Sweden puts Northvolt’s $1.5 billion funding guarantee on hold
Northvolt had agreed to a USD 5 billion green loan package with a group of lenders, intended to pay for a planned tripling of its battery-making capacity. This expansion has now been shelved.
Struggling battery maker Northvolt’s decision to scrap a major factory expansion in Sweden puts on hold crucial funding for the company that was agreed earlier this year, a Swedish government agency has said.
The cash-strapped Swedish company in September said it would slim down and slash jobs, triggering fears about the future of Europe’s home-grown EV sector amid sluggish demand and competition from China, according to a Reuters report.
At the start of 2024, Northvolt agreed to a USD 5 billion green loan package with a group of lenders, intended to pay for a planned tripling of its battery-making capacity at its Skelleftea facility in northern Sweden.
This expansion has now been shelved.
The lenders, including the European Investment Bank, had received guarantees of USD 1.5 billion from Sweden's government Debt Office.
“Last week the company announced that the expansion is suspended. Our assessment is that the loans therefore will not be disbursed in the near future,” Debt Office Director General Karolina Ekholm told Reuters.
The battery manufacturer was not just an important project for Sweden’s “green industrial revolution” but touted as Europe’s answer to imported Chinese batteries and a means of reducing the dependence on oil.
Since it was founded in 2016, Northvolt rose rapidly, getting billions of dollars in investment and orders from top automakers like Volkswagen and Volvo.
But the mood has soured recently as Europe’s EV market struggles. In June, BMW canceled a USD 2.2 billion contract with Northvolt. Last month, the beleaguered battery maker announced plans to cut 1,600 jobs in Sweden as part of a major cost-cutting drive.
Production at its flagship factory in Skelleftea is well short of its full capacity. The company reportedly aims to reach an initial output of 16 GWh per year by 2026, an estimated delay of three years from the original target.