Northvolt’s Battery Making Boom Fizzles Out in Northern Sweden

Charles Daly and Jonas Ekblom
4-min read

(Bloomberg) -- The crisis at Swedish battery maker Northvolt AB is rippling through communities in the north of the country, where unpaid bills and scrapped projects threaten the livelihoods of suppliers and wage earners alike.

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This week, the Northvolt unit managing the expansion of its main battery-cell factory in northern Sweden filed for bankruptcy, saddling suppliers with about 606 million Swedish kronor ($58.3 million) in claims. The move followed last month’s decision to shed 1,600 jobs in Sweden — including 1,000 in Skelleftea, home to the factory — in response to a deepening cash crunch.

Titan Konstruktion, a local builder that worked on the Northvolt project, applied for restructuring with a Swedish court last month citing late payments, according to a legal filing seen by Bloomberg News.

Unpaid work totaling 79 million kronor has “naturally led to increasing strain on the company’s finances and the group will not have the ability to cover its liabilities,” the filing said.

Skelleftea, an industrial outpost near the Arctic Circle, has borne the brunt of the battery maker’s travails. The gigafactory, commissioned in late 2021, symbolized Europe’s ambition to create its own electric-vehicle supply chain, and drew workers from as far away as India. Businesses like Titan, based 1 1/2 hours to the north of the main factory by car, enjoyed an unprecedented boom.

The sudden shutdown of the expansion project this week sent a shudder through local companies. Many of the area’s entrepreneurs had direct business there, “so we can assume that a large number of them will feel a significant impact,” Skelleftea municipal director Kristina Sundin Jonsson told Swedish Radio.

Construction companies working on the add-on costing several billion dollars “are being hit very hard” by unpaid claims, Fredrik Andersson, who heads the local branch of industry group Byggforetagen, told state broadcaster SVT.

The bankruptcy filing at Northvolt Ett Expansion has already started to topple local builders.

In its court filing last month, Lulea-based Titan said one nonpaying customer accounted for about 85% of the firm’s entire revenues. The lawyer working on the application confirmed the customer was Northvolt.

The battery maker didn’t immediately respond to requests for comment.

Personnel cutbacks announced at the main plant in Skelleftea haven’t yet taken force, as they’re subject to talks with unions. Municipal official Jonsson told TT, a local news agency, that she hoped that many who were let go will stay.

“We really need this workforce,” she said. “We have large needs in our welfare system. We have other industries that are screaming for workers. So we’ll do everything we can to try to keep them.”

Northvolt, which attracted some $10 billion in investments, has been streamlining its business as it attempts to secure new funding to see it through its liquidity crisis. Its next test arrives on Oct. 14, when a $28 million tax bill comes due. Further out, the company must meet its payroll obligations, which typically fall on the 25th of each month in Sweden.

The battery maker has asked suppliers to the bankrupt unit that also serve its ongoing operations to continue doing business as usual. That may be increasingly difficult as unpaid invoices pile up.

Overdue claims against the main factory, Northvolt Ett, last week included bills from shipping firms, builders and fire safety consultants, according to data from Sweden’s Enforcement Agency.

“About half of our invoices worth 11,047 kronor are now past their due date,” utility Skelleftea Kraft AB’s Sanna Backstrom said in emailed comments. The bills relate to temporary power connections for the now defunct construction site, Northvolt Ett Expansion AB, she said.

The speed at which the unpaid bills have piled up shows just how quickly Northvolt fell into crisis. As of Thursday, the enforcement authority had outstanding payment orders against Northvolt subsidiaries totaling 378 million Swedish kronor.

While most of the claims were against Northvolt Ett Expansion, the unit that filed for bankruptcy, more than 85 million kronor were owed by other companies in the group.

The data indicates a sharp increase in the amount of claims, as companies in the group had 16.9 million kronor in outstanding payment orders as of early September, according to the daily Dagens Nyheter’s reporting.

Back in Skelleftea, employees whose jobs are on shaky ground are nursing additional losses. Northvolt workers were allowed to buy shares through savings programs but haven’t been allowed to sell, despite promises in the company’s terms and conditions, newspaper Svenska Dagbladet reported.

A worker named William told the newspaper that he invested 1 million kronor in the program, but hasn’t been able to offload his stock.

“I feel completely fooled,” said William, who only gave his first name to the newspaper.

--With assistance from Lars Paulsson, Niclas Rolander, Christopher Jungstedt and Rafaela Lindeberg.

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