EV stocks are in focus this morning after Northvolt – an electric vehicle battery maker based out of Stockholm said it has filed for bankruptcy in Sweden.
Northvolt is choosing to file for insolvency following an “exhaustive effort to explore all available means to secure a viable financial and operational future,” the company said in a press release today.
The vendor’s announcement on Wednesday deals a significant hit to Europe’s commitment to onshoring production of EV batteries and bridge the gap with China that’s currently the world’s top market for electric vehicles.
What made Northvolt file for bankruptcy?
Northvolt blamed several industry-wide challenges for ending up in bankruptcy, which included “rising capital capitals and shifts in market demand.”
Additionally, geopolitical instability resulted in material supply chain disruptions, making it all the more difficult for the battery maker to ramp-up its operations.
The news arrives months after Northvolt opted for Chapter 11 restructuring in the US as well.
Ever since, it’s been on the lookout for financial support to remain in business.
Northvolt did receive “liquidity support from lenders and key counterparties” in recent months, but was “unable to secure the necessary conditions to continue in its current form,” its press release added.
Northvolt had contracts with notable names like BMW
A Swedish court will now appoint a trustee to lead Northvolt’s bankruptcy proceedings.
This will include settlement of outstanding obligations and the overall sale of the business.
Note that Northvolt once counted prominent names like Goldman Sachs and Volkswagen among backers, and had several contracts in place with renowned automakers, including BMW.
“This is obviously very bad news. Mistakes have certainly been made in the company’s industrial and economic project,” Pascal Canfin – a senior Member of the European Parliament (MEP) said on Wednesday.
In his statement, Canfin urged the bloc to continue its efforts to build a domestic battery industry and lower the region’s overall reliance on China.
China is posing fierce competition to Western EV makers
Chinese electric vehicle companies like BYD are posing a massive threat to their Western rivals.
They’re offering competitively priced products to attract strong demand that’s evidently hurting even the likes of Tesla Inc in 2025.
Shares of the American EV giant have so far lost more than 45% this year.
Following a slowdown in 2024, analysts at S&P Global Mobility forecast a meaningful increase of 30% in global EV sales this year.
They estimate electric vehicles making up nearly 17% of total vehicles sales worldwide in 2025.
Analysts remain positive on what the future holds for the EV industry even though a bunch of car manufacturers have recently dialed down on their electrical vehicle strategy to focus more on hybrid vehicles.
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