Northvolt In Talks For 200m Euros In Short-Term Funding

Swedish electric vehicle (EV) battery maker Northvolt is reportedly in talks with investors and lenders over securing short-term funding worth about 200 million euros ($218m, £167m) as it deals with setbacks including production difficulties and competition from China.

The talks were taking place last week, Reuters reported, even as the company replaced the chief executive of its Northvolt Ett (“One”) factory in a move announced last Wednesday.

The funding is far lower than amounts the firm has been reportedly seeking since earlier this year and is not enough to secure the company’s future, meaning the firm must continue looking for a larger amount of capital for the long term, the report said, citing unnamed sources.

New short-term funding could include battery pre-orders from customers as well as loans, with shareholders, customers and lenders in active discussions, the report said.

Fundraising

There is reportedly a verbal agreement for 150m euros in funding, but a final deal has not been agreed.

Earlier this year Swedish media reported Northvolt was seeking 15bn crowns ($1.44bn, £1.1bn). In September reports said the company was looking for only 7.5bn crowns.

Northvolt has been in weekly meetings at which the sum it was asking for gradually decreased, a source told Reuters.

Truck maker Scania, a Northvolt shareholder, has reportedly been leading the talks.

The company said in a statement it was “in close dialogue” with Northvolt.

Car maker BMW, which cancelled a $2bn order from Northvolt earlier this year, is reportedly not involved in the fundraising.

BMW said it has no plans to change its 2.8 percent stake in Northvolt.

The German economy ministry said on Friday Northvolt had confirmed its plans for a factory at Heide in northern Germany with EU-approved state aid, and said there were no questions about German subsidy support for the project.

In response to the report Northvolt re-released a statement from 24 September that said it had made significant progress in recent weeks toward raising cash.

EU battery project

Northvolt Ett is Europe’s first homegrown gigafactory for lithium-ion battery cells, and was a key part of an EU battery industry project intended as a direct challenge to the dominance of Chinese battery producers.

But the factory has reportedly struggled with persistent production problems, which have delayed Scania’s rollout of electric trucks and led to BMW cancelling its order.

The production issues, coupled with sluggish demand for electric vehicles and competition from China, have reportedly had a major impact on Northvolt’s financial situation.

In September after a strategic review and as part of a cost cutting exercise, the firm announced plans to cut 25 percent of its workforce, with 1,600 Northvolt employees being let go, split across Skellefteå (1,000 positions), Västerås (400 positions) and Stockholm (200 positions).

Last week the subsidiary company managing Northvolt’s Ett expansion project filed for bankruptcy after the factory expansion it was developing was cancelled.