Northvolt's Bankruptcy Triggers $13 Billion Investor Losses; Goldman Sachs Faces $900 Million Write-off

Nov 25, 2024, 06:22 AM

Swedish battery manufacturer Northvolt, founded in 2016 by two former Tesla executives, has filed for Chapter 11 bankruptcy protection in the United States, dealing a significant blow to Europe's electric vehicle battery ambitions. The company, once a symbol of Europe's efforts to compete with China's dominance in battery production, struggled to scale production and faced quality issues. The collapse was triggered in part by BMW canceling a multi-billion dollar order in June. Major investors, including Goldman Sachs and Volkswagen, are facing substantial losses. Goldman Sachs Asset Management is set to write off nearly $900 million on its investments in Northvolt, while Volkswagen has written down the majority of its stake, leading to losses estimated at $1.6 billion. The total investor losses may exceed $13 billion, making it one of the largest tech failures ever. Northvolt admitted it should have delayed subsidized expansion plans in Germany and Canada. The European Commission has an exposure of $313 million to loans to Northvolt. The bankruptcy is seen as a setback for the European electric vehicle supply chain and raises concerns about the region's ability to build a competitive battery industry.