(Bloomberg) -- A group of Northvolt AB lenders is set to meet on Friday to consider whether to extend a lifeline to the cash-strapped maker of electric vehicle batteries or cut their support and risk losing billions.
Ultimately, their choices are likely to prove pivotal for Northvolt, the Swedish firm that’s swallowed more than $15 billion in debt, equity and government funding commitments in a bid to create an independent EV supply chain for Europe.
The company now finds itself in a fast-moving liquidity crisis after a production ramp-up faltered at its main plant near the Arctic Circle. Northvolt expanded aggressively across Europe and North America to build the manufacturing scale needed to compete with lower-cost Chinese producers, but has seen EV demand slow in key markets this year.
The immediate goal for Northvolt is to gain access to a part of a $5 billion green loan facility announced in January that’s been held back by lenders. Northvolt on Thursday won a pledge of support from founder Harald Mix, a part-owner of the company, who promised fresh capital that will help bolster its chances of survival.
Northvolt didn’t reply to messages and calls seeking comment. The manufacturer told Bloomberg News earlier this week that it was making progress in financing talks.
The company also moved this week to stem the cash burn by shedding a fifth of its global staff and suspending the expansion of the main factory at Skelleftea.
One cathode active material production facility has been mothballed and another terminated, both in Sweden. It’s still committed to units under construction in Germany and Canada, but may revise their timelines and scope, the company said earlier this month.
Northvolt’s funding was backed by orders worth more than $55 billion from companies including Volkswagen AG and BMW AG. But the production woes and flagging EV demand starved the company of much-needed revenue. It’s a stunning reversal for a company that was less than a year ago wooing investors with a planned initial public offering that would have valued it at $20 billion.
It remains unclear at this stage if Northvolt’s other main shareholders — including Volkswagen, Goldman Sachs Asset Management and BMW — will also be willing to provide fresh capital.
--With assistance from Charles Daly, Giulia Morpurgo, Niclas Rolander, Monica Raymunt and Irene García Pérez.
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