(Bloomberg) -- Goldman Sachs Group Inc.’s investment arm, the second-largest shareholder in Northvolt AB, is considering joining other investors in an effort to rescue the cash-strapped battery maker, according to people familiar with the matter.
Goldman Sachs Asset Management is actively involved in trying to find a solution to Northvolt’s liquidity crisis, the people said, asking not to be identified because the fundraising talks are confidential. They characterized the discussions as constructive, while cautioning that the situation remains fluid, and the firm’s participation would depend on support from other investors.
Northvolt has been working for weeks to secure a cash infusion that would pull the struggling electric-vehicle supplier through a liquidity crisis disclosed last month. The company has laid off staff and scaled back projects as it seeks to cut costs, and is focused on increasing battery-cell production at the Swedish manufacturer’s main plant near the Arctic Circle.
A spokesperson for Goldman Sachs Asset Management declined to comment.
A Northvolt spokesperson declined to comment. On Tuesday, the company said it was making progress on the funding package and continues to “work intensely” on the proposal.
Goldman’s involvement would boost Northvolt’s fundraising effort and encourage others to participate. The scramble to save the company is complicated by the mix of creditors, equity investors, customers and governments that backed its mission to create an independent European supply chain for EVs. Each has considerations to weigh as they contemplate next steps.
Volkswagen’s Role
Northvolt is targeting around €200 million ($218 million) to address its short-term needs, with about €150 million of that committed under verbal agreements, Bloomberg News has reported.
Top shareholder Volkswagen AG has suggested it’s willing to help Northvolt ramp up production of battery cells, though it hasn’t provided specifics. The German carmaker is under pressure to conserve resources after disclosing plans to close factories at home amid a sales slump.
Nonetheless, VW’s Swedish truckmaking unit Scania CV AB uses Northvolt batteries and could provide financial aid through battery cell pre-orders, the people said.
“We are in close dialogue with Northvolt but cannot comment further,” Scania spokeswoman Veronica Nilsson said in an email. Newspaper Dagens Industri reported on the truckmaker’s involvement earlier this month.
Northvolt Chief Executive Officer Peter Carlsson and co-founder Harald Mix have pledged to provide fresh capital. In a DI op-ed on Wednesday, Mix said he’s invested more than 1.5 billion Swedish kronor ($144 million), on par with Swedish institutions.
Swedish pension fund AMF, owner of a 2.8% stake, said it’s in contact with the company and other Northvolt shareholders but hasn’t made a decision “about how we see the way forward.”
The company has received about $10 billion in debt and equity funding since its founding in 2017. However, its strategy to grow aggressively in a range of battery technologies threw up numerous operational hurdles.
Rapid Expansion
The plans encompassed not just a rapid scale-up of complex cell manufacturing, but the production of components such as cathode materials and the construction of several new factories.
As it sought to gear up production at its main plant in Skelleftea, Northvolt encountered quality issues, leading to a high number of faulty cells. In June, BMW AG canceled a €2 billion order due to quality problems in a prelude to Northvolt’s current liquidity crisis.
Officials in Sweden and Germany, where Northvolt is building a factory, have emphasized the importance of saving the company, though they haven’t committed to any added funding.
Goldman Sachs representatives have discussed Northvolt in meetings with the German government, but lobbying efforts have largely been led by the company and other parties, one of the people said.
Germany’s economy ministry told Bloomberg News it was monitoring developments at the battery maker “very closely” and it remains in contact with the company. Its support for the project in Heide “continues unabated,” a spokesperson said in emailed comments.
Swedish Deputy Prime Minister Ebba Busch has also offered encouragement. “There is still hope for Northvolt, and we hope this will succeed,” she said.
--With assistance from Kamil Kowalcze and Niclas Rolander.
(Updates with AMF comment in 12th paragraph; German government meetings, comment from 16th paragraph.)
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