Northvolt appoints restructuring manager for its battery factory
Northvolt Ett in Skellefteå, northern Sweden, has officially been producing battery cells since the end of 2021, but has had enormous problems scaling up production since then. On the one hand, many cells do not meet the quality standards, and on the other, the quantities are too low even after almost three years. This autumn, a production target of 51,000 cells per week was circulated, but Northvolt Ett only achieved this in a single week between the end of September and the beginning of November. A spokesperson described this target as ‘outdated’ but did not give a new figure.
In Paul O’Donnell, Northvolt has now found a new manager for the factory – his predecessor, Mark Duchesne, resigned in October. Northvolt cites O’Donnel’s significant experience in financial restructuring from his time at Blackstone and his role as director of several companies. O’Donnell will also join the board of directors. It makes sense to expand the
Low unit sales are not only putting pressure on turnover, the constant adjustments are also costing a lot of money. In addition, major customer and shareholder BMW cancelled an order worth billions in the summer. The Geran carmaker would have needed the prismatic cells from Northvolt Ett for its current electric models. With the Neue Klasse, BMW is switching to large-volume round cells – prismatic cells will thus no longer be needed at BMW in the future.
The cancelled BMW order had made the problems at Northvolt public. The combination of cancelled orders and the capital-intensive problems of scaling production has put the company in a difficult financial situation.
As a result, the company initiated a strategic review, announced cost-cutting measures and reorganised the Management Board. In the meantime, however, doubts within the industry are growing: Traton brand Scania, which wanted to source all its battery cells for electric trucks from Northvolt, is reportedly looking for alternative suppliers.
A few days ago, insider reports revealed that Northvolt is even considering filing for bankruptcy protection under Chapter 11 of the US Bankruptcy Code. The step would protect the ailing company from its creditors for a period of time and is intended to facilitate the reorganisation and financial restart.
However, Northvolt needs fresh capital for this new start – there is talk of a financial injection of around 300 million dollars. Negotiations have been dragging on for weeks. They apparently involve a consortium of banks and existing investors (the major US bank Goldman Sachs already has a stake in Northvolt). On the other hand, the Swedish government does not want to invest in the company. And Quebec, too, is debating whether or not to further invest in Northvolt. The battery manufacturer is constructing a manufacturing plant there – which was supposed to open in 2026, but the opening date was recently pushed back to 2028.
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