Restructuring expert appointed to oversea Northvolt’s main facility in northern Sweden, amid financial worries
Northvolt has appointed a restructuring expert for its main battery factory, as the embattled Swedish battery manufacturing venture seeks to secure its operations.
Reuters, citing a Northvolt company spokesperson on Wednesday, has appointed restructuring expert Paul O’Donnell to oversee the lithium-ion battery maker’s main facility in northern Sweden.
O’Donnell will become chairman of Northvolt Ett, the group’s battery cell plant, the spokesperson added.
Embattled firm
“It makes sense to augment the board with an individual who has significant restructuring experience in order to guide the company through the challenging period,” the spokesperson told Reuters.
“Paul has significant experience in this arena both in his professional career with the Blackstone Group and subsequent to that his non-executive director roles in several companies,” he added.
Last month Northvolt was reportedly in talks with investors and lenders over securing short-term funding worth about 200 million euros ($218m, £167m).
That came soon after the company replaced the chief executive of its Northvolt Ett (“One”) factory.
That funding however was not considered enough to secure the company’s future however, and shortly after that it was reported that the talks with creditors, shareholders and at least one customer on a short-term financing deal had stalled.
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.
It confirmed that 1,600 Northvolt employees were to be let go, split across Skellefteå (1,000 positions), Västerås (400 positions) and Stockholm (200 positions).
Bankruptcy protection?
Last week Northvolt was said to be discussing the possibility of bankruptcy protection in the United States as one of several options for the cash-strapped company to survive.
It comes after a subsidiary company managing Northvolt’s Ett expansion project filed for bankruptcy in October, after the factory expansion it was developing was cancelled.
Then earlier this week Northvolt admitted it does not plan to meet a goal of producing 100,000 cells per week, after Reuters had reported it has been consistently missing internal production targets since early September.
The firm has only been producing 20,000 shippable cells per week.
Unnamed sources told Reuters the production problems stemmed from faults with machines, inexperienced staff and unrealistic plans.
Northvolt however said that its machines in serial production were delivering “very good levels of performance” and that its staff were the most experienced for any Europe-based battery manufacturer.
The delays meant Northvolt lost a 2 billion euro (£1.7bn) contract with BMW in June, since which time it has been primarily producing for truck maker Scania as well as Volkswagen’s Audi and Porsche brands.
European batteries
Northvolt had been set up as part of an EU effort to reduce the region’s dependence on Asian producers for batteries for electric vehicles (EVs) and power storage.
The EU in 2019 had approved a 3.2bn euro subsidy from seven member states, led by Germany and France, into the battery industry plan.
But in total the lithium-ion battery manufacturer has received approximately 10 billion euros ($10.57 billion) in funding since its startup in 2016.
Just before Christmas 2021, Northvolt had reached a deal with Portuguese oil firm Galp to build what was intended to be Europe’s largest integrated lithium conversion plant in Portugal.
Also in December 2021, Northvolt confirmed that its gigafactory in Skellefteå, a former gold mining town about 200 km south of the Arctic Circle, had assembled the first battery cell.
