Northvolt faces a significant challenge as the Swedish Debt Office delays its funding guarantee. This decision follows Northvolt’s recent move to halt plans for a major factory expansion in northern Sweden, posing a threat to crucial funding secured earlier this year.
The company’s move to streamline operations and cut jobs in September has raised concerns about its role as Europe’s potential leader in electric vehicle battery production. Challenges such as production difficulties, slow demand, and increased competition from Chinese counterparts have intensified Northvolt’s financial pressures.
Earlier this year, Northvolt secured a $5 billion green loan package to triple its battery production capacity in Skellefteå, Sweden. However, this ambitious expansion has now been put on indefinite hold.
The group of lenders, which includes the European Investment Bank (EIB), the Nordic Investment Bank, and over 20 commercial banks, received guarantees totaling $1.5 billion from Sweden’s Government Debt Office.
Officials have stated that the funds guaranteed by the state agency are unlikely to be disbursed to Northvolt in the near future, raising concerns about the company’s financial outlook and its role in the electric vehicle battery market.
Karolina Ekholm, Debt Office Director General, stated, “Last week, the company announced that the expansion was suspended. Our assessment is that the loans will not be disbursed in the near future. Guarantees were only valid if conditions of the original agreement were followed.”
Northvolt did not respond to a request for comment on Tuesday, but a spokesperson told Reuters on September 24 that significant progress had been made in its recent cash-raising efforts.
The EIB, which committed over $1 billion of the $5 billion financing package, reported outstanding loans to Northvolt totaling $313 million from a 2020 agreement to be refinanced under the new arrangement.
Source: Reuters