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Volkswagen has written down the majority of its 21 per cent stake in Northvolt over the past year ahead of the Swedish battery maker’s filing for Chapter 11 bankruptcy, according to people close to the German carmaker.
The writedowns by the largest shareholder in Northvolt, which have been done in phases over the past 11 months, are not expected to have any material impact on VW’s financial performance, one of the people said.
But the soured bet on Northvolt marks another headache for VW, which is planning to close several factories in Germany and lay off tens of thousands of employees amid a slowdown in electric vehicle demand and collapsing market share in China.
The carmaker first invested €900mn into the battery start-up in June 2019, giving it a 20 per cent stake and a seat on the board. A year ago it injected a further €500mn. VW-owned brands Porsche, Audi and Scania have all become Northvolt customers.
VW is listed as Northvolt’s second-largest creditor in the Chapter 11 filing due to a $355mn convertible note. As of the end of 2023, VW said the book value of its stake in Northvolt was at €693mn.
VW declined to comment on the writedowns and the current value of its stake in Northvolt.
Other large investors have also been hit by the collapse of Europe’s biggest battery hope with funds managed by Goldman Sachs planning to write off almost $900mn by the end of the year, the Financial Times has previously reported.
Earlier on Monday, the European Commission said EU taxpayers would lose hundreds of millions of dollars if Northvolt collapses — the bloc had guaranteed $313mn of loans to the company.
VW has been one of the strongest early backers of Northvolt alongside industrial partners such as BMW and Scania and other financial investors including Goldman and BlackRock. By 2022, Northvolt had $55bn in customer orders, and this year reached $15bn in equity and debt capital as well as government support.
But the start-up struggled to increase production at its Skellefteå plant in northern Sweden and became overstretched with ambitions not only to manufacture battery cells but also to produce their chemicals and recycle the materials.
By the time the lossmaking group filed for Chapter 11 bankruptcy in the US last week, it had just $30mn in cash — enough for a week’s operations — and $5.8bn in debt. By filing Chapter 11, it can access finance including $145mn in cash and $100mn from Swedish truckmaker Scania.
People close to the talks said VW decided not to invest further in Northvolt as the battery manufacturer sought additional financing, citing its own struggles as well as a lack of confidence that the Swedish start-up had a viable plan to turn itself around.
“In this latest funding round, VW basically told us they’re not able to continue to capitalise us,” co-founder Peter Carlsson said as he resigned as Northvolt chief executive on Friday
Additional reporting by Andy Bounds in Brussels
