Northvolt files for Chapter 11 bankruptcy in the U.S.
Nov 21 (Reuters) - Sweden's Northvolt seeks US Chapter 11 bankruptcy protection in theU.S. Chapter 11 bankruptcy protection, the cash-strapped company said on Thursday.
Northvolt went in a matter of months from being Europe's best shot at a home-grown electric-vehicle battery champion to racing to stay afloat by slimming down, hobbled by production problems, the loss of a major customer and a lack of funding.
Northvolt has been discussing the possibility of filing for Chapter 11 bankruptcy protection in the United States as one of several options for survival, two sources familiar with the matter told Reuters on Nov. 15.
Local media had reported Chapter 11 was seen as a way for the company, which was set up in 2016, to sort out its finances.
The filing by itsmost developed battery player is the biggest blow yet to Europe's hopes of building its own EV battery sector, reducing Western carmakers' reliance on Chinese rivals such as CATL 300750.SZ and BYD 002594.SZ.
With Volkswagen VOWG_p.DE among its owners, Northvolt has led a wave of European startups investing tens of billions of dollars in battery production to serve the continent's automakers as they switch from internal combustion engines to electric vehicles.
But growth in EV demand is moving at a slower pace than some in the industry had projected, and competition remains stiff from China, which controls 85% of global battery cell production, International Energy Agency data shows.
On Monday, Reuters reported that the embattled green tech player has missed some in-house targets and has curtailed production at its battery cells plant in northern Sweden, underscoring the challenge of ramping up output.
In October, Northvoltstruck a deal that gave access to a small amount of money while talks on a bigger financing package continued, business daily DI reported.
Those talks had become more difficult in recent weeks, one of the sources familiar with the Chapter 11 plan said.
In recent years several Swedish companies have opted for doing Chapter 11 such as Scandinavian airline SAS and debt collector Intrum, a process that allows management to retain control over the company and run its operations.
In October, a source with knowledge of Northvolt's plans said the company was looking to raise some $300 million, which would carry it into 2025 if successful.
But this amount was far less than the 15 billion Swedish crowns that Swedish media had reported Northvolt was aiming for a few months ago, or even the scaled-back ambition of 7.5 billion crowns reported in September.
Deputy Prime Minister Ebba Busch told Reuters on Tuesday the Swedish government did not plan to take a stake in Northvolt.
Reporting by Terje Solsvik in Oslo, Dietrich Knauth in New York
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