Northvolt rescue, Goldman Sachs and Sweden's Vargas are also involved

The Swedish company Northvolt, which specialises in the production of batteries for electric vehicles with the ambition to challenge the overwhelming power of the Chinese industry in this sector, is going through a serious liquidity crisis. Its plan to become a major player in the European supply chain is at risk of failure. The company founded in 2016 by Peter Carlsson, current ceo, and Paolo Cerruti, both former Tesla executives, last 23 September announced the cutting of a fifth of its workforce, including 1,600 posts at its three operating sites in Sweden, and the downsizing of its projects, focusing on production at its main plant in Sweden in Skelleftea, in the country's main mining area, 200 km south of the Arctic Circle. The ongoing fundraising is reportedly close to closing a package of around EUR 270 million.

Goldman Sachs, the second largest shareholder after Volkswagen (21%, invested EUR 900 million), is considering joining other investors to provide the capital injection needed to resolve the crisis. Although details are confidential, negotiations are reportedly proceeding in a positive direction, although the big US company's involvement will depend on the participation of other financial partners. These include Vargas Investment Group, a Swedish holding company active in sustainable energy technology, led by another Northvolt co-founder, Harald Mix, which could participate with SEK 100 million, just under EUR 9 million.

Volkswagen, in any case, has indicated its willingness to support the Swedish company. And Scania, the truck division of the VW group that uses Northvolt batteries, could also provide financial support through pre-orders.

The picture is complicated by the variety of creditors, investors and institutions. Northvolt has attracted huge investments since its start-up, raising around USD 13 billion, between equity and debt, thanks to investors such as BlackRock, Goldman Sachs itself, Volkswagen, and several pension funds. Growth was also supported by loans from the European Investment Bank (EIB). The rapid expansion and planning of new plants in Germany (in Heide, work started in March, EUR 900 million from the German government with EU approval) and Canada did not avoid problems, e.g. the cancellation of a EUR 2 billion order by BMW in June.

Both Swedish Deputy Prime Minister Ebba Busch and German Economics Minister Robert Habeck recently emphasised the importance of saving Northvolt. And to think that only two years ago there was talk of an IPO and listing at a market value of EUR 20 billion. The company's fate has a geopolitical implication, because while the big European manufacturers are putting the brakes on their own battery production or the construction of new sites due to the drop in demand for electric cars, the big question is what will become of Europe's coveted independence, which is crucial for the energy transition and competitiveness against the leading player, China. Whose champions are called CATL and BYD, number one and number two in the world ranking.