Swedish battery manufacturer Northvolt has announced the suspension of a major factory expansion in northern Sweden, which has delayed essential funding previously agreed upon earlier this year, according to a statement from a Swedish government agency.
In September, the company revealed plans to downsize and reduce its workforce, raising alarms about the future of Europe’s leading contender in the electric vehicle battery market amidst production difficulties, sluggish demand, and escalating competition from Chinese manufacturers.
At the start of the year, Northvolt secured a $5 billion green loan package from a consortium of lenders aimed at tripling its battery production capacity at the Skellefteå facility. However, the recent decision to halt this expansion has significantly affected the financing arrangements.
The group of lenders included the European Investment Bank (EIB), the Nordic Investment Bank, and more than 20 commercial banks, which received guarantees totaling $1.5 billion from Sweden’s government Debt Office. Officials indicated that the release of these funds is now uncertain.
“Last week the company announced that the expansion is suspended. Our assessment is that the loans therefore will not be disbursed in the near future,” said Karolina Ekholm, Director General of the Debt Office, in a statement to Reuters. She emphasized that the guarantees were contingent upon compliance with the original terms of the agreement.
While Northvolt has not yet responded to requests for comment, a company spokesperson noted on September 24 that substantial progress had been made in securing additional funding. The EIB, which committed to financing over $1 billion of the $5 billion loan package, revealed that its outstanding loans to Northvolt currently stand at $313 million, stemming from a loan agreement made in 2020 that was set to be refinanced as part of the new funding plan.
Source: Reuters
