The collapse of Swedish battery maker, Northvolt AB, has potentially left a 300million euro (£250million) hole in its budget and may have scuppered the European Union’s ambitions for electric vehicle success.
The company filed for bankruptcy protection under the US Chapter 11 procedure last week, as it only had about $30million (£23.8million) in cash remaining.
Some of its $5.84billion (£4.6billion) debt is owed to the EU itself, which has sought to boost potential European champions in the sector seen as key to the green transition.
“We backed several loans of the European Investment Bank to Northvolt battery factory,” European Commission spokesperson Veerle Nuyts told reporters on Monday.
She added that the EU’s exposure – the unrepaid value of the loan — “currently amounts to $313million (£248million), under the guarantee of the European fund for strategic investments.”
The fund, established in 2015, was a flagship policy of the then-Commission president Jean-Claude Juncker and offered 21billion euros (£17.5billion) in funding for infrastructure, innovation and small business.
In 2017, the Commission also set up the European Battery Alliance, in a bid to gain European leadership against tough competition from China.
“The work we have done on batteries, including with the battery alliance, has been a success,” EU spokesperson Johanna Bernsel told reporters on Monday, saying that a total manufacturing capacity of 167 Gigawatt hours was installed in 2023.
But Northvolt was, until last week, the most credible player in the European market – and its collapse leaves creditors scrabbling over shreds from the estate.
“The European Investment Bank is closely monitoring the situation,” a spokesperson for the Luxembourg-based public lender told Euronews in a statement.
“We are determined to reach a constructive resolution that will safeguard the EIB’s and the EU’s interests” and “will continue to support strategic industries driving the transition to a net zero economy,” the EIB spokesperson added.
Any shortfall could now have to be borne by the EU budget, which is mainly funded by contributions from national finance ministries.
A draft of the EU budget for next year, formally agreed by member states on Monday, sets total commitments at just over €192.8 billion (£160.7 billion), with €800 million (£667 million) set aside as headroom to meet unforeseeable needs.