A Northvolt facility in Vasteras, Sweden, on Sept. 29, 2021.Helena Soderpalm/Reuters
Swedish battery maker Northvolt AB’s decision last month to scrap a major factory expansion in northern Sweden puts on hold key funding for the company that was agreed earlier this year, a Swedish government agency said on Wednesday.
Cash-strapped Northvolt in September announced it would slim down and cut jobs, sparking fears that Europe’s best shot at a homegrown electric-vehicle battery champion may stall owing to production problems, sluggish demand and competition from China.
Northvolt at the start of the year agreed to a US$5-billion green loan package with a group of lenders, intended to pay for a planned tripling of its battery-making capacity at Skelleftea in northern Sweden, but this expansion has now been shelved.
The lenders, including the European Investment Bank, the Nordic Investment Bank and more than 20 commercial banks, received guarantees amounting to US$1.5-billion from Sweden’s government Debt Office.
But the money guaranteed by the state agency is unlikely to be disbursed to Northvolt any time soon, officials said.
“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,” Debt Office director-general Karolina Ekholm said in a statement to Reuters.
Guarantees were only valid if conditions of the original agreement were followed, she added.
Northvolt did not immediately respond to a request for comment on Tuesday. A spokesperson for the company told Reuters on Sept. 24 the company had made significant progress in recent weeks in its effort to raise cash.
The EIB, which agreed to finance more than US$1-billion of the US$5-billion, said its outstanding loans to Northvolt amounted to US$313-million, stemming from a 2020 loan that was due to be refinanced as part of the new package.
Northvolt has said that its recent announcement of job cuts will have no impact on plans to build a $7-billion battery factory near Montreal. However, the company noted it is proceeding with a strategic review before making any decisions on the timing of construction. That is expected to be completed by the end of this fall.
- With a report from Globe staff