Northvolt in Talks to Sell Battery Pack Business

By Marie Mannes

STOCKHOLM (Reuters) – Northvolt is negotiating the sale of its electric battery pack business for heavy industry due to financial struggles, aiming to divest by year-end according to an internal memo.

This rush to sell marks Northvolt's effort to bolster its finances and refocus on battery cell production, moving away from being a comprehensive electric vehicle (EV) battery manufacturer and recycler. Last month, the company, seen as Europe's major EV battery contender, filed for U.S. Chapter 11 protection after failing to secure additional funding.

Northvolt requires up to $1.2 billion in external long-term finances. In the Chapter 11 filing on Nov. 21, the company announced its intention to sell Northvolt Systems Industrial, which produces industrial batteries, part of the Northvolt Systems unit primarily based in Poland, notably at the Northvolt Dwa factory.

While the business’s value remains undisclosed, Northvolt's outgoing CEO indicated it is among the few profit-generating sectors. Its batteries serve essential machinery in industries like construction, with customers including Swedish mining equipment maker Epiroc and Finnish engineering firm Konecranes.

For approximately two months, Northvolt has held promising talks with an unnamed major industrial company regarding the sale, according to an internal staff announcement dated Nov. 22.

Despite preliminary negotiations, a deal is sought within the upcoming weeks; otherwise, the company might have to shut down operations by year-end due to insufficient funds.

Regarding the deadline, a spokesperson from Northvolt Poland expressed optimism for a positive outcome.

In the Nov. 21 filing, Northvolt also planned to wind down its energy storage division within the Northvolt Systems unit, which manufactures products for excess power storage.

These decisions were independent of the Chapter 11 filing, as stated in the memo.

Should the sales proceed, Northvolt's operations would narrow significantly, focusing on its battery factory in Skelleftea and R&D in Vasteraas, marking a reversal from previous strategies seeking partners for the energy storage sector.

The closure of the energy storage business will lead to approximately 130 job losses in Poland. Additionally, plans for battery factories in Germany and Canada may face delays, as noted in recent weeks.

Customers Epiroc and Konecranes are closely monitoring the situation; Epiroc indicated it would carefully evaluate quality and delivery promises if the industrial battery business is sold, while Konecranes has no discussions regarding the purchase.

While exiting the battery storage sector may lower costs, it risks forfeiting a thriving market. Experts suggest Northvolt may regret its exit considering the growing demand for energy storage solutions.

Andy Palmer, founder of consultancy Palmer Automotive, commented: "Northvolt undoubtedly stretched itself too wide but might rue the day it exits from this market."