Published by Global Banking and Finance Review
Posted on January 29, 2025
By Marie Mannes
STOCKHOLM (Reuters) -Northvolt agreed with Volvo Cars on Wednesday to sell the battery maker's stake in their joint venture NOVO Energy for an undisclosed sum and explore potential collaborations in North America.
Northvolt, which is under U.S. bankruptcy protection, had ceased funding for most of its joint ventures and non-core businesses, including Novo, throughout 2024 to sustain its primary business of battery cell production.
Due to this, the automaker found Northvolt in breach of contract in October and said it would acquire the stake in Novo.
Both companies declined to comment on the financial details of the agreement and the price of the stake sale.
Volvo Cars and Northvolt, once hailed as Europe's best prospect for a domestic electric-vehicle (EV) battery champion, formed Novo in 2021 to build a battery factory in Gothenburg on Sweden's west coast.
The carmaker said in October it would need a new partner to keep plans for the factory on track.
On Tuesday, a U.S. Bankruptcy judge approved Northvolt's sale of its stake in battery recycler Hydrovolt to Norwegian aluminium maker Norsk Hydro, for 78 million Norwegian crowns ($6.79 million).
It will need to do the same with the Novo stake.
According to Northvolt's lawyers, discussions for its long-term funding needs are ongoing, and the company plans to raise near-term cash by divesting non-core businesses.
Northvolt is looking to sell its recycling business, Revolt, and its battery systems business, Northvolt Industrial.
SUPPLY OPPORTUNITIES
Northvolt has struggled with persistent quality issues and troubles increasing production of its battery cells, which caused BMW last year to cancel a 2 billion euro contract and other stakeholders to worry if Northvolt would be able to meet its financial and production targets.
While Volvo's takeover of Novo means that Northvolt would lose out on its planned orders to the carmaker, the Swedish companies on Wednesday agreed on a plan to explore potential supply opportunities in North America.
"The framework agreement with Volvo Cars shows that market interest in Northvolt remains strong, it now opens up a path for supply opportunities in North America at Northvolt Six in Montreal," a spokesperson said.
($1 = 0.9615 euros)
(Reporting by Stine Jacobsen and Marie Mannes, editing by Anna Ringstrom and Louise Heavens)
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