Volkswagen the automaker has been Northvolt’s top shareholder, and has significantly written down its 21% stake in the Swedish battery cells maker that filed for bankruptcy protection in the U.S. last week, two people familiar with the matter said. Volkswagen bet big on European-made batteries a few years ago with two massive investments in Northvolt, the Swedish manufacturer. Now Volkswagen’s €1.4 billion stake in Northvolt is worth less than half that,
The write-downs from Volkswagen’s investment in battery maker occurred throughout the current fiscal year as the situation at deteriorated. Several of Northvolt’s top shareholders have been cutting or reviewing the value of their holdings in the firm, which has kept missing production targets as an expected boom in electric vehicle demand has failed to materialize in Europe.
Northvolt’s bankruptcy
Its unclear what Volkswagen’s current stake is worth now, though it’s unlikely to have risen given the battery manufacturer’s decision to file for Chapter 11 bankruptcy last week. Northvolt fought to avoid bankruptcy by laying off 1,600 employees in September and selling assets in November from its acquisition of Cuberg. The company was reportedly burning through $100 million a month, according to Swedish media.
Volkswagen’s Northvolt stake writedown
The writedowns at Volkswagen were done throughout the current financial year, the people said, without giving the Northvolt stake’s current value.
At the end of 2023, Volkswagen reported the book value of its shareholding in the Swedish firm Northvolt at 693 million euros ($726 million). This stake was down nearly a quarter from a year earlier.
That value dropped dramatically over the course of 2024, the people said. They declined to be identified because the information is confidential.
Volkswagen’s annual results
One of the people said the writedowns would have no impact on Volkswagen’s annual results, pointing to the fact that writedowns on the carmaker’s Northvolt stake had already been made prior to the Chapter 11 filings.
Volkswagen expects an operating profit margin of 5.6% and net cash flow in the automobile division of 2 billion euros in 2024.
Volkswagen declined to comment on the writedowns of stakes, reiterating that it would not make any statements on the impact Northvolt’s filing will have on the company.
Northvolt financial troubles
There was a report that funds managed by Goldman Sachs, Northvolt’s second-largest shareholder with a 19.2% stake, would write off their $900 million stake in Northvolt to zero by year-end, citing letters to investors.
Swedish pension fund AMF, also among Northvolt’s top 10 shareholders, said it was regularly reviewing and adjusting the values of its unlisted holdings, but offered no details when asked about its Northvolt stake.
Scottish money manager Baillie Gifford, Northvolt’s sixth-largest shareholder with a 4.8% stake according to its annual report, valued its investment in the company at around 20 million pounds ($25 million) at end of September, down from 375 million at the end of March.
Will Northvolt’s bankruptcy affect Volkswagen?
Volkswagen’s large investment in Northvolt was once seen as a key part of its strategy to dominate the EV market with European-made batteries. The significantly underperformence due to Northvolt’s financial difficulties, including a costly bankruptcy filing has lead to stake cutting by Volkswagen. Volkswagen has already accounted for these writedowns and does not expect a direct impact on its overall financial performance for the year.
Stock update
Volkswagen stock closed at 82.40 EUR up 0.73%. Overall on Monday, the Dow Jones Industrial Average rallied 1%, hitting an all-time high, while the S&P 500 and the Nasdaq composite rose 0.3% each.
