Northvolt’s Bankruptcy: A Billion-Dollar Burden for Swedish Taxpayers
The Swedish battery manufacturer Northvolt has filed for bankruptcy, raising concerns that the Swedish state may be forced to cover some of the company’s debts. Northvolt has received extensive support from both the Swedish government and the EU over several years but has never managed to become profitable. The bankruptcy means that several state-issued guarantees may now be called in, potentially resulting in a significant financial burden for taxpayers.
State Guarantees Worth Billions
According to previous reports, the Swedish state, through the National Debt Office (Riksgälden), has issued credit guarantees of up to 15 billion SEK for loans to Northvolt’s battery factory in Skellefteå. These guarantees mean that the state may be required to cover part of the loans if the company fails to repay them. The European Investment Bank (EIB) was one of Northvolt’s largest lenders, and a significant portion of the loans was backed by Swedish taxpayers.
With the bankruptcy filing, there is a substantial risk that these guarantees will now become a reality. This means that the state—and thus Swedish taxpayers—may have to bear part of the losses. The actual cost will depend on how much of the loans have been disbursed and how the bankruptcy proceedings unfold.
Naïve Green Transition?
Northvolt has been a symbol of Sweden’s commitment to green industry and electrification, but the company’s financial struggles raise questions about how tax money is used in such projects. Critics argue that politicians have been overly optimistic, handing out large sums in grants without ensuring a sustainable business model.
A key lesson from Northvolt’s bankruptcy is that the state must be more cautious in how it supports green initiatives. Providing loans instead of grants, and ensuring that companies can stand on their own before receiving extensive state aid, could be a way forward to avoid similar financial setbacks.
What Happens Next?
Bankruptcy administrators will now assess Northvolt’s assets and liabilities, and creditors will demand their money. If Northvolt cannot fully repay its loans, the state will have to fulfill its guarantees. This could result in one of the biggest financial blows to the Swedish government in recent years.
The future of Sweden’s green industry is now uncertain. Can Sweden continue to lead the green transition without risking billion-dollar losses for taxpayers? This is a question that politicians and businesses must take very seriously.
