Volkswagen has substantially written down its 21% stake in Northvolt, a Swedish battery cell manufacturer, following the company’s recent filing for bankruptcy protection in the US, reported Reuters.
The writedown reflects the challenges faced by Northvolt, including missed production targets and a slower-than-expected growth in electric vehicle demand in Europe.
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The writedown at Volkswagen applies throughout the current financial year, although the current value of the stake remains undisclosed.
At the end of 2023, Volkswagen reported the book value of its shareholding in Northvolt at €693m ($726m), nearly a quarter down from the previous year.
This value has reportedly decreased further in 2024.
A source stated that the writedown would not affect Volkswagen’s annual results, as adjustments were made prior to Northvolt’s Chapter 11 filing.
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By GlobalDataVolkswagen anticipates an operating profit margin of 5.6% and a net cash flow of €2bn in its automobile division for 2024.
Volkswagen has not commented on the writedown, maintaining silence on the potential impact of Northvolt’s filing on the company, reported the news agency.
Meanwhile, the Financial Times reported that funds managed by Goldman Sachs, Northvolt’s second-largest shareholder with a 19.2% stake, plan to write off their $900m stake by year-end.
Swedish pension fund AMF, among Northvolt’s top ten shareholders, confirmed regular reviews and adjustments of its unlisted holdings’ values but provided no specifics regarding its Northvolt stake.
An AMF spokesperson stated, “As is obvious to everyone, the value of Northvolt is considerably lower than it was compared to a year ago,” noting an investment of 1.95bn Swedish crowns ($178m) over the years.
After Northvolt filed for bankruptcy in the US, the company announced that CEO Peter Carlsson would step down.
He will, however, continue as a senior advisor and remain on the board. Carlsson has led Northvolt since its founding in 2016.
The company expects its restructuring process to conclude by the first quarter of 2025, during which it will consider new investment proposals from strategic and financial investors, existing lenders, shareholders, and customers.
