The European Union’s pledge to invest in domestic automotive battery production comes too late for Northvolt, once seen as spearheading its battery-electric vehicle strategy.

Despite considerable financial and professional support from Swedish truck maker Scania, Northvolt files for bankruptcy in Sweden, ending Europe's best hope of developing a rival to major Asian BEV battery manufacturers.

The company had already sought U.S. Chapter 11 bankruptcy protection in November as it started to run out of money owing to the suspension of some anticipated battery supply contracts with automakers amid a slowdown in consumer demand for BEVs.

It also struggled with production issues and BMW cancelled a $2 billion order last June because Northvolt failed to deliver on a long-term supply contract for battery cells signed in 2020.

Its debt stood at more than $8 billion across the nine Northvolt entities in the Chapter 11 process at the end of January, documents seen by Reuters news agency reveal.

The bankruptcy is among the biggest in Swedish corporate history and the most high-profile since carmaker Saab Automobile collapsed about a decade ago.

Northvolt had been heralded as the start of a string of gigafactories to be dotted around the continent to help domestic automakers reduce their reliance on battery packs from Asian providers and help them cut production costs to resist rising competition from unfairly subsidized BEVs from Chinese manufacturers.

In a company statement, Northvolt says, “The company was unable to secure the necessary financial conditions to continue in its current form.”

Northvolt's operations in North America and Germany were not filing for bankruptcy in their jurisdictions, the company adds. Its Polish operation was also not included in the bankruptcy filing.

A court-appointed trustee will now oversee the bankruptcy process, which will include the sale of its assets and settling its outstanding obligations as far as possible.