Swedish battery maker Northvolt filed for bankruptcy last week, threatening EU ambitions for the electric vehicle sector and leaving a potential €300 million budget gap.

The company, which filed for Chapter 11 bankruptcy protection, had just $30 million (€28.81m) left in cash. Its $5.84 billion debt includes loans owed to the EU, which had backed Northvolt’s projects.

EU Faces Financial Fallout

The European Commission confirmed that Northvolt’s outstanding debt to the EU amounts to $313 million, under the European Fund for Strategic Investments. The EU had supported loans from the European Investment Bank (EIB) for Northvolt’s battery factory.

Although the European Battery Alliance has achieved some success, with 167 Gigawatt hours of manufacturing capacity in 2023, Northvolt’s collapse leaves creditors vying for repayment.

The EIB is working on a solution to safeguard EU interests, but any shortfall could burden the EU budget, which is primarily funded by member states. The 2024 EU budget draft sets aside €800 million for unforeseen needs.