Goldman Sachs has to write off nearly 900 million USD after the Swedish battery manufacturer Northvolt filed for Chapter 11 bankruptcy in the US this week.

Just seven months ago, Goldman had issued an optimistic forecast that the value of its stake in Northvolt could increase to six times the original investment by 2024. "While we, like many others, are disappointed, this was a minority stake in highly diversified funds," commented the bank.

Northvolt, founded in 2016, was once considered Europe's great hope in the battle against Asian dominance in battery manufacturing. Supported by investors like Volkswagen and Goldman Sachs, the company raised one billion USD in a Series B funding round in 2019 to build a factory in northern Sweden and drive expansion.

But the ambitious growth plans failed. Northvolt struggled with production problems and rising debts. When filing for bankruptcy on Thursday, the company had only 30 million US dollars in liquid assets left, enough for a week of operation, and debts of 5.8 billion US dollars. CEO Peter Carlsson resigned a day later and warned of a withdrawal of investments in the green transformation.

Goldman Sachs had supported several financing rounds of Northvolt in the past five years. The funds affected include West Street Capital Partners VII and VIII with investments of $407 million and $346 million, as well as the Horizon Environment and Climate Solutions Fund with $116 million. The investment banking business of Goldman Sachs is also affected, as Northvolt owes the bank $4.78 million according to the bankruptcy filing.

Volkswagen, largest shareholder of Northvolt with 21 percent, is also likely to incur significant losses. The car manufacturer is listed as the second largest creditor in the bankruptcy documents with a convertible bond of 355 million US dollars.

Some investors privately criticized that they were pushed too hard by Goldman and other funds to support Northvolt. The insolvency could affect the willingness of further investors to invest in green projects.

Northvolt needs between 1 and 1.2 billion US dollars to exit insolvency in the first quarter of 2024. The company is currently negotiating with new investors and partners. Through the insolvency, Northvolt gains access to 145 million US dollars in cash and 100 million US dollars from Scania, one of its customers.