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Lyten hoarded cash to snatch up Northvolt’s assets after the European battery maker failed.

Until last year, things looked pretty good for Northvolt, a Sweden-based battery startup that Europeans saw as their answer to Tesla. The company had vacuumed up $13 billion in capital from largely blue-chip investors and taken $55 billion in battery orders from major carmakers like BMW, Volkswagen and Volvo. Northvolt executives spoke of going public at a valuation of $20 billion.

The collapse of the 5,000-person company came quickly, amounting to one of the largest tech failures ever. In March, Northvolt declared bankruptcy, saying it had burned through all but $30 million in cash. Its failure was mostly its own doing, but it coincided with a big downturn in the battery industry. No buyer emerged for the company.

Earlier this month, Northvolt’s bankruptcy trustee announced that he had found a surprise new owner for most of Northvolt’s assets: Lyten, a tiny, 250-employee developer of next-generation lithium-sulfur batteries.

By almost every measure, it is an improbable marriage: Lyten has raised $670 million since it was founded a decade ago, less than half the $1.6 billion lost by VW and below the $896 million hit taken by Goldman Sachs. Lyten makes around 100 batteries a week in San Jose, Calif.; at the Northvolt plant it’s taking over in Skellefteå, Sweden, it will start out manufacturing 30,000 batteries a week.

The deal turns a niche battery producer into an industry giant, a bet-the-company moment for Lyten CEO Dan Cook, who champions scale as a formula for survival. He hoarded cash, held off paying bills and cut staff to seize the moment when others in the struggling industry wouldn’t step up to buy Northvolt.

Lyten Sees an Opportunity

This story is based on interviews with Keith Norman, Lyten’s chief marketing officer, and four other people familiar with the situation.

Two former Tesla executives, Peter Carlsson and Paolo Cerruti, launched Northvolt in 2017. They promoted it as sort of a European Tesla, and said the startup would compete with China’s big suppliers. The two men went on a capital expenditure tear, announcing and building plants in Poland, Germany and Sweden, among other countries. They hinted repeatedly that the U.S. was on the drawing board, too.

Carlsson and Cerruti discovered, however, that battery manufacturing is rife with pitfalls. They committed numerous errors, for instance, in ordering battery-manufacturing equipment from Wuxi Lead, one of China’s premier manufacturers. Things went downhill from there. In June 2024, BMW canceled its $2 billion contract with Northvolt because deliveries were late and their quality inferior. Most of Northvolt’s other customers followed BMW out the door.

Carlsson began to jettison assets. In one of his first moves, he shut down Cuberg, the company’s lithium-metal battery subsidiary in San Leandro, Calif., in August 2024—just three years after he’d acquired it.

The shutdown launched Lyten’s ambitious takeover effort. Until then, Lyten, founded in 2015, was a specialized developer of a battery chemistry that combines lithium with sulfur, eliminating metals such as nickel, cobalt and iron that everyone else was using in their commercial batteries.

Cook, also the startup’s co-founder, was an anomaly in the industry. While an engineer, he was not a battery expert. He worked at GM and Steve Jobs’ NeXT before stints at private equity firms Cerberus Capital Management and Tenex Capital Management, where he helped acquire, integrate and run tech and industrial companies.

In an interview several years ago, Cook emphasized the virtue of businesses growing as large as they could. “When you work in the industrial world, one truth that hits you square in the face is the need for scale,” he said. “For cleantech to deliver on its promise, it must have a pathway to deliver at a global scale.”

Sulfur is light and packs a lot of energy in a battery, making it attractive to the makers and buyers of satellites and drones. Lyten aspired to become a major battery supplier to the fast-growing drone industry, finding initial customers in combat drones for Ukraine, and was planning a gigafactory in Reno, Nev., to boost production.

That’s when Northvolt announced it was closing its Cuberg plant. The two companies’ batteries shared one important factor—they both used a lithium-metal anode. Northvolt seemed prepared to sell the plant in pieces. It was so eager to dump the plant and so short on cash that it stiffed Cuberg employees on their final paycheck, instructing the subsidiary’s managers to use cash from the sale of equipment to pay the salaries.

Cook looked at the same plant, replete with $25 million in almost new lithium-metal production equipment, and saw the potential for a massive head start in scaling up drone batteries. In November, he acquired the plant’s equipment, along with a lease on the building, for an undisclosed price.

That purchase—as big as it was compared with Lyten’s size—got Cook looking at an even bigger piece of the Northvolt empire: its stationary battery storage assembly factory in Gdansk, Poland. Northvolt had invested $200 million in the plant’s equipment, which produced conventional nickel-manganese-cobalt battery systems as backups for factories and the power grid.

The drone battery industry is relatively small, and Lyten’s batteries weren’t suited—at least not yet—for electric vehicles or stationary storage, the two big segments in the industry. The Poland plant could change all that for Lyten, immediately making it a big player in the stationary battery industry. One big risk was that Lyton had no experience with the NMC battery chemistry used at the plant.

The negotiations with Northvolt seemed to be going relatively fast: By early March, the companies were nearly ready to sign a deal. But then, on March 14, Northvolt declared bankruptcy.

Lyten Gets Creative

Now the deal was in danger: Though the Poland plant was technically a separate entity and not part of Northvolt’s bankruptcy, in practice it was very much beholden to its Swedish parent. Northvolt was its sole customer and had shut off payments to the factory. The Polish plant had its own monthly bills to pay, including to workers and suppliers, as well as to the Polish government for assistance it had provided. If any of these parties demanded payment, they could force the plant to declare bankruptcy.

If it did, “the deal would be off,” Norman said. “We would have to go through an entirely different process to attempt to acquire the asset, which we absolutely wanted.”

So, he said, “we had to go get creative.” In a highly unusual arrangement, Lyten decided to guarantee payment of the Poland plant’s bills. The potential cost was something less than $50 million, he said.

But Lyten didn’t have $50 million in cash. “So we started to take some actions internally to sort of preserve our cash flows,” Norman said. In part, this meant “slowing down on some of the capital projects that we had in motion, as well as slowing down on some of our vendor payments.”

At Lyten’s San Jose headquarters, Cook and Norman’s actions triggered confusion and fear. Cook, who was notorious in the company for keeping its finances to himself, had told almost no one at Lyten about the potential deal.

Now engineers and Lyten managers working on the company’s projects began hearing from its vendors about unpaid invoices.

The complaints reached the desk of Celina Mikolajczak, Lyten’s chief battery technology officer, whose staff had contracted the work. She asked Cook and other executives what was going on. She heard back that the invoices were being processed.

Diverting Cash

But many Lyten employees worried that the startup might be on the verge of insolvency. When Mikolajczak asked Cook, he assured her that the company had cash.

Despite Cook’s assurances, vendor complaints continued, and Mikolajczak began holding weekly meetings about the unpaid bills, which her staff calculated topped $10 million, according to people familiar with the situation. She would forward the bills up the chain of command and wait for an answer.

Continuing the negotiations, Cook approved cash payments from Lyten’s accounts to the Gdansk plants to cover salaries and other bills. He called these payments a loan so that Lyten could get repaid if the deal went south and someone else purchased the plant, Norman said.

The talks dragged on through the second quarter as officials in charge of Northvolt’s bankruptcy got up to speed about the months of talks. Around June, they finally signed off on it. The deal, closely resembling the one that was almost ready for signing in March, was announced July 1.

Three weeks later, Mikolajczak was fired, along with 25 of her staff, including some of the lieutenants who had complained about the unpaid bills. Lyten fired 20 other Lyten employees as well. The reason, Lyten’s senior management said, was that the company was reorganizing. It would be a very different business.

The blockbuster announcement came on Aug. 7, when Lyten announced its massively larger acquisition of Northvolt assets—the flagship plant in Skellefteå, a new R&D lab and a plant in Germany.

There is much skepticism in the industry that Lyten will manage to marshal the skill and cash required to make the Northvolt plants successful. Prior to resigning last November, Carlsson had been attempting to raise $1.3 billion that he said was necessary to tide Northvolt over into 2027 and allow it to reorganize. When he couldn’t raise that much, he scaled back the amount to $300 million. He couldn’t raise that, either.

Norman said Lyten is in an entirely different circumstance, with a much smaller workforce and a conservative plan for ramping up production. In July, the company announced it had raised $200 million, which Norman said it would spend on the U.S. production expansions, paying off the U.S. vendor bills, and running the Poland and Swedish plants. He said it was raising more, though he wouldn’t say how much or from what source.

“We have acquired a lot more manufacturing capacity, much faster than we expected, and we’re gonna take advantage of that,” he said.