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How harsh is the winter of cleantech discontent?


In recent weeks our glass has been half full, but this narrative is now upended, and the glass appears half empty. For some, it's worse. As our Nordic Green Indices show, the happy funding window was as brief as a Nordic summer. And with an icy winter on the way, the barns were not as full as they needed to be. With food stores (finance) running low, firms are going hungry.


Our feature stories this week all highlight the same issues. Even the biggest, such as Ørsted, need to make do with what’s in the barn. And that means project cancellations, redundancies and a suspended dividend. For smaller firms, such as CAKE, it spells the end. And these are just the ones that make the news. Dozens, or even hundreds more, who are just ideas, or start-ups with a prototype, are facing challenging decisions about whether to continue. This is a tragedy for the founders, but it's also a loss for the Nordics, Europe and the world, which needs climate-smart products and solutions brought forth in abundance. With news out this week that global temperatures have broken records now for 8 months in a row, the thin green line of 1.5°C is fast approaching.


Arguably it needs to be this way - survival of the fittest is the mantra for our Western societies. Mundus Nordic Green doubts that handouts and subsidies are the right path forward. But we believe that politicians could be doing much more to create the right incentives that would enable good companies to be more profitable. That would send signals to the finance industry to pile on investments.


Alas, for many it seems that the winter of discontent may herald the Valley of Death. But some lucky ones, with access to the right funders, will survive. Let's hope that it's survival of the fittest and not just the fattest (on financing).


Sean Williams, Head of Mundus Green Impact

Feature Stories

Ørsted suspends dividend, cuts jobs and exits offshore wind markets

Ørsted's Board of Directors has approved a business plan with a vision for 35-38 GW of installed capacity by 2030, alongside revised financial targets. Despite grappling with challenges in 2023, Ørsted says that it maintains its global leadership in offshore wind, aiming for sustained growth and returns over the next decade. However, substantial impairments and costs from US offshore projects weighed on Ørsted's credit metrics, prompting actions to fortify its balance sheet for long-term resilience.


Implementing changes to mitigate risks, including a comprehensive portfolio review and prioritisation of high-value growth options, Ørsted has ceased projects like Ocean Wind 1 and 2 and is realigning its US offshore strategy and withdrawing from offshore wind markets in Norway, Spain and Portugal. Project cancellations and adjustments are expected to relieve capital and development expenditure burdens, bolstering the company's project portfolio. In a bid to shore up its financial position, Ørsted is suspending dividends, expediting divestments, and targeting cost reductions and operational efficiencies, including staff reductions.


Aligned with the approved business plan, Ørsted updates its strategic ambition, financial targets, and policies, emphasising sustainable growth and value creation. The company plans substantial investments without the need for new equity, financed through various means. Furthermore, Ørsted maintains its commitment to sustainability, setting ambitious targets for carbon reduction and supply chain decarbonisation. In a notable development, following the approval of the business plan, Thomas Thune Andersen, Chair of Ørsted A/S, announces his decision to step down, marking a significant transition in the company's leadership. An investor and analyst update is scheduled to provide comprehensive insights into Ørsted's performance and future trajectory.


Electric motorcycle company CAKE files for bankruptcy

CAKE, the electric vehicle manufacturer, filed for bankruptcy on 1 February, as its attempts to secure additional capital failed. CEO Stefan Ytterborn said that the company's original business model, selling electric motorcycles directly to consumers online, proved unsustainable, leading to adjustments and new attempts to secure funding.


Since its inception, CAKE has relied on venture capital to fuel its rapid growth. The company took in SEK 135 million in 2019, with Creandum and American Headline as anchor investors, and SEK 539 million in 2021 in a round that AMF led, where the company was valued at a SEK 1.7 billion. The plan was to raise another SEK 500 million in a so-called C-round in 2022, to scale up the business. 


But despite its innovative products and ambitious goals, profitability has remained elusive, and the company struggled to achieve financial stability. The recent failure to secure funding from major investors, coupled with declining sales in some markets, has exacerbated CAKE's financial woes. 


"We were convinced that we would get one of the larger investors to join hands with AMF. But that's where the misery started,” said Ytterborn. “It is not one but several circumstances that have caused us to end up in this situation. Climate issues are no longer in focus, we are in a recession. It’s about us, but it’s also about the venture capital ecosystem. At the moment it is completely dead, there are no takers in the later phase CAKE is in.”

Volvo stocks rise on Polestar share sell-off amid electric car challenges

Volvo Cars announced its decision to cease funding Polestar Automotive Holding, handing responsibility for the luxury car brand to Volvo's top shareholder, China's Geely Holding. The news led to a significant surge in Volvo's stock price, up over 30% at market open. The move comes amid criticism from analysts who view Volvo's heavy involvement in Polestar as a drain on its resources, particularly as Polestar struggled to compete in the electric vehicle market, exacerbated by Tesla's price competition.


Polestar, which went public in June 2022, has seen its shares decline by over 83% and missed delivery targets for 2023. Volvo is considering transferring Polestar shares to its shareholders, making Geely a major direct owner in the brand, and Geely has expressed support for this, affirming its commitment to provide operational and financial assistance to Polestar independently. 


Polestar’s core problem has been that it has only been able to deliver a single electric car model, the Polestar 2, which has put the handbrake on sales. A new larger electric SUV – the Polestar 3 was displayed in the autumn of 2022, but major software problems have delayed it until the summer of 2024. A slightly smaller electric SUV, the Polestar 4, was shown last spring, but will only begin to be delivered this summer - almost a year and a half later. 


Until then, more financing is required. Polestar has a plan to achieve positive cash flow by 2025 and recently announced job cuts of 450 people – of which 250 will come from Sweden. Polestar CEO Thomas Ingenlath underlines that Polestar is a growing startup, which needs to raise around SEK 13 billion from additional investors to actually make it profitable around 2025. The goal is then to sell around 160,000 cars per year, which roughly is three times more than Polestar sold in 2023. 


Alarm as Swedish cleantech companies cant find capital for growth

Despite a surge in VC investment, Sweden's green technology sector is sounding an alarm over a critical lack of capital. Magnus Agerström, the CEO of Cleantech Scandinavia, highlights the urgency, stating, "We are facing the biggest transformation ever in the climate technology industry. But the capital market has not caught up." This discrepancy underscores the sector's struggle to secure the substantial funding necessary for its initiatives, with many companies facing significant financial hurdles.


The challenges facing green technology ventures are multifaceted. Climate technology projects are often capital-intensive and carry inherent risks, dissuading traditional investors. Agerström notes that such projects are "six times more capital-intensive than existing technology," further complicating the investment landscape. Stina Lantz, the CEO of Sisp, echoes these concerns, warning that Sweden risks losing an entire generation of green technology companies due to the funding crisis.


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