German startup Next.e.GO, which three years ago announced plans to build an electric car factory in the Bulgarian city of Lovech and signed a memorandum of understanding with the government, has filed for insolvency. The application was submitted by Next.e.GO Mobile SE to the district court of Aachen, where the company is registered.
Next.e.GO Mobile is a wholly-owned subsidiary of Next.e.GO N.V., which was listed on Nasdaq a few months ago. Officially, the company explains its decision with challenges in the electric mobility sector, which also affect other players in the industry. However, people familiar with the matter comment that the problems facing the German startup are purely financial and the bankruptcy is the result of poor management.
Unfavorable market environment
The decision to apply for the opening of insolvency proceedings comes against a backdrop of recent adverse developments and challenges in the electric vehicle (EV) industry, volatility in the capital markets exacerbated by the recent situation surrounding other players in the EV sector, Next.e.GO says in a filing to the stock exchange."Given the unfavorable market environment, the equity-based financing instruments that were secured by the company could not perform to the expected level and pace," it points out.
"The prevailing market conditions along with uncertainty across the EV sector has further significantly hindered the company's ability to secure alternative funding." The company also notes that other affiliates, including Next.e.GO N.V. as the parent company of Next.e.GO Mobile SE, are expected to initiate respective insolvency proceedings in the short term.
The Bulgarian project
Founded in 2015, Next.e.GO announced plans to build an EV factory in Bulgaria in 2021. The then acting economy minister, Kiril Petkov, said the company would invest 140 million euro and open hundreds of jobs, with the number potentially reaching 1,000. According to the memorandum of understanding signed with the government, the company had to receive around 34 million euro in direct cash payment as state aid, which would be disbursed upon completion of certain stages of the project. The factory was supposed to be built on the site of the former Balkan plant in the city of Lovech, which is owned by the Domuschiev brothers.
In the same year, a local subsidiary, Next.e.GO Bulgaria, was registered, in which 50% plus 1 share were held by Next.e.GO Mobile, and the remainder was owned by Advance Properties of the Domuschiev brothers. In 2022, the company increased its capital by 2 million levs (1 million euro) and purchased a 17.4-hectare plot from Balkan in Lovech, reportedly with a loan from the Bulgarian partner. Practically, Next.e.GO Bulgaria has no other obligations or financial problems, a source tells Capital Weekly. The Bulgarian company declined to comment.
Change of location
Shortly after that, however, the German startup decided to change the location and focus on North Macedonia. Next.e.GO did not comment at the time whether it was abandoning the Bulgarian project altogether. In the summer of 2022, North Macedonia's government announced that Next.e.GO planned to build an electric car factory in the city of Tetovo and that the project would be backed with a 130 million euro state aid.
The investment was not officially announced but according to publications in the local media it had to reach 720 million euro and create 900 jobs. Construction was supposed to be completed in 2024. North Macedonia's authorities said they had terminated the state aid agreement due to the company's decision to file for bankruptcy, adding that no subsidies had been disbursed.
German startup Next.e.GO, which three years ago announced plans to build an electric car factory in the Bulgarian city of Lovech and signed a memorandum of understanding with the government, has filed for insolvency. The application was submitted by Next.e.GO Mobile SE to the district court of Aachen, where the company is registered.
Next.e.GO Mobile is a wholly-owned subsidiary of Next.e.GO N.V., which was listed on Nasdaq a few months ago. Officially, the company explains its decision with challenges in the electric mobility sector, which also affect other players in the industry. However, people familiar with the matter comment that the problems facing the German startup are purely financial and the bankruptcy is the result of poor management.
