If you have a car, then the battery that helps you start your daily commute bears the same name on it as its tiny “sister” in the wireless headphones you might have in your ear, or the power source for an older generation AirPods. VARTA. The historic German company, founded in 1887 in Elwangen, Baden-Württemberg, has always been one of the leaders in the field and tried to catch up with the electrification train with new technologies, which leading car brands such as Porsche now need.

The dream didn’t last long

In 2017, everything seemed to be going as expected and its entry into the stock market seemed like the most logical move. In August 2021, its share had reached 165 euros. Last Monday it had fallen to 3.50. It was preceded by the administration’s announcement of the transition to a judicial liquidation process, with the aim of avoiding bankruptcy. For shareholders this means they will likely lose everything.

The problems for the once “safe paper” of the stock market did not appear out of nowhere. Already in 2022, the company recorded losses of 200 million euros despite a turnover of 800 million. The reasons were many. Orders from major customers like Apple plummeted. The pandemic caused supply shortages, production delays and a significant loss of profits. A cyberattack in 2023 crippled the business, which is why there are still no secure financial figures for its course in 2023. And competition from much cheaper China was becoming more and more relentless.

The anxiety of the workers

The approximately 4,500 employees now realize that in the globalized world everything can change very quickly and uncertainty about tomorrow can take the place of the former certainty of working in a historic, but innovative company.

Eyes are now on Porsche AG, which owns a piece of the company and needs it to survive, since it produces a specific type of fast-charging battery, which… is planted in the Porsche 911 Carrera GTS hybrid model. The issue is not just economic, since this particular car was to be the proof that the traditional car industry has caught the meaning of the times and looks with optimism to the (electric) future.. There is of course also the industrial patriotism. The bankruptcy of a battery company known all over the world would give new fuel to the discussions about the delay of the German industry in this particular sector, which makes it by all accounts running behind the Chinese.

Liquidity injection required

The hope now is that both Porsche, and the Austrian Troiner group that owns 50.1% of the shares, will put their hands in their pockets to avoid total disaster. There is talk of a first “liquidity injection” of at least 50 million euros.

In any case, what seems inevitable is the adoption of tough measures, such as zeroing of shares in order to convince lenders to write off part of the company’s debts. Of course, there is talk of complete reorganization plans with what this may mean for the production units, but mainly for the number of employees. Plans for the complete or partial transfer of the business to the hands of creditors, in order to avoid its dissolution, sound worryingly in the ears of the latter. What is certain is that the next phase will be far from the image of a solid and reliable business just a few years ago. And in all scenarios shareholders are expected to be left with empty pockets.