Quebec’s hydropower and critical mineral riches were key to saving a multi-billion dollar battery factory being built by Sweden’s Northvolt outside Montreal, after the company filed for U.S. bankruptcy protection late last week.
The C$7 billion ($5.1 billion) Northvolt Six gigafactory, sited in Montérégie in the south of the province, was deemed essential to the future of Northvolt, the company told Canada's National Observer, in an email.
“Quebec was originally chosen based on access to clean energy – hydroelectricity, a pool of qualified and talented individuals, and access to critical minerals” and this hasn’t changed with the US bankruptcy filing, the Northvolt spokesperson wrote.
Parent company Northvolt AB, last Thursday filed a Chapter 11 motion – which staves off creditors while a bankrupt company reorganizes – after a failed bid to secure rescue funding of US$900m that left it with debts of almost US$6 billion and only $30m in available cash, enough to cover a week’s operations.
The Chapter 11 filing casts a shadow over one of the darlings of Europe’s energy transition, though Northvolt North America, as a subsidiary of Northvolt AB, is financed independently from the parent company.
The company’s Canadian operations, as a result, “will continue to operate as usual, outside of the Chapter 11 process,” the spokesperson wrote.
One million batteries a year
Plans for the Northvolt Six plant, which expects to produce enough lithium-ion batteries for one million electric vehicles (EVs), or 60GWh a year when at full capacity, will nonetheless proceed with an adjusted timeline, she said.
“We are aware of the responsibility we have to bring this project to a successful conclusion,” said the Northvolt spokesperson
When Northvolt announced last year it would build the giant battery plant, which would be one of North America’s biggest, the Canadian and Quebec provincial governments were committed to contributing $1 billion each for the first phase of construction.
Northvolt said despite its financial travails, it will not apply for emergency financing from the government.
“We are grateful for the support that Northvolt has received,” said the spokesperson.
“The restructuring period under Chapter 11 will allow Northvolt to gain access to new funding and continue operating normally while it restructures its debt and appropriately scales the business to current customer needs.”
Northvolt's troubles stem from a previously overhyped global EV market that has been softening in recent months, reducing demand for batteries and negatively impacting investor interest, as well as rising competition for Chinese and South Korean manufacturers flooding the market with low-priced technology.
Northvolt's challenges reflect broad challenges in the battery sector, where numerous manufacturing plant projects have struggled due to fragmented supply chains and market uncertainties, said Moe Kabbara, vice president of the Transition Accelerator, a Toronto-based think-tank, in an email to Canada's National Observer.
More than 600 gigawatt-hours of planned battery manufacturing capacity in Europe has recently been canceled, delayed, or downsized, he noted.
“This should serve as a wake-up call as North America positions itself to compete with China's established battery ecosystem,” Kabbara wrote.
Looming trade uncertainties with the U.S. under Donald Trump’s second administration, said Kabbar, could be an opportunity to reap the benefits of deeper North American battery sector integration.
“This will be critical. It would strengthen both countries' ability to compete globally while making our shared auto sector more resilient.”
In the wake of the Chapter 11 filing, Northvolt CEO Peter Carlsson resigned from the role he has held since co-founding the company in 2016. Northvolt said Carlsson would stay on as a senior advisor and member of the board.
Construction progressing as planned
Northvolt has so far signed some $200 million in contracts with Quebec suppliers to build its plant. Construction work has progressed steadily in recent months, said the company spokesperson. Earthworks for the gigafactory are underway, she said, and would be complete by year's-end as planned.
Foundation pouring is slated to start in spring, with design and engineering work continuing on the plant's battery cell production line, cathode active materials plant, and recycling facility.
The Canadian Northvolt gigafactory is one of two in development by the battery-maker around the world; the other is in Germany.
Canada’s Liberal government has made the country’s industrial battery ecosystem — from critical mineral mines through to EV manufacturing — and cornerstone of its energy and industrial policy, chipping in support for Northvolt and a dozen battery companies and automakers some $56 billion in support and tax breaks.
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