Christinne Muschi/The Canadian Press
Quebec is pulling the plug on its support for a battery cell megafactory championed by Sweden’s Northvolt AB, crushing hopes for what was supposed to be the biggest private sector project in the province’s history.
“Today, we are ending our funding of Northvolt in Quebec,” the province’s Economy Minister, Christine Frechette, said in a news release Tuesday. “As the company has not presented a satisfactory plan with respect to Quebec’s interests, we are asserting our rights in order to recover as much of our investment as possible.”
Premier François Legault’s government was not able to strike a deal with Silicon Valley startup Lyten Inc. to carry on the project after Northvolt declared bankruptcy earlier this year. The government said it will now analyze what to do with a 352-megawatt volume of energy that was set aside for the venture.
Lyten, an American developer of lithium-sulfur batteries announced in August that it would buy the entirety of Northvolt’s remaining assets in Europe. The company also said it was committed to pursuing the acquisition of Northvolt Six, the site where Northvolt had planned to build a giant battery cell factory in the greater Montreal area, with financial backing from the Quebec and federal governments.
U.S. startup says it wants to take over Northvolt’s site for future battery factory in Quebec
Quebec government officials met with company executives in recent weeks. Lyten asked the province to commit additional funds and wanted more time to get the project going – terms that Quebec was unwilling to accept, said Catherine Pelletier, a spokesperson for the minister.
At $7-billion, Northvolt Six had been trumpeted as the largest private-sector investment in Quebec history when it was announced two years ago. The project was a key pillar in Mr. Legault’s industrial strategy to make the province a global hub for electric vehicle battery production and development.
The strategy has come under significant fire from opposition parties and critics for its failures in recent months, not only because Northvolt could not deliver on its ambitions, but also because of the insolvency of local bus maker Lion Electric. Both companies benefited from government financing.
Ms. Frechette said Tuesday that the government remains convinced that battery manufacturing has a bright future in the province. She said that’s particularly true in Bécancour, across from Trois-Rivières, where companies such as General Motors have made major investments and continue to pursue projects.
Still, pursuing this industrial dream has come at a cost.
Swedish EV battery maker Northvolt files for bankruptcy, putting Quebec plant plans in doubt
Quebec has lost the $270-million investment it made in the Northvolt parent company. It also lent the battery maker $240-million to help it buy land for the factory, a loan secured by the property as collateral.
The federal government committed up to $1.34-billion to help Northvolt build the first phase of the plant but hasn’t yet disbursed any funds. Major pension funds in Canada were also left exposed.
Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System, Investment Management Corp. of Ontario and Caisse de dépôt et placement du Québec all participated in US$2.3-billion in convertible debt financings for Northvolt, joining major automakers and financial institutions to support the company when its future looked bright. At least three of the four organizations have taken writedowns on their investments.
Northvolt was once seen as the future of electric vehicle battery-making in Europe. But it ran out of money last year after a wave of problems that started when BMW AG cancelled a US$2-billion order in June, after Northvolt failed to deliver on a long-term contract.