Québec pulls out of Canadian Northvolt factory

With US-based Lyten, Northvolt has found a buyer for its European business. A restart of operations is already planned. An agreement was also sought for the plant announced in 2023 in the Québec municipalities of Saint-Basile-le-Grand and McMasterville – but this has not materialised. With the latest developments, that outcome looks even less likely: the Québec government has declared the partnership for the factory, dubbed Northvolt Six, a failure.

“Today we are putting an end to any financing of Northvolt in Quebec,” said Québec’s economy minister Christine Fréchette. “The company has not presented a plan that satisfies Québec’s interests. We intend to exercise our right to recover the maximum of our investment. This adventure has proven to be unsuccessful, and we are obviously, disappointed.”

According to Canadian Press, the failure to reach an agreement between Lyten and the provincial government was also due to “disproportionate demands” made by the US firm for taking over Northvolt Six. A spokesperson for Fréchette said Lyten had asked for additional subsidies, but the government wanted to avoid risking further taxpayer losses.

No update on German factory

The latest developments in Canada also cast a shadow over ongoing talks around Northvolt Drei, the planned factory in Schleswig-Holstein, Germany. A spokesperson for the state’s economy ministry told TAZ that negotiations remained confidential and it was too early for comment.

Northvolt had announced in 2023 that it would invest seven billion Canadian dollars (around 4.9 billion euros at the time) in Québec for the first construction phase, which included a 30 GWh cell factory and a cathode material production line. Further investments were expected to expand the site to 60 GWh per year. Northvolt cited clean hydropower as one reason for choosing the location, some 25 kilometres east of Montreal.

As is often the case with such large-scale projects, however, government incentives likely played a decisive role. At the time, Canada was keen to build a domestic EV industry with its own battery supply chain, and provinces competed fiercely for projects. Ontario, for example, attracted several large investments, including Volkswagen’s large-scale battery plant in St. Thomas. From the outset, Northvolt said it had strong support from the Government of Canada and the Government of Québec.

Québec even changed its own regulations to exempt the battery plant from a full environmental review. Expecting up to 3,000 new jobs in the region, the province invested CAD 510 million (314 million euros) – CAD 240 million (148 million euros) as a guaranteed loan for the land purchase, and CAD 270 million (166 million euros) as equity in Northvolt Batteries North America.

Fréchette has now confirmed that Québec has written off the CAD 270 million investment. The government still aims to recover the loan: according to Canadian media, Québec has filed a court application this week to claim almost CAD 200 million from frozen Northvolt accounts and is seeking permission to sell or reclaim the land.

Northvolt Batteries North America stressed in a statement that it was not affected by the insolvency of the Swedish parent company and still had “substantial resources to resume the project.” The company added: “While we acknowledge the government of Quebec’s decision to close this chapter, we remain committed to ensuring a smooth transition and to supporting our employees and partners throughout this difficult period.”

thecanadianpressnews.ca, cbc.ca

This article was first published by Sebastian Schaal for electrive’s German edition.