Swedish manufacturer Northvolt AB is close to a deal to build an electric-vehicle battery plant near Montreal, a project that’s expected to be worth about $7 billion, according to people familiar with the matter.
The Canadian and Quebec governments are preparing to give financial aid to Northvolt that may be worth billions, following a similar agreement with Volkswagen AG to build an EV battery plant in Ontario, the people said. An announcement is likely to be made in the coming weeks, though negotiators are still working on final details, they said, speaking on condition they not be identified because the matter is private.
A deal with Northvolt would underscore Prime Minister Justin Trudeau’s ambitions for Canada to capture a sizable piece of the North American electric-vehicle supply chain, at a huge cost to the public purse. Trudeau’s government, and the government of Ontario, have pledged more than $14 billion to Volkswagen for its proposed factory in St. Thomas, Ontario.
They’re also in talks with Stellantis NV on a EV battery plant in the city of Windsor, Ontario, across the border from Detroit.
The amount of government money at stake is large because Canadian officials are trying to match the incentives companies would receive under the Inflation Reduction Act if they built their manufacturing facilities in the U.S. The U.S. law, signed by President Joe Biden last year, offers ongoing subsidies for the production of electric vehicle batteries, not simply the cost of constructing new plants.
The Northvolt project — to be built in Saint-Basile-le-Grand, about 25 kilometers east of Montreal — is to include a cathode factory, a battery cell assembly line and a recycling facility, the people said. If it is built to plan, it would be one of the largest private-sector investments ever in Quebec, Canada’s second most-populous province.
By choosing Quebec, Northvolt, which says its goal is to build the “world’s greenest battery,” will benefit from the province’s low-cost and clean hydroelectric power.
“Northvolt is currently doing a site study in North America, analyzing multiple possible locations in the U.S. and Canada. This process is still ongoing, and no final investment decision has been made,” Northvolt spokesperson Anders Thor said by email.
Stockholm-based Northvolt, founded by former Tesla Inc. executives in 2016, has a primary manufacturing site in Skelleftea, Sweden, and two other factories in the works in Europe. The company has partnerships with Volvo Group, BMW and Volkswagen and says it has more than US$55 billion in contracts.
Quebec has put a lot of effort into creating a hub for electric vehicle battery manufacturing. General Motors Co. and Posco Future M Co. have secured half of the financing for a proposed $600 million cathode plant in the city of Becancour from the provincial and federal governments. Ford Motor Co. and Germany’s BASF SE have also expressed interest in investing in the region.