Sweden’s Northvolt picks Quebec for new multibillion-dollar EV battery factory

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Northvolt AB, a supplier of electric-vehicle batteries to Volkswagen and BMW, has picked Quebec to host a new multibillion-dollar factory as the Swedish manufacturer pushes into North America.

Executives with the Stockholm-based company will join political leaders from the Quebec and federal governments for a formal announcement Thursday in Montreal to detail their plans, according to two sources briefed on the event. The Globe and Mail is not naming the people because they were not authorized to discuss the information.

Northvolt has been scouting sites in North America for an EV battery cell production facility, and chose Saint-Basile-le-Grand in the Richelieu Valley for its project, which is valued at an estimated $7-billion. The factory’s main site would be on land formerly occupied by Canadian Industries Ltd., a maker of chemicals and explosives.

Quebec is trying to make the province a hub for EV battery development, and it is luring companies with its low-carbon hydroelectricity and financial backing in tandem with the federal government. Premier François Legault and his cabinet colleagues have characterized the effort as a new industrial revolution, with capital investment sums the province hasn’t seen since Hydro-Québec undertook major dam projects in the 1950s and 1960s.

“This is big,” Quebec Economy Minister Pierre Fitzgibbon told Radio-Canada earlier this month. Northvolt’s project would be the largest private-sector investment ever made in Quebec, he said. He did not specify the sum being invested.

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Northvolt spokesman Anders Thor declined to comment Tuesday. A spokesman for Mr. Fitzgibbon also declined to comment.

Quebec has been vying for the plant as Canada seeks to compete with a U.S. clean-tech industry that has been turbocharged over the past year by incentives that are part of President Joe Biden’s Inflation Reduction Act. That legislation includes US$369-billion in funding for green energy and related technology, as well as EVs and energy efficiency measures. Ottawa and provincial governments have responded with billions of dollars in public funding to lure battery makers and suppliers into building plants in Quebec and Ontario.

The federal and Ontario governments announced a deal in April to provide Volkswagen with up to $13.2-billion in subsidies for production support after the company builds a battery plant in St. Thomas, Ont. In June, Stellantis NV and LG Energy Solution Ltd. reached a deal with those governments for as much as $15-billion in subsidies to restart construction on their EV battery factory in Windsor, Ont.

In Quebec, General Motors Co. is partnering with South Korean battery material maker Posco Chemical Co. Ltd. on a new cathode factory in Bécancour, Que. And Ford Motor Co. announced last month that it’s working with South Korea’s EcoProBM and SK On Co. Ltd. on a $1.2-billion plant that would produce EV battery materials in that same city, backed by $644-million in public funding.

Quebec’s decision to open the taps for battery companies is not universally supported. At a lunch event last week with the Chamber of Commerce of Metropolitan Montreal, National Bank chief executive Laurent Ferreira said he’s “not a big fan” of using subsidies to attract foreign enterprise to Canada when the country could prioritize support for local business instead.

“When we give subsidies to foreign companies, they go directly into the pockets of foreign shareholders who are mainly not Canadian,” Mr. Ferreira told Radio-Canada when asked to expand on his earlier comments. “I have my doubts about this model over the long run in terms of wealth creation.”

Northvolt currently produces batteries for transport and energy storage at a gigafactory in northern Sweden. It emphasizes sustainable production, with the plant powered by emissions-free electricity. It has set a goal to achieve 150 gigawatt hours of annual production capacity by 2030, with a focus on keeping a small carbon footprint through regional sourcing of materials and recycling.

The company secured new investments from three Canadian pension funds last month, which joined U.S. asset manager BlackRock Inc. in a US$1.2-billion financing. The transaction saw the Investment Management Corp. of Ontario (IMCO), Canada Pension Plan Investment Board and Ontario Municipal Employees Retirement System, along with BlackRock, enlarge a convertible debt program to US$2.3-billion.

Northvolt’s ownership group includes Volkswagen AG, BMW and Goldman Sachs, and the company is reportedly considering an initial public offering. It has signed US$55-billion in supply deals with such European companies as Volkswagen, BMW, Fluence Energy, Scania AB, Volvo Cars and Polestar.