Quebec government ends funding for Northvolt battery project

The Quebec government has walked away from Northvolt AB’s Canadian electric vehicle battery plant, closing the chapter on a high-profile project derailed by the company’s bankruptcy.

“Today, we are ending our funding of Northvolt in Quebec,” Economy Minister Christine Frechette said in a news release. “As the company has not presented a satisfactory plan with regard to Quebec’s interests, we are asserting our rights in order to recover as much of our investment as possible. This venture has proved unsuccessful, and we are obviously disappointed.”

In August, Lyten Inc., a California startup that develops lithium-sulfur batteries, agreed to acquire all of Northvolt’s remaining European assets. No financial details were released, but the American purchaser said then that it was buying the assets at a “significant discount” to their estimated value of roughly $5 billion.

Lyten had showed interest in the Canadian project, which was estimated to cost over $5 billion to build, but the Quebec government was cool to the possible acquisition. Northvolt’s collapse came at a high political cost for the governing party, the Coalition Avenir Quebec.

“This decision is deeply regrettable for Northvolt North America, particularly given the significant efforts already made — and still ongoing — to identify a buyer,” Northvolt’s Canadian subsidiary said in an emailed statement. “We wish to underscore that Northvolt North America is not in bankruptcy and retains substantial resources to relaunch the project.”

Quebec has already lost C$270 million ($196 million) on its investment in Northvolt, but still has a senior secured loan tied to the land acquired to build the battery plant near Montreal, which totals C$260 million with interest and fees, according to Frechette’s office. Ending its commitment will also free up 352 megawatts of power to be used for other industrial projects in the province, according to the news release.

Canadian pension funds also lost money from Northvolt’s bankruptcy. The Ontario Municipal Employees Retirement System booked a loss on its $325 million investment, while the Caisse de Depot et Placement du Quebec disclosed that it wrote down its $150 million investment to zero. Investment Management Corp. of Ontario also marked down its investment, which was $400 million.

To help attract Northvolt in 2023, the Canadian and Quebec governments pledged to match subsidies available for US manufacturing under the Inflation Reduction Act. The support during construction as well as battery production could have amounted to more than $5 billion.

(By Mathieu Dion)