Northvolt, a Swedish lithium-ion battery manufacturer, announced on Thursday its plans to construct a $5.2 billion gigafactory in Quebec, marking a significant milestone in Canada’s electric vehicle (EV) battery manufacturing landscape. This substantial investment, the largest of its kind in the province, further amplifies Canada’s presence in the global EV revolution.
The inaugural phase of construction for the Northvolt Six factory, located just outside Montreal, is slated to commence later this year with an operational target of 2026. Northvolt is set to contribute $3.2 billion to the project, while both the local and federal governments will each invest $1 billion, revealed Northvolt Co-Founder Paolo Cerruti in an exclusive statement to Reuters.
The first phase of the facility will deliver 30 gigawatt hours (GWh) of production capacity, with ambitious plans to expand to 60 GWh through investments approaching a staggering $9 billion. Cerruti, who will helm the project as CEO of Northvolt North America, affirmed Northvolt’s commitment to fostering a domestic battery industry to counter the supremacy of Asian manufacturers.
Northvolt’s journey to becoming Europe’s premier battery manufacturer has been fueled by over $9 billion in debt and equity raised since 2017, including a recent injection of $1.2 billion from investors that includes the Canada Pension Plan and Ontario Municipal Employees Retirement System.
Cerruti shed light on the extensive deliberation that preceded the selection of Quebec as the factory’s location, stating, “We looked at 70 different sites at the beginning of this process. We were also looking at the United States, but eventually Canada made it for the first factory.” Factors tipping the scales in Canada’s favor included access to sustainable energy sources, a skilled workforce, proximity to vital natural resources, and the favorable disposition of the Canadian government.
The introduction of the $369-billion U.S. Inflation Reduction Act (IRA) last year spurred companies like Northvolt to cast their gaze across the Atlantic, lured by generous subsidies and cost-effective energy options. Cerruti noted that the IRA had caught the industry off guard, prompting Northvolt to establish a site selection team approximately a year ago and expedite the decision-making process in 2023.
With contracts valued at more than $55 billion primarily with European customers, including automotive giants like BMW, Scania, Volkswagen, and Volvo Cars, Northvolt has firmly established itself as a key player in the global EV battery arena. Cerruti also revealed that the company had secured an anchor customer in North America, although specific details remained undisclosed. He emphasized, “This size of investment and project cannot happen if you don’t have an anchor customer.”
Northvolt’s foray into Quebec promises to invigorate Canada’s EV battery manufacturing sector, elevating the country’s stature as a formidable contender in the race towards a greener, electrified future.
