It will take a little longer than expected for Quebec and Ottawa to recover the total amount of production subsidies of 4.6 billion granted to Northvolt for the construction of its battery cell mega-factory in Montérégie.
In an analysis released Friday, the Parliamentary Budget Officer (PBO) estimates the break-even point at 11 years. By confirming the arrival of the Swedish company in Quebec last September, the two levels of government dangled a horizon oscillating between five and nine years.
“This estimate excludes all nodes in the electric vehicle supply chain except cell manufacturing,” the taxpayer watchdog writes, in its 25-page report.
The PBO’s analysis also looks at government assistance granted to Volkswagen and Stellantis for their projects in Ontario.
How can we explain the discrepancy between government calculations and those of the PBO? Yves Giroux explains that the method of the Federal Ministry of Innovation, Science and Economic Development expects “full production” at the Northvolt Quebec plant as soon as it comes into service, around 2026.
Mr. Giroux’s team is less optimistic.
“Our slightly longer break-even point reflects the lagged production profile for estimating annual revenues,” writes the PBO.
In addition to subsidizing the production of the Northvolt complex – a decision to respond to the Biden administration’s Inflation Reduction Act (IRA) – the Legault and Trudeau governments are also financing its construction.
Northvolt will be established on the former Canadian Industries Limited (CIL) explosives site, which straddles the municipalities of McMasterville and Saint-Basile-le-Grand, in the southern suburbs of Montreal. The land is 170 hectares in size – approximately 130 football fields.
The first phase of the complex is expected to require nearly 200 megawatts of power, or about half that of an aluminum smelter. In principle, work should begin by the end of the year.
