Quebec and Ottawa are not content with financing Northvolt to the tune of 2.7 billion to build its mega-factory on the South Shore of Montreal. They agree to subsidize the possible production of the complex to the tune of 4.6 billion – a very common mechanism in the United States.
This facet of the agreement, which constitutes a direct response to the American Inflation Reduction Act (IRA), was added, on Thursday, to the details which had previously been revealed by La Presse. The details of the financial package were presented during a press conference attended by Prime Ministers François Legault (Quebec) and Justin Trudeau (Canada) and the co-founder of Northvolt, Paolo Cerruti.
For the Quebec state, which would absorb a third of the subsidy bill, this would increase the aid offered to Northvolt for its project estimated at 7 billion to approximately 3 billion. The Legault government also grants 1.37 billion in loans and equity investments in the Swedish start-up.
To try to calm things down, both levels of government affirm that production subsidies are conditional.
“Operational support will only be provided as long as the incentives provided for in the United States IRA remain in force,” specifies the joint press release from the Legault and Trudeau governments.
Estimated at 7 billion, the Northvolt project is presented as the largest private investment in the history of Quebec. In particular, lithium-ion battery cells will be manufactured there, the last step before assembly. The Legault government was still trying to attract a company in this niche to Quebec in order to complete the battery manufacturing ecosystem.
According to our information, California was also trying to convince the company based in Stockholm to establish itself there. The IRA is a law passed by the Biden administration. It has a budget of US$370 billion to subsidize projects aimed at combating climate change. Anything related to the production of batteries for electric vehicles is eligible for assistance. This visibly forced Quebec and Ottawa to react.
If governments emphasize the IRA, Mr. Cerruti did not cite the generosity of the American program. This former senior Tesla executive instead spoke of “renewable energy”, access to “raw materials” as well as a “world-class” talent pool.
“The demand for batteries is constantly increasing, as is the need for sustainable and circular manufacturing solutions,” he says.
The Northvolt complex, details of which have already been revealed by La Presse, will be built on land that formerly housed the Canadian Industries Limited (CIL) explosives factory. The location straddles the municipalities of McMasterville and Saint-Basile-le-Grand. Battery cells and cathode materials – the positive pole of a lithium-ion battery – will be manufactured there, in addition to recycling.
More than 3,000 people should be able to work there eventually. The first phase of the project is expected to have a capacity of 30 gigawatt hours, which is expected to power around 500,000 electric vehicles.
Year of foundation: 2015
Headquarters: Stockholm
Products: Battery materials, energy storage systems and charging infrastructure
Workforce: More than 4000 people
Customers and partners: Volkswagen, BMW, Volvo, Polestar, Scania