Swedish lithium-ion battery producer, Northvolt, has announced its plans to establish a $5.2 billion gigafactory in Quebec, sparking off largest investment in the Canadian city, and the latest in electric vehicle battery manufacturing capacity in Canada.
Northvolt’s Co-Founder, Paolo Cerruti, explained that the company will invest $3.2 billion of the $5.2 billion total, while the local and federal government contribute $1 billion each. The first phase of the construction of the factory, named Northvolt Six, will begin this year outside Montreal. The factory is expected to be operational by 2026.
Cerruti, who is to lead the project as CEO of Northvolt North America, continued that the first phase will provide 30 gigawatt hours (GWh) of production capacity, before eventually expanding to 60 GWh with investments approaching $9 billion.
Northvolt has already established several European factories, and is among the few players building a domestic battery industry to rival Asian manufacturers who currently dominate the market.
The company has a vision of becoming Europe’s largest battery manufacturer, but has incurred over $9 billion in debt and equity from investors since 2017. Despite that, Northvolt has managed to attain over $55 billion worth of contracts with customers including BMW, Scania, VW, and Volvo Cars.
Speaking on why Canada was chosen, Cerruti noted that the availability of sustainable energy, access to skilled workers, proximity to natural resources and the attitude of the government were among the reasons “Canada made it for the first factory”, and was chosen over the US.
The US passed a $369-billion Inflation Reduction Act (IRA) in 2022, has caused Northvolt and other companies to seek countries across the Atlantic that provide attractive subsidies and cheaper sources of energy.
“IRA took the industry by surprise,” Cerruti said, adding Northvolt had decided to put together a site selection team around a year ago, accelerating the process earlier in 2023.
Cerruti said the company had also secured an anchor customer in North America, stating that an investment of this size could not have happened without an anchor customer.