Sweden's Northvolt to build $5.1 billion EV battery plant in Canada

Sweden-based battery cell maker Northvolt committed $5.1 billion last week to build its first North American battery manufacturing site in Quebec.

Company CEO Peter Carlsson joined Canadian Prime Minister Justin Trudeau, Quebec Premier Francois Legault and other top government officials on Thursday to confirm a site just east of Montreal straddling McMasterville and Saint-Basile-le-Grand, as the location of the widely rumored, vertically integrated plant.

It won out over stiff competition, Carlsson told reporters.

“We were looking at almost every state in [the] United States, but we couldn’t help glancing at Quebec. It was like, we found the grid, we found the raw materials supply, we found a really, really attractive city in Montreal.”

The company did not point directly to which automakers the new cell plant will supply, but Carlsson said Northvolt has booked $55 billion in global orders from Audi, BMW, Porsche, Volvo and truck maker Scania.

“It’s also those customers that we’re also bringing from Europe over here as we’re establishing this facility in Montreal.”

Northvolt co-founder Paolo Cerruti added that the company’s “anchor customer” for the plant is likely to be disclosed in “the coming weeks.”

The Northvolt campus, which will include a cell production plant and precursor steps such as cathode active material production and battery recycling at adjacent facilities, will cover 420 acres. In its first phase, it will have capacity to produce 30 GWh of battery cells each year, while an expected expansion will double output to 60 GWh annually, enough to power roughly 1 million electric vehicles.

Government support

The federal and Quebec governments said the investment marks a new high-water mark for private projects in the province. It also caps a string of battery supply chain spending in Quebec over the past 18 months, adding cell production to a long list of mining and material processing sites planned, under construction or already in production across the province.

Both the federal and Quebec governments pledged considerable upfront and longer-term tax incentive spending to secure the project.

Ottawa committed Canadian $1.34 billion toward capital expenditures, while Quebec will spend Canadian $1.37 billion.

Canada's dollar is worth 73 cents in U.S. currency at current exchange rates.

Francois-Philippe Champagne, Canada’s minister of innovation, science and industry said the announcement of the plant is the “culmination of our desire to attract the world’s biggest players.”

“Northvolt’s decision to pick Quebec to establish their project, amongst more than 70 sites, is a strong vote of confidence in the EV ecosystem we are currently building in Quebec, and all around Canada,” he said in a release.

“It also speaks volumes of our country’s competitiveness when it comes to attracting major investments.”

As with other battery cell plants planned in Ontario, the federal and provincial governments will match cell production tax incentives worth $35 per kWh offered under the U.S. Inflation Reduction Act. Ottawa estimates the subsidies will cost a total of Canadian $4.6 billion through 2032, with one-third of the cost carried by the province.

Construction on the new battery plant, called Northvolt Six, is expected to start next year, with early site preparation beginning this fall. The plant is scheduled to produce its first cells in 2026, ramping up to full production by 2028.

Flavio Volpe, head of the Automotive Parts Manufacturers' Association, praised the announcement in a post on X.

Northvolt, which was founded in Stockholm in 2016, said it expects to hire about 3,000 people to staff the plant.

The province's labor pool is among the primary reasons it cited for choosing Quebec.  

Cerruti, who was previously COO of Northvolt and will helm the new project as CEO of Northvolt North America, pointed to Quebec’s clean power grid, natural resources and labor force as the three key reasons why the company chose the location.

Tax incentives that put Canada on a level playing field with those offered in the U.S. were also integral.

“It is extremely important… If there was no money, there would be no cell makers in this country,” Cerruti said.