Feds Say They Lost No Money on Northvolt Bankruptcy, While Quebec Is Out $270M

The entrance to Northvolt, the new EV battery plant being built by the Swedish manufacturer in Saint-Basile-le-Grand, east of Montreal, Que., on May 16, 2024. Christinne Muschi/The Canadian Press

The federal government says it did not lose any money after Swedish battery maker Northvolt went under, meanwhile, Quebec’s government says it lost $270 million in the deal and Quebec’s pension fund manager says it lost $200 million.

Ottawa and Quebec had announced support for the company in September 2023 to build a mega factory in the Montreal area in a bid to make the province a key player in the electric vehicle supply chain.

Battery cell maker Northvolt AB announced it filed for bankruptcy in Sweden earlier this month and decisions about its Canadian subsidiary were expected to be made by a court-appointed trustee and by lenders.

“Innovation, Science and Economic Development Canada (ISED) does not have any agreements with Northvolt, and no support in any form has been disbursed to the company by the Government of Canada,” ISED spokesperson André Daigle told The Epoch Times in a statement.

Daigle added that since Ottawa did not make any disbursement to Northvolt, ISED is not expected to take part in proceedings regarding financial restructuring of the company.

The Prime Minister’s Office said in 2023 the federal government would provide up to $1.34 billion in capital commitment toward the battery plant project.

Ottawa and Quebec had also offered production incentives of up to $4.6 billion. When asked to clarify why Ottawa is not losing money in the Northvolt deal, an ISED spokesperson declined to comment further.

“Our statement speaks for itself and we have nothing additional to add,” said the department.

Then-Industry Minister François-Philippe Champagne said in mid-March that Ottawa was trying to find a party interested in taking on the Northvolt factory project in Saint-Basile-le-Grand, Que., set to be established over an area equivalent to 318 football fields. Champagne, now serving as finance minister, had emphasized China would not be taking over the project.

While Ottawa says it hasn’t lost any money in the project, the same cannot be said for Quebec.

“We believe the value of this amount is lost,” Christine Fréchette, Quebec’s minister of economy, innovation and energy, said last week in reference to $270 million invested by Quebec.

Another $240 million granted to Northvolt to purchase the land is backed by security interests and the assets of Northvolt’s subsidiary, Fréchette said.

Quebec’s pension fund manager, the Caisse de dépot et placement du Québec (CDPQ), said it also lost $200 million in the deal.

“This investment is already considered written off,” CDPQ spokesperson Jean-Benoît Houde told The Epoch Times. “That said, we are in contact with the company and we’re following closely the situation for the project in Quebec.”

Doubts about the future of Northvolt’s project in Quebec surfaced last summer when the company said it was conducting a strategic review of its expansion moves. The electric vehicle sector has faced some headwinds with car manufacturers scaling back their investments in the face of lower demand.

Ottawa and the provinces of Quebec and Ontario in recent years have made sizeable investments in several projects to attract manufacturers, including Northvolt, Volkswagen, and in a joint venture between Stellantis and LG Energy Solution.

The federal government expected to provide $21.9 billion in production incentives as of late 2023 to the three companies, seeking to match subsidies offered by the U.S. government under the administration of then-President Joe Biden.

U.S. President Donald Trump issued an executive order immediately after taking office, asking his administration to consider removing subsidies causing “market distortions that favor EVs over other technologies.”

The Canadian Press contributed to this report.