Electric vehicle battery maker Northvolt recently filed for bankruptcy protection in the United States. Obviously, this made a lot of waves in Quebec, where the company is to build a plant backed by major investments.
The company this week took pains to clarify that its U.S. process does not jeopardize the project for the Quebec plant project. That project has received hundreds of millions of taxpayer dollars, so many are naturally worried.
Northvolt is partly a victim of a context in which there is a global slowdown in demand for electric vehicles. In fact, it is the anticipated growth that is smaller, which forces everyone to review their objectives.
This is partly why the Swedish company and several of its subsidiaries have applied for a reorganization of their debts and assets under the supervision of a court, under Chapter 11 of the US Bankruptcy Code.
And why wouldn't this impact Canada? Northvolt clarified that its Canadian subsidiary is funded separately and that it "will continue to operate as planned outside of Chapter 11 proceedings."
The Northvolt plant, called Northvolt Six, which is being built about 25 km east of Montreal, is a $7 billion project. Once operational, the plant will produce battery cells and cathode active materials for electric vehicles.
"I see no reason today to think that we will not do things as planned," said Paolo Cerruti, co-founder of Northvolt and CEO of Northvolt's North American division, and who is overseeing the project.
"Activity on the site is daily and very intense. There are trucks every day and about 150 people working there."
Concerns remain, despite everything
All that said, concerns about Northvolt's financial solvency remain. In all, the project on which Quebec and Ottawa have agreed is receiving $2.4 billion in funding.
As Automotive News recalls, the province granted Northvolt a $240 million secured loan to help it purchase the land needed to build the plant, which is located in Montérégie, Quebec. The government has also invested $270 million in parent company Northvolt AB.
"If there is an amount at risk, it is this one," said Christine Fréchette, Quebec's Minister of the Economy, Innovation and Energy. It is when Northvolt's financial restructuring is completed that we’ll know if Quebec can hope to recover its investment.
The province does not intend to invest more money in Northvolt, the minister added.
In September, Northvolt announced it is reducing its activities in Europe and laying off 1,600 people in Sweden, about a fifth of its workforce. The company recently sold its site in Borlänge, Sweden, where it was about to build a cathode materials plant — metal oxides that are a key component of lithium-ion batteries used in electric cars.
Last month, Paolo Cerruti hinted that the company may have been overly ambitious, but said it had no plans to ask the provincial and federal governments for more money for its battery plant project in Quebec.
"Northvolt Six is an essential part of the company's future and we remain fully committed to seeing it through," he said in a statement.