Ottawa is looking for a buyer to take over a large electric vehicle battery plant project in Quebec after its Swedish parent company filed for bankruptcy, Industry Minister François-Philippe Champagne said.
“We’re having discussions in the background to see if we can find a party that is interested in taking over the factory,” Champagne said during an unrelated press conference in Ottawa on March 12.
Battery cell maker Northvolt AB announced it filed for bankruptcy in Sweden on March 12, halting the plan to build a European giant to rival its Asian competitors.
The company said it faced a number of challenges in recent months, such as rising capital costs, shifts in market demand, geopolitical instability, and subsequent supply chains disruptions.
Ottawa and the province of Quebec have invested billions to bring Northvolt to Canada. The investment to build a factory east of Montreal, which would occupy an area equivalent to 318 football fields, was first announced in September 2023.
The first phase of the project was said to be a $7 billion investment, with Ottawa providing $1.34 billion in capital and Quebec $1.37 billion.
Related Stories
Other government production incentives were worth up to $4.6 billion, with a third falling on Quebec.
Ottawa said the project could provide 3,000 jobs and contribute up to $1.6 billion to Canada’s GDP.
The status of the factory is now in limbo and Champagne said he’s working on finding a solution.
Champagne responded with an emphatic “no” when asked by reporters whether China could take over the factory. “I want to be very clear, the answer is clearly ‘no,’” he added.
Trade tensions have risen with China in recent days, with Beijing imposing tariffs on Canadian seafood in retaliation to Ottawa slapping Chinese electric vehicles (EVs) with a 100 percent tax in October 2024. The federal government also remains wary of Chinese investments in strategic sectors due to national security concerns.
Champagne, who has secured other investments from foreign players in the EV sectors by offering billions in subsidies, said the Northvolt factory is “very important.”
“The profitability of Northvolt goes via the factory here, because North America is the biggest market,” he said.
Champagne said Canada is diversifying its economy and it needs a European ally who is a leader in manufacturing EV batteries. “There’s an existential crisis,” Champagne said in reference to current relations with the United States, “and I hope that the investment continues.”
The Canadian subsidiary of Northvolt does not have clarity on whether the Quebec factory will go ahead but said it remains solvent and will honour its obligations towards its employees.
Decisions about the subsidiary will be made by a court-appointed trustee of the parent company in Sweden and by lenders, a spokesperson of Northvolt North America said.
The parent company had filed for bankruptcy protection in the United States in November. The company said at the time the Quebec plant would still go ahead.
This followed Northvolt AB conducting a strategic review of its expansion moves in summer 2024.
The Canadian Press contributed to this report.
