Sweden’s Northvolt to build $5.2 billion battery factory in Canada

By Supantha Mukherjee and Divya Rajagopal

STOCKHOLM/TORONTO (Reuters) – Swedish lithium-ion battery producer Northvolt said on Thursday it would open a $5.2 billion gigafactory in Quebec, the largest ever investment in the Canadian province and the latest in electric vehicle battery manufacturing capacity in the country.

The first phase of the construction of the Northvolt Six factory just outside Montreal will begin this year and it is expected to be operational in 2026.

Northvolt will invest $3.2 billion of the total with the local and federal government each contributing $1 billion, Northvolt Co-Founder Paolo Cerruti told Reuters.

The first phase will provide 30 gigawatt hours (GWh) of production capacity, before eventually expanding to 60 GWh with investments approaching $9 billion, said Cerruti, who will lead the project as CEO of Northvolt North America.

Northvolt already has several European factories and is among a handful of players building a domestic battery industry to fight off the dominance of Asian manufacturers.

It has raised more than $9 billion in debt and equity since 2017 in its bid to become Europe’s biggest battery manufacturer, including $1.2 billion last month from investors including Canada Pension Plan and Ontario Municipal Employees Retirement System.

“We looked at 70 different sites at the beginning of this process,” Cerruti said. “We were also looking at the United States but eventually Canada made it for the first factory.”

He pointed to the availability of sustainable energy, access to skilled workers, proximity to natural resources and other factors such as the attitude of the governments as reasons for the decision.

The $369-billion U.S. Inflation Reduction Act (IRA) passed last year has prompted companies including Northvolt to look across the Atlantic, attracted by hefty subsidies and cheaper 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.

Northvolt has more than $55 billion worth of contracts with mainly European customers such as BMW, Scania, Volkswagen and Volvo Cars.

Cerruti said the company had also secured an anchor customer in North America, but declined to name them.

“This size of investment and project can not happen if you don’t have an anchor customer,” he said.

(Reporting by Supantha Mukherjee in Stockholm and Divya Rajagopal in Toronto; Editing by Kirsten Donovan)