Quebec grants $2.9 billion to attract Northvolt for its battery plant

MONTREAL – Swedish manufacturer Northvolt says it will build a $7 billion gigafactory for electric vehicle batteries near Montreal that it claims will represent the largest private investment in Quebec’s history.

On hand at the unveiling in Montreal, Prime Minister Justin Trudeau said the investment would help build the economy of the future.

“This is a historic and transformative announcement. Northvolt’s investment will bring end-to-end battery manufacturing to Canada, making our country one of only a few locations to have this capacity outside of Asia.”

The Quebec government has committed up to $2.9 billion to secure the deal, including both construction help and production incentives, while the federal government will contribute up to $1.34 billion.

The 170-hectare site in McMasterville and Saint-Basile-le-Grand, Que., will have initial capacity to produce about 30 gigawatt hours of annual cell manufacturing when it goes into production in 2026.

The site will also include facilities for cathode active material production and battery recycling.

The company says the plant is expected to employ up to 3,000 people.

It says it plans to later double the production capacity, but did not say how much it expects the expansion to cost.

At full capacity, the plant could add up to $1.6 billion to the economy, said Trudeau.

The investment is just the latest major battery plant announcement in recent years, helped along by generous promises of funding.

Volkswagen’s battery plant in St Thomas, Ont., which will have up to 90 gigawatt hours of production volume, will see it receive up to $13.2 billion in production subsidies.

The Stellantis-LG Energy Solution plant being built in Windsor, Ont. with more than 45 gigawatt hours of targeted production capacity, could see it receive up to $15 billion.

Opposition criticism

Even before the official announcement, the scale of the sums involved was criticized by Quebec’s opposition parties. Liberal economic critic Fred Beauchemin believes that the Legault government should have focused its assistance on Quebec SMEs.

“Why don’t we help our SMEs to stand out from the crowd and become the next Couche-Tard?”

At the Parti québécois (PQ), Joël Arseneau questioned the relevance of such an investment in a context of labor shortage. “It’s about to create thousands of jobs for workers we don’t have.”

Québec solidaire parliamentary leader Gabriel Nadeau-Dubois believes there is “no guarantee” that the project will be profitable for Quebec taxpayers or that it will help reduce greenhouse gases.

– This report by The Canadian Press was first published in French on Sept. 28, 2023.