Some folks collect baseball cards or stamps. Canada is collecting EV battery plants.
What happened: Swedish electric vehicle (EV) battery maker Northvolt — which has supply deals with BMW and Volkswagen — has secured the largest private investment in Quebec history to build a $7 billion factory near Montréal.
- Canada has been worried about losing EV factories to the US with its lavish Inflation Reduction Act, but Northvolt looked at 70 locations across North America but picked this site thanks to Quebéc’s affordable renewable energy and natural resources.
Securing the factory did not come cheap. The federal and Québec governments will together essentially foot the bill for the factory between loans and generous production subsidies.
Why it matters: Upon completion, the factory will produce batteries for 500,000 EVs annually and will eventually double production. As one of the few plants outside of Asia with that production capacity, it could help Canada realize its goal of being an EV battery hub.
- This year, Southern Ontario also secured the construction of two EV battery plants, one from Volkswagen and one from Stellantis and LG (who played hard to get).
Yes, but: Spending all that public money on yet another EV factory from a non-Canadian company is a huge risk, especially if the batteries it produces one day become outdated.
- There are other concerns about the factory, too, including worries it will not be able to find the 3,000 workers it needs and local concerns about noise and pollution.
Zoom out: The investment also won’t pay off if projected EV demand doesn’t become a reality. Volkswagen — now a significant player in Canada’s EV battery chain — has begun cutting production of two EV models in Germany due to declining European demand.—QH