Northvolt to build $7B battery factory near Montreal, includes government money

Swedish manufacturer Northvolt has announced 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 on Thursday, Prime Minister Justin Trudeau said the project will help build the economy of the future.

"This is a historic and transformative announcement," the prime minister told an audience that included Northvolt executives and politicians representing all levels of government. "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 170-hectare site straddles two communities about 30 kilometres east of Montreal — McMasterville and St-Basile-le-Grand — and will have initial capacity to produce about 30 gigawatt hours of annual cell manufacturing when it goes into production in 2026, enough to power one million vehicles a year. Northvolt says it plans to eventually double that capacity.

The site will include facilities for cathode active material production and battery recycling, and will employ up to 3,000 people.

Quebec's government has committed up to $2.9 billion to secure the deal, while the federal government will contribute up to $1.34 billion.

Trudeau and Quebec Premier François Legault defended public investments in the project, saying the money will help secure local prosperity in the burgeoning green economy.

At full capacity, the plant could produce up to $1.6 billion in economic benefits, said Trudeau. And though Quebec has the resources and talent to power green industries, he told reporters, the federal and provincial governments had to demonstrate their willingness to invest on a scale comparable to that in other countries, such as the United States.

Legault likened government funding in battery manufacturing to what was spent on the expansion of Quebec's hydroelectricity production capabilities through monumental construction projects in the late 20th century.

When former Quebec premier Robert Bourassa kicked off that initiative in the 1970s, "people thought that he was crazy to invest so much money," Legault told the news conference. "But finally people are very happy today that we have hydroelectricity."

"Now the next step is to bring the car industry (to) Quebec."

The Northvolt news is just the latest major battery plant announcement in Canada 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.

— With files from Ian Bickis in Toronto.

This report by The Canadian Press was first published Sept. 28, 2023.