Northvolt AB said it still plans to go ahead with constructing its electric vehicle battery manufacturing plant in Quebec, despite its parent company filing for bankruptcy in the United States and the CEO recently resigning.
Co-founder and CEO Peter Carlsson resigned on Tuesday with the company’s chief financial officer Pia Aaltonen-Forsell taking over as interim CEO.
Northvolt would require between $1 billion and $1.2 billion in fresh funding to stabilize its finances and survive the bankruptcy, according to Carlsson.
The Quebec project had already been delayed for nearly a year while it underwent a strategic review of its future operations after receiving $7.2 billion worth of taxpayer money.
Despite the bankruptcy filing and with the global market for EVs continuing to dwindle, the Swedish battery manufacturer said it intends to go ahead with the Quebec project anyway.
It said its Canadian subsidiary is financed separately and “will continue to operate as usual outside of the Chapter 11 process.”
Referring to the project slated for construction just east of Montreal, Northvolt co-founder and chief executive Paolo Cerruti told the Financial Post everything was moving along as scheduled.
“I see no reason today to think that we won’t do it as planned,” said Cerruti. “Activity on the site is daily and very intense, and there are trucks every day and around 150 people working.”
However, Northvolt’s financial solvency has unsurprisingly turned heads from provincial governments in both Quebec and Ottawa, which pledged a combined contribution of $2.4 billion in funding.
“This was not the desired scenario, no one is hiding it, we would have liked it to proceed differently,” Quebec Economy Minister Christine Frechette told reporters last week.
Quebec already granted the battery manufacturer a $240-million secured loan to help buy the land for the plant in the province’s Monteregie region.
Additionally, the province invested $270 million in parent company Northvolt AB.
“If there’s an amount at risk, it’s this one,” said Frechette, noting that “we’ll have an idea of the future of this amount” only after the restructuring process is resolved.
The minister added that the province will not be providing the company with any additional funding.
Cerruti echoed that sentiment last month, saying that the company had no intention of asking the provincial or federal governments for more money regarding the Quebec project.
“Northvolt Six (the Quebec project) is an essential component of the company’s future and we remain fully committed to seeing it through,” he said in a statement last Thursday.
However, Quebec’s pension fund manager the Caisse de depot et placement du Quebec, has already invested $200 million into Northvolt as well.
News of the company filing for bankruptcy protection comes in the wake of it announcing it would also be downsizing its operations in Europe.
That downsizing includes laying off some 1,600 employees in its home country of Sweden, around one-fifth of its total workforce.
It also sold a site in Borlänge, Sweden, that was intended to build a factory for cathode materials, a key component of lithium-ion EV batteries.
The company began clearing land and destroying wetlands to construct the new plant in January, sparking public outcry regarding the environmental cost of green technologies.
A similar development proposal on the same site less than a year ago was rejected by the Legault government because it would have destroyed about 65,000 square metres of wetlands.
In comparison, the current project will affect over 150,000 square metres of wetlands, including over 15,000 square metres that will be restored by the end of 2032.