On Thursday, Swedish lithium-ion battery maker Northvolt said it will establish a $5.2 billion gigafactory in Quebec, the province’s largest investment and the newest in electric car battery production capacity.
The Northvolt Six facility near Montreal will begin construction this year and open in 2026.
Co-Founder Paolo Cerruti told Reuters that Northvolt will spend $3.2 billion and the municipal and federal governments will each contribute $1 billion.
Cerruti, CEO of Northvolt North America, said the first phase will produce 30 gigawatt hours (GWh) before rising to 60 GWh with $9 billion in expenditures.
Northvolt has many European plants and is one of a few creating a local battery sector to compete with Asian manufacturers.
It obtained $1.2 billion this month from Canada Pension Plan and Ontario Municipal Employees Retirement System to become Europe’s largest battery maker, raising more than $9 billion in debt and equity since 2017.
“We initially looked at 70 sites,” Cerruti added. “We considered the US, but Canada was chosen for the first factory.”
He cited sustainable energy, skilled employees, natural resources, and government attitudes as reasons for the choice.
Northvolt and other industries are looking across the Atlantic for subsidies and cheaper energy after the $369-billion U.S. Inflation Reduction Act (IRA) passed last year.
Northvolt formed a site selection committee a year ago and accelerated the process in 2023. “IRA took the industry by surprise,” Cerruti said.
Northvolt has over $55 billion in contracts with European clients like BMW (BMWG.DE), Scania [RIC:RIC:SCVSA.UL], Volkswagen (VOWG_p.DE), and Volvo Cars.
Cerruti stated the firm has a North American anchor customer but would not name them.
He remarked, “This size of investment and project can’t happen without an anchor customer.”