Northvolt, a Swedish maker of electric car batteries, said Thursday it would build a factory near Montreal after the Canadian government matched financial incentives that would have been available in the United States.
The company will invest $5 billion in the factory, which will employ up to 3,000 people and will be among the largest battery plants in North America when it begins production in 2026.
The Inflation Reduction Act, President Biden’s signature climate law, includes billions of dollars in incentives to create a domestic battery industry. It has sparked an investment boom, as well as fierce competition among government officials seeking to attract companies to their states or provinces.
America’s allies have complained that incentives designed to create a domestic supply chain have triggered a costly subsidy arms race.
Canada’s federal government and Quebec’s provincial government will each provide $1 billion in subsidies for the project, effectively matching the incentives Northvolt would have received if it had decided to build a plant in the United States, said Paolo Cerruti, one of the founders. of the company.
“Canada is mirroring those measures practically one by one,” Cerruti, a former Tesla executive who will oversee the factory, said in an interview.
Northvolt was also attracted to the site, in McMasterville and Saint-Basile-le-Grand, Quebec, because of the region’s abundant hydroelectric power, as well as mines that could eventually supply lithium and other raw materials, Cerruti said. A lithium mine near La Corne, Quebec, about 350 miles northwest of Montreal, began operating this year.
“We would like to have as much lithium as possible from Canada,” Cerruti said.
Northvolt promotes itself as a sustainable battery producer that aims to minimize greenhouse gas emissions and other environmental damage caused by its factories. The site in Quebec will also include a recycling center that Northvolt says will eventually produce half of the lithium, cobalt, nickel and other raw materials needed for electric car batteries.
Cerruti said Northvolt had secured customers for the Quebec plant, but declined to name them. In Europe, Northvolt makes batteries for automakers such as BMW, Volkswagen and Volvo. The company’s main factory is in northern Sweden and it is building a factory near Hamburg that will receive subsidies from the German government.
In April, Volkswagen said it would invest about $5 billion to build a battery factory in St. Thomas, Ont., which would also benefit from government funding.
