The Canadian and Quebec governments are preparing to give financial aid to Northvolt that may be worth billions, following a similar agreement with Volkswagen to build an EV battery plant in Ontario, the people said.
A deal with Northvolt would underscore Prime Minister Justin Trudeau’s ambitions for Canada to capture a sizeable piece of the North American electric-vehicle supply chain, at a huge cost to the public purse. Trudeau’s government, and the government of Ontario, have pledged more than $13 billion to Volkswagen for its proposed factory in St. Thomas, Ont. They’re also in talks with Stellantis on a EV battery plant in the city of Windsor, Ont., across the border from Detroit.
The amount of government money at stake is large because Canadian officials are trying to match the incentives companies would receive under the U.S. Inflation Reduction Act if they built their manufacturing facilities in the United States. The U.S. law, signed by President Joe Biden last year, offers ongoing subsidies for the production of electric vehicle batteries, not simply the cost of constructing new plants.
By choosing Quebec, Northvolt, which says its goal is to build the “world’s greenest battery,” will benefit from the province’s low-cost and clean hydroelectric power.