EV battery manufacturer Northvolt faces major roadblocks

Swedish electric vehicle battery manufacturer Northvolt is fighting for its survival as Canadian taxpayer money and pension fund investments hang in the balance.

Reuters reported that the company has considered whether to seek bankruptcy protection in the United States as it continues to deal with a growth slowdown in the EV market and struggles to ramp up production at a plant in Sweden.

As a result, it has cast doubt about the future of a gigafactory to be built on a site the size of three hundred football fields in St-Basile-le-Grand, on the south shore of Montreal.

Greig Mordue is an associate professor of engineering at McMaster University, and the chair of advanced manufacturing policy. He says taxpayers should be disappointed, but not surprised by the turbulence at Northvolt.

"Manufacturing is hard," says Mordue. "Automotive manufacturing in particular is hard and battery manufacturing is essentially an unknown. Northvolt is essentially a startup, and to go from zero to a hundred in just a few years is very difficult."

Another sign of Northvolt's struggle is the fate of co-founder and CEO Peter Carlsson.

A former Tesla executive, he attempted to establish Northvolt as the European leader battery maker since 2016. Northvolt confirmed to CTV News that he is no longer CEO, though is staying on the board of administration of Northvolt Ett, the subsidiary in charge of Northvolt's Swedish plant.

"Paul O'Donnell is currently CEO of Northvolt Ett, while Peter Carlsson is staying on the board," the company said in a statement. "It is logical to bolster the board with a person who has vast experience in accompanying businesses in the current complex operational context."

Normand Mousseau, a University of Montreal physics professor and scientific director of the Trottier Energy Institute at Polytechnique Montreal, says the road to energy transition was always going to be a "bumpy road", but that the direction is clear and that means EV's are the destination.

However, he says setbacks like those Northvolt is facing are to be expected. He also says many believed Northvolt could not fail because it was establishing itself as a leader of the European market. But despite measures like tariffs imposed on Chinese-made EVs, the Canadian market will continue to be vulnerable if it focuses exclusively on manufacturing and not on knowledge, he added.

"Don't forget that other battery manufacturers are going on in Canada," says Mousseau. "We are still part of the game, but part of the game in a passive way, because all the technology comes from outside. We are just grounds and workers but very little intellectual property, so we remain at risk at any change because nothing anchors these companies in Canada at the moment."

The federal and Quebec governments provided billions in financing and incentives for the $7 billion plant to be built east of Montreal. Major pension funds including the Canada Pension Plan Investment Board, as well as the Caisse de Depot et Placement, also contributed financially, and it is not clear how much of it could be lost.

Northvolt says it is continuing negotiations to secure financing, though experts say it is a race against time.