Between unshakeable optimism and the beginnings of skepticism regarding the full realization of the Northvolt project, Prime Minister François Legault suddenly seems to be wavering somewhat. The “stroke of genius” touted last year was transformed this week into a “calculated risk”. The profitability of the investments made by his government will not be measured by the success of this single major project for the future, but by the “batting average”, he added. The allegory, which was perhaps intended to be reassuring, was on the contrary a bit worrying.
All the signals from the Legault government and the Swedish company remain encouraging. At least publicly, for now. The multinational maintains its “commitment” to build its electric vehicle battery factory in Quebec. The Minister of Energy, Christine Fréchette, further reports that Northvolt, despite the tightening of its activities in Sweden, would preserve the tripartite nature of the project on Quebec soil (manufacturing of battery cells, recycling and production of cathodes).
By recognizing that Quebec is obviously not spared from the vagaries of a completely new global industry, Mr. Legault is only making a sincere admission. The contrast with his absolute faith displayed so far, combined with a lack of transparency from his government having sown certain doubts in this whole issue, naturally raises eyebrows today.
Northvolt admitted at the start of the week that it had “tried to do too quickly and too many things at the same time”. The young company must now, like others before it, curb its ambitions to first perfect its innovation.
The Federal Minister of Industry, François-Philippe Champagne, in turn recalled that it took 17 years for Tesla to be profitable. However, not all start-ups experience the same success. The pockets of Tesla’s billionaire boss, Elon Musk, are, on the other hand, much deeper than those of taxpayers and the Quebec state, which has already committed 510 million in the project, to which are added 200 million granted by the Caisse de dépôt et placement du Québec.
Global demand for electric vehicles, and their batteries, is slowing down. In Europe, these unfavorable market conditions have forced the delay or shelving of many other battery factory projects. There is nothing unique about Northvolt. But the entry point offered to it on the North American market, by establishing itself in Montérégie, could be saving for the Quebec project, in the face of American protectionism, both Democratic and Republican. We will have to see if the multinational’s creditors see this growth potential in the same way.
The death of the Northvolt Six factory is far from predicted. Quebec joining the global shift leading to decarbonization from the start, by establishing itself in the electric vehicle ecosystem, did not suddenly become an ill-advised bet.
The Northvolt project has, however, become the symbol of a promising battery sector, but one on which the Legault government has bet big without rallying all Quebecers along the way.
The announced change in the project, whatever it will be when the multinational reveals it, requires adaptation. It would be impossible to justify depriving clean electricity from operating companies seeking to decarbonize in turn, while Northvolt monopolizes unused energy blocks due to its delays. Withdrawing them without notice would undermine the government’s credibility as a serious business partner. Minister Fréchette would, however, have an interest in attaching a timetable to them or temporarily reallocating them, as she is now judiciously open to doing.
The postponement of the construction of the Quebec factory is no longer even stated in the conditional tense. All that remains is to quantify it, between the 12 to 18 months mentioned. Northvolt will introduce its “sequencing update” this fall. The Legault government will have to seize the opportunity to slow down the pace as well.
The opacity which has so far colored the approval of the project has only served to sow doubt and undermine public confidence in the government’s regulatory decisions. Important steps have been skipped, first and foremost, the holding of a study by the Office of Public Hearings on the Environment, leaving many impact assessment questions unanswered.
The current uncertainty of the project is thus met with popular disbelief. The coming months will tell whether the Legault government’s bet in Northvolt was the right one. While waiting to see it, it has become, over months of lack of transparency, more difficult to believe it.