Future Northvolt Quebec factory | A much lower bill for Germany

Northvolt will build a vast complex in Germany although it has been promised much less generous public aid there than in Quebec. The gap between the two is currently in the billions of dollars.

The German Northvolt factory – the construction of which was made official on Wednesday – will only assemble battery cells, the last step before assembling the batteries. In Quebec, the young Swedish company will produce cathode materials (the positive pole of a battery) and assemble battery cells, in addition to recycling.

Although different, the projects in Quebec and Germany are similar in one aspect: the size of the investment, approximately 7 billion.

For the moment, the European public financial support offered to the company is limited to aid of 902 million euros (1.32 billion CAN) from the German government. This is a subsidy aimed at financing the construction of the complex accompanied by a loan guarantee.

“Other aid could be granted to Northvolt Drei, but nothing has been announced in this direction so far,” confirms the company, in an email to The Press.

Everything indicates that the company will receive a share of the 3 billion euros (CAN 4.4 billion) fund announced last December by the European Union (EU) to accelerate the emergence of a battery sector. This envelope, however, risks supporting more than one project – and there are several in the works in Europe. A compilation carried out last summer by the Reuters agency counted at least 35 in the planning phase.

Two-Pronged Support

In Canada, public assistance for projects by Northvolt, Volkswagen (Ontario) and Stellantis (Ontario) is divided into two components: construction and production. In the case of Northvolt, Quebec and Ottawa offered 2.7 billion for the construction of its complex on the gigantic land which straddles Saint-Basile-le-Grand and McMasterville. Added to this are subsidies for cell production capped at 4.6 billion.

This last mechanism is intended to be a response to theInflation Reduction Act (IRA), this American law with a budget of 370 billion US dollars to support projects aimed at combating climate change, such as those in the niche of batteries for electric vehicles.

By giving the green light to the financial support offered to Northvolt by the German government on January 8, the European Commission – whose approval was essential to move forward – justified its decision by the need to respond to the offensive American. It was necessary to “level the playing field”, according to the European Commissioner for Competition, Margrethe Vestager.

“Without this aid, Northvolt would have set up its factory in the United States, where support was notably offered under theInflation Reduction Act », Explained the European Commission.

For the moment, the German Northvolt factory has no guarantee of seeing part of its production subsidized. This did not stop the company from moving forward with its project. This contrasts with what happened in Canada, where governments insisted on the need to copy the IRA to convince Northvolt, Volkswagen and Stellantis to establish themselves on this side of the border rather than in the United States. United.

Last December, as part of an interview with The Pressthe Minister of Economy, Innovation and Energy, Pierre Fitzgibbon, reiterated that the “IRA treatment” was a sine qua non condition for welcoming Northvolt to Quebec.

“The Americans are releasing large sums of money, and we, Canada, must follow,” says Professor Richard Ouellet, a specialist in international law at Laval University. This is another example of the war on subsidies. Europe is relatively lucky to get away with this cost. »

If the IRA were to be repealed in the United States, Canada would stop subsidizing the three massive battery factory complexes. In the meantime, subsidizing production is a game-changer for these companies. In the case of Northvolt, The Press had calculated that each electric car equipped with Northvolt battery cells in Quebec would cost $3,000 in subsidies from the governments of Quebec and Canada.

Two contexts

Hamburg is one of the hubs of the German automotive industry. About a hundred kilometers to the north, Northvolt will be geographically close to the multiple factories of Volkswagen, one of its main customers and shareholders, in this region of the country.

The fact remains that at the end of the day, it is currently much more expensive to attract battery factory projects to North America compared to what is done in Europe, says the battery expert. ‘Laval University.

In addition to formalizing the construction of its complex in Germany, Northvolt was also able to complete financing of 3.4 billion euros (5 billion CAN) from private lenders, including 23 financial institutions. The European Investment Bank is also participating in this financing.

The money is to be used to finance the expansion of its initial complex, in Skellefteå, in northern Sweden.