Northvolt AB files for bankruptcy after $2.7B subsidy from Canadians

Swedish battery developer and manufacturer Northvolt AB filed for bankruptcy, raising serious doubts about whether its planned Quebec factory will ever come to fruition.

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Swedish battery developer and manufacturer Northvolt AB filed for bankruptcy, raising serious doubts about whether its planned Quebec factory will ever come to fruition, despite being handed billions in taxpayer subsidies.

In a statement released on Wednesday, Northvolt AB said that “following an exhaustive effort to explore all available means to secure a viable financial and operational future for the company, the Board of Directors of Northvolt AB today announced that it has filed for bankruptcy in Sweden.”

The company employs around 5,000 people in Sweden. A court-appointed trustee will now oversee the sale of the business, including its assets and settle any outstanding obligations.

Northvolt’s bankruptcy marks one of the largest in Sweden’s corporate history and does not bode well for its $7 billion plan to build a battery manufacturing plant outside of Montreal. This project received financial backing from both the federal and Quebec governments.

“This uncertainty is another prime example of why corporate welfare is a bad deal for taxpayers. Government bureaucrats and politicians should stop trying to play investment banker with taxpayers’ money,” Franco Terrazzano, federal director of the Canadian Taxpayers Federation told True North.

According to an analysis by the Parliamentary Budget Officer, Northvolt was given $2.7 billion in taxpayer subsidies to build the factory by 2026.

“Our hope is that the monitor will begin seeking a buyer who will invest in taking over all North American operations and relaunching the project,” said Quebec Economy Minister Christine Fréchette in French in a post to X.

“Although the $270 million invested in the parent company has lost its value, the $240 million loan is secured by our security interests in the land and assets of the Northvolt North America subsidiary. We are evaluating our options and will exercise our rights should the assets in Quebec be liquidated.”

While the federal government has yet to release the funds it pledged for the project, numerous major pension funds involved now face an uncertain future, including the Canada Pension Plan Investment Board, Ontario Municipal Employees’ Retirement System and Investment Management Corp. of Ontario.

“We are hopeful that the outreach we have undertaken with potential investors during the Chapter 11 process will accelerate identifying the necessary financing to allow continued trading under the Swedish bankruptcy process,” said Tom Johnstone, Interim Chairman of Northvolt’s Board of Directors.

From an environmental perspective, much of the damage is already done. The province permitted the Swedish company to begin clearing approximately 8,000 trees over 130,000 square meters of wetlands to make space for the new facility over a year ago.

“Governments should end corporate welfare and get out of the business of business. Instead of corporate welfare, governments should cut taxes and red tape to grow the economy. All federal party leaders need to commit to ending corporate welfare,” said Terrazzanno.