Canada will not provide additional funding to Northvolt, a government source said

Written by Divya Rajagopal

TORONTO (Reuters) – Canada is no longer planning to invest in Swedish electric vehicle battery maker Northvolt after it filed for bankruptcy in the United States on Thursday, a Canadian government source said.

“Northvolt's liquidity picture is deteriorating,” the company said in its Chapter 11 filing, filed in US Bankruptcy Court in Houston.

Canada's Northvolt plant being built in the province of Quebec was a cornerstone of Prime Minister Justin Trudeau's industrial and climate policies.

“We don't think giving the company more money is in the cards for Quebec and the federal government,” the source told Reuters.

Representatives for Quebec and Trudeau did not respond to a request for comment.

In its bankruptcy filing, Northvolt said its Canadian and German operations are not part of the bankruptcy proceedings and that progress will continue. Northvolt initially said the Canadian plant would start operating in 2026, although the company said it would take longer.

Northvolt announced in 2023 that it will invest C$7 billion ($5.17 billion) in the Canadian industry. At the time, Northvolt said the Canadian government and the provincial government of Quebec would each contribute $1 billion to the first phase of construction.

The outstanding land loan from Canada to Northvolt is $181 million, according to Thursday's filing. The Canadian plant, called Northvolt Six, currently holds approximately $240 million in cash and “represents an important pillar of the company's future growth strategy,” the bankruptcy filing said.

Trudeau has made EVs a key plank of Canada's industrial policy, providing production credits and other support to 13 battery companies and automakers, including Northvolt, worth C$56 billion ($41.34 billion).

(Reporting by Divya Rajagopal in Toronto; Editing by Caroline Stauffer and Matthew Lewis)