MONTREAL — The Quebec government has decided to terminate its financial support for a $7 billion electric vehicle battery factory near Montreal. Economy Minister Christine Fréchette announced the decision on Tuesday, stating that the government will attempt to recover some of its investment after spending $510 million on the project, which was once considered the largest private investment in the province's history.

The Quebec government had initially pledged up to $2.9 billion in financing for the Northvolt project, while the federal government committed up to $4.4 billion. However, construction of the plant never commenced. Fréchette explained, "Since the company did not present a satisfactory plan with respect to Quebec's interests, we are asserting our rights to recover the maximum amount of our investment. This adventure has proven unsuccessful, and we are obviously disappointed."

The future of the battery plant has been uncertain since Northvolt's Swedish parent company filed for bankruptcy in March. Recently, American battery startup Lyten announced its intention to acquire Northvolt's assets in Sweden and Germany, and expressed interest in the Northvolt Six project in Quebec's Montérégie region.

Catherine Pelletier, a spokesperson for Fréchette, indicated that government representatives met with Lyten in July and August. However, she noted that Lyten sought additional government funding that Quebec was not willing to provide. Pelletier described Lyten's demands as "disproportionate," but did not disclose specific figures. She added that the government was hesitant to risk more taxpayer money on a relatively new company.

In response to the government's decision, Northvolt Batteries North America expressed regret. The company stated it had been in discussions with potential buyers until recently. "It is important to remember that (the North American subsidiary) is not bankrupt and still had solid financial resources to relaunch the project," the company said. "It was a great project, and our team still believed in it."

The Northvolt project was initially announced with much enthusiasm in September 2023, during an event attended by then-Prime Minister Justin Trudeau, who described it as a "historic and transformative" announcement. Quebec's pension fund manager, the Caisse de dépôt et placement du Québec, also invested $200 million in the company. The province's investment included a $270 million stake in the Swedish parent company, which was lost following its bankruptcy.

Despite the setback, Quebec is seeking to recover a $240 million guaranteed loan that was issued for the land purchase for the plant. Pelletier mentioned that the government filed documents in court under creditor protection legislation, and a judge will need to authorize the process for the sale or repossession of the land. "Given our existing security interests on our debt, we are well positioned to recover the full value of our debt at the end of this process," she stated.

Fréchette emphasized that the failure of the Northvolt project does not signify the end of Quebec's battery industry. "On the contrary, our sector is very much alive with several companies active in this ecosystem," she said. "We remain convinced that it has a bright future."

She also noted that nearly 3,000 people are currently working on the construction of battery factories in Bécancour, Quebec. However, Quebec Liberal Leader Pablo Rodriguez criticized the government for its handling of the project. "We've put all our eggs in one basket," he told reporters in Ste-Foy, Quebec. "It's a failure both in terms of planning and execution."