Nothing prevents Northvolt from suspending its project in Quebec indefinitely

Northvolt has complete freedom to suspend its expansion projects, especially in Quebec, the company recently announced in its annual report.

• Also read: Deadlines: Ottawa tries to allay concerns about Northvolt plant

• Also read: Northvolt may revise the schedule for its Quebec project due to “significant pressure” from its customers

• Also read: Battery industry: Massive losses for Northvolt

In 2023, Northvolt recorded a massive loss of nearly 1.6 billion Canadian dollars, according to the document released earlier this month.

This loss of $1.17 billion, we learned, is four times higher than the loss of $285 million in 2022.

The company’s revenue rose 20 percent to $128 million – a much smaller increase than expected, largely due to production problems at Northvolt’s main plant in Skellefteå, Sweden.

Strategic review

In this context, the company announced a “strategic review” that could lead to a postponement of its factory projects in Quebec and Germany.

The financial report states that the structure of many of the company’s loans enables it to achieve “modular growth”.

“If necessary, we could suspend investments in the expansion of new facilities at any time,” it says.

“We remain committed to Quebec and our intentions remain unchanged,” he assured the Newspaper a spokeswoman for Northvolt, Emmanuelle Rouillard-Moreau, last week.

“Too ambitious”

Let us remember an interview with the Swedish daily newspaper Days Industry Ten days ago, Northvolt CEO Peter Carlsson said: “We were a bit too ambitious with our expansion plans and are currently reviewing this.”

By 2023, Northvolt has invested $1.8 billion in capital expenditures and $1.4 billion in operations. Since its founding in 2016, the company has raised over $15 billion in funding.

Northvolt says it has received $5.8 billion, or $7.7 billion Canadian, in financial support from Ottawa and Quebec for its Montérégie power plant project, up from the $7.3 billion it cited when the project was officially announced in September.

“Nothing to worry about”

At the request of the NewspaperRaphaël Duguay, professor of accounting at Yale University in the USA, took a look at Northvolt’s financial reports.

“I see no reason to worry,” he said. “As it is still a young company, we cannot expect to make a profit at the moment.”

The expert stressed that the company must first solve the problems at its Swedish plant before it can repeat the measures in Quebec and Germany.

“If we recognize that we cannot achieve profitability with our Swedish model any time soon and we want to replicate it in Canada, it obviously would not be feasible. So I think they are doing the right thing.”

Last month, auto giant BMW canceled a 2 billion euro ($3 billion) order from Northvolt due to production delays at the battery maker.

Swedish media also reported that Northvolt would abandon its plans to build a cathode materials factory in the country.