Northvolt’s Financial Struggles and Future Projects in Quebec: A Deep Dive

2024-02-01 05:00:00

Last year, while Northvolt was negotiating with Quebec and Ottawa to obtain billions of dollars in financial aid, the young Swedish company suffered delays and massive losses.

• Read also: Northvolt: a complaint to the police for “unauthorized environmental activities” in Sweden

• Read also: Northvolt resumes its work in Montérégie

During the first nine months of 2023, Northvolt suffered a colossal loss of around CA$1.4 billion, more than eight times that recorded during the same period in 2022.

These figures come from an article published in December by the Swedish financial newspaper Today’s industrywhich obtained Northvolt’s third quarter 2023 report.

Starving production

Northvolt’s poor financial results can be explained in large part by low production at the company’s only factory, located in Skellefteå, in northern Sweden, and by its large inventories of lithium, nickel and cobalt, whose value has plunged.

During the first three quarters of 2023, the Northvolt factory delivered 79.8 MWh of battery cells, or less than 5% of the total production capacity of the installations, which reached 16 GWh.

Deliveries were particularly weak in the third quarter, which ended in September, due to upgrades and maintenance work, according to Northvolt.

When the construction of the Skellefteå plant was announced in 2017, it was expected that the facilities would be operating at full capacity in 2023. This goal has been postponed several times and Northvolt is now targeting 2025 to achieve it, according to Today’s industry.

A big customer stomps his foot

In October, truck maker Scania partly blamed Northvolt for its more than a year delay in ramping up its electric vehicle production.

“We fight hard with them [Northvolt] to ensure that they respect [les échéanciers] so that we can actually start delivering,” Scania CEO Christian Levin told Today’s industry.

This exit was surprising, since Scania has invested at least twice in Northvolt.

In an interview with the Swedish newspaper, the CEO of the battery manufacturer, Peter Carlsson, wanted to be reassuring, but he still recognized that a change of direction was necessary.

“It is clear that we are reviewing our costs and tightening our belts to ensure that we do not find ourselves in a liquidity crisis,” he said.

Peter Carlsson Photo from LinkedIn

No impact in Quebec?

Mr. Carlsson vowed that the difficulties facing Northvolt would not delay the development of the company’s other projects, including the one planned in Quebec.

“The schedules of our other projects are closely linked to customer needs and we are not making any changes to them,” he said.

The executive said he felt “very strong support” from private and public investors who have staked more than CA$18 billion on Northvolt. In January alone, the company raised nearly CA$6 billion.

The facilities that Northvolt wants to build in Montérégie must have a capacity of 60 MWh, almost four times more than those in Skellefteå. The project is valued at $7 billion and will be entitled to more than $2.7 billion in aid from Quebec and Ottawa, to which might be added production subsidies of $4.6 billion.

Northvolt plans to launch production at its Quebec factory in 2026.

“Northvolt’s projects are independent of each other and the viability of the Northvolt Six project [en Montérégie] is in no way linked to the production capacity of Northvolt Ett [à Skellefteå]», indicated Wednesday to the Journal a spokesperson for the company, Emmanuelle Rouillard-Moreau.

– With Francis Halin

The CEO sold more than $25 million worth of shares

Peter Carlsson, co-founder and CEO of Northvolt, sold more than CA$25 million worth of company shares from 2019 to 2022, the Swedish newspaper revealed Today’s industry in December.

“As part of the agreement with the other shareholders, Rocarma [le holding de Carlsson] had the right to sell 5% of [sa] participation in Northvolt,” the company told the newspaper.

One of the first investors in Northvolt was Swedish billionaire Harald Mix, founder of the financial firm Altor Equity Partners.

Harald Mix Photo taken from LinkedIn

The main shareholders of Northvolt

• Volkswagen: 22,1%
• Goldman Sachs: 15,7%
• Vargas (Harald Mix et Carl-Erik Lagercrantz): 7.6%
• Peter Carlsson: 6.9%

Source: Today’s industry

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