VWAPY Volkswagen AG (PK)

By Dominic Chopping

STOCKHOLM--Northvolt will build a new multi-billion dollar battery factory in Canada, marking its first production site outside of Europe as it looks to supply customers in the North American electric-vehicle market.

In a statement late Thursday, the Swedish battery maker said the new Northvolt Six factory will be built just outside of Montreal, with construction on the first phase starting later this year and first operations expected in 2026. It will be powered entirely by hydroelectricity.

When completed, the factory will have 60 gigawatt-hours of annual cell manufacturing capacity--enough to produce batteries for one million electric vehicles a year--with adjacent facilities for material production and battery recycling.

Construction of the first phase of the project for 30 gigawatt-hours of capacity is expected to see $5 billion of investment, with the Canadian government and local Quebec administration contributing a total of $2.7 billion Canadian dollars ($2 billion).

As part of the deal, Canada and Quebec have both committed to providing Northvolt with production support to match the U.S. Inflation Reduction Act's Advanced Manufacturing Production Credit, equalling up to $35 a kilowatt-hour, as well as production incentives worth up to C$4.6 billion.

Northvolt Co-Founder Paolo Cerruti will lead the project as chief executive of Northvolt North America, which will have its head office in Montreal.

"We have in Northvolt Six enormous potential, not only to rapidly expand our ability to bring sustainable batteries into markets of North America, but to accelerate Quebec's emergence as a key actor in the global energy transition. With its unique access to renewable power and raw materials, we see this as the ideal base of operations for Northvolt's first gigafactory outside of Europe," Cerruti said.

Co-founded in 2016 by former Tesla executive Peter Carlsson, Northvolt has a factory in northern Sweden, is building another one in the south of country in partnership with Volvo Cars and will build another in Germany. It also has research and development, recycling and assembly plants in Sweden, Germany, Norway, Poland, Portugal and the U.S.

The company has so far received $55 billion in orders from key customers including BMW, Fluence, Scania, Volvo Cars and Volkswagen Group.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 29, 2023 07:13 ET (11:13 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.