Battery maker Northvolt has launched a strategic review of its activities, including the timeline on which it plans to build a new $7-billion Montreal gigafactory, as it pumps the brakes on an expansion plan that may have been too aggressive, CEO Peter Carlsson told Swedish newspaper Dagens industri on Tuesday. 

The Stockholm-based startup told the Journal de Montreal it is reviewing its operations because it’s under pressure to make deliveries to its customers, but remains interested in making batteries in Quebec.

It’s a sharp U-turn for a company that was Europe’s best-funded startup when it announced plans for the Quebec factory in 2023. The Canadian site, which has already been the subject of some local tensions, could be uniquely impacted as the startup tries to compete with industrial giants like CATL and LG.

What’s going on at Northvolt: It has struggled to stay on track as it has scaled, with BMW cancelling a €2-billion battery order two weeks ago. Meanwhile, its operating loss more than tripled to $1.03 billion last year, Northvolt said, as it fought to ramp up its Northvolt Ett plant in Skellefteå, Sweden.

Now, Northvolt says it must get its Skellefteå plant to full production before it can proceed in Montreal, because Skelleftea is the parent plant for the others globally. 

Canada’s skin in the game: Bank of Montreal is among the lenders that financed what was Europe’s largest-ever green loan to the company, and Northvolt’s investors include the Caisse de dépôt et placement du Québec, Investment Management Corporation of Ontario, Canada Pension Plan Investment Board and Ontario Municipal Employees Retirement System. Northvolt’s Canadian gigafactory, which was expected to begin battery production in 2026, is backed by $1.34 billion in federal construction subsidies and $1.37 billion in provincial construction subsidies, as well as up to $4.6 billion in production subsidies to match what the U.S. Inflation Reduction Act would offer. 

Audrey Milette, a spokesperson for federal Innovation Minister Francois-Philippe Champagne’s office, said the minister “is aware of the recent developments and will continue to work with all partners to foster a strong and sustainable EV sector.” 

The takeaway: Northvolt joins companies like Ford, BASF, EcoPro, Umicore and Li-Cycle in either delaying or re-assessing their battery businesses. While zero-emission vehicle sales are still growing in Canada, up 53 per cent in the first quarter compared with the same time last year, major automakers like Tesla are starting to see sales deflate from last year’s EV exuberance.