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Automotive

Northvolt bankruptcy ominous sign for politicians’ EV gamble

Published

4 months ago

5 minute read

From the Canadian Taxpayers Federation

By Jay Goldberg

Northvolt’s bankruptcy and the heavy losses traditional auto manufacturers are seeing on EVs is evidence that betting billions on the industry was a terrible gamble for Trudeau, Legault, and Ontario Premier Doug Ford.

Politicians love to gamble with your cash, but, based on their record, you’d think they were rookies getting fleeced by a card shark at a shady bar.

The latest epic failure is the gamble on electric vehicle battery manufacturer Northvolt.

The Legault government bet buckets of cash. And now the company is broke.

“Northvolt’s liquidity picture has become dire,” reads the Swedish EV battery manufacturer’s bankruptcy protection filing.

It turns out Northvolt accumulated $5.8 billion of debt. It’s CEO just resigned. The company’s future is bleak. New leadership is hoping it can remain afloat with the help of a $100-million loan from one of its shareholders.

Both the government of Quebec and the province’s pension fund bet hundreds of millions of dollars on Northvolt. They bought stakes in the company worth a combined $470 million.

That’s money Quebec taxpayers and pensioners may never get back.

Quebec Economy Minister Christine Fréchette admitted the money is “at risk” and taxpayers will only know if that investment remains intact after the company goes through its bankruptcy process.

As bad as the loss is for Quebeckers, Canadian taxpayers might also soon be facing billions in losses. That’s because Northvolt has a Canadian subsidiary that also received buckets of taxpayer cash.

Northvolt’s Canadian subsidiary is currently building a $7-billion EV battery plant in Quebec. Quebec Premier Francois Legault and Prime Minister Justin Trudeau gave a combined $2.4 billion to Northvolt to build it.

Northvolt says its Canadian subsidiary is funded separately from the global company that was forced to file for bankruptcy and will “operate as usual outside the Chapter 11 process.”

But if the parent company’s finances have spiraled out of control, there’s every reason for taxpayers to worry its Canadian operation will too.

Northvolt repeatedly missed its in-house global production targets this year and curtailed some of its operations in Sweden.

If Northvolt is cutting back on global production, what reason does it have to ramp up production on a new facility in Canada?

With Northvolt’s global finances on the rocks, Canadian politicians might be tempted to throw even more cash at the company’s Canadian operation to keep the company afloat.

But throwing good money after bad isn’t a solution. Politicians in Ottawa and Quebec City need to stop gambling with taxpayers’ money.

Sadly, the implications for taxpayers are much wider than the future of one EV battery company.

Canadian politicians bet $57 billion of taxpayer cash on the EV industry.

But the entire industry is in jeopardy. Other than Tesla, every EV manufacturer is losing money making them.

General Motors lost $3.5 billion on EVs in 2023. The Ford Motor Company lost $7.7 billion. And both of those companies received billion-dollar handouts from the Trudeau and Ford governments to build EVs here in Canada.

The only reason GM and Ford aren’t in Northvolt’s position is because they have gasoline-powered cars to sell that turn a profit, allowing them to balance out their earnings (or lack thereof).

But there are signs of a pull-back.

Ford, for example, cancelled plans to produce two different models of electric SUVs, which were supposed to be built in Canada. This is costing the company billions. Meanwhile, the Canadian plant is pivoting back to building gasoline-powered cars.

Northvolt’s bankruptcy and the heavy losses traditional auto manufacturers are seeing on EVs is evidence that betting billions on the industry was a terrible gamble for Trudeau, Legault, and Ontario Premier Doug Ford.

This is a very expensive lesson: politicians should never gamble with taxpayer dollars by throwing billions at corporations. Businesses don’t need handouts to make investments that make sense.

In all these cases, the financial well-being of Canadian taxpayers should never have been at risk.

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Automotive

Trump warns U.S. automakers: Do not raise prices in response to tariffs

Published on March 29, 2025

By

MXM logo MxM News

Quick Hit:

Former President Donald Trump warned automakers not to raise car prices in response to newly imposed tariffs, arguing that the move would ultimately benefit the industry by strengthening American manufacturing. However, automakers are signaling that price increases may be unavoidable.

Key Details:

  • Trump told auto executives on a recent call that his administration would look unfavorably on price hikes due to tariffs.
  • A 25% tariff on imported vehicles and parts is set to take effect on April 2, likely driving up costs for U.S. automakers.
  • Industry analysts predict vehicle prices could rise 11% to 12% in response, despite Trump’s insistence that tariffs will benefit American manufacturing.

Diving Deeper:

In a conference call with leading automakers earlier this month, former President Donald Trump issued a stern warning: do not use his new tariffs as an excuse to raise car prices. While Trump presented the tariffs as a boon for American manufacturing, industry leaders remain unconvinced, arguing that the financial burden will inevitably lead to higher costs for consumers.

Trump’s administration is pressing ahead with a 25% tariff on all imported vehicles and parts, set to take effect on April 2. The move is aimed at reshaping trade dynamics in the auto industry, encouraging domestic manufacturing, and reversing what Trump calls the damaging effects of President Joe Biden’s electric vehicle mandates. Despite this, automakers say that rising costs on foreign parts—which many depend on—will leave them little choice but to pass expenses onto consumers.

“You’re going to see prices going down, but going to go down specifically because they’re going to buy what we’re doing, incentivizing companies to—and even countries—companies to come into America,” Trump stated at a recent event, reinforcing his stance that the tariffs will ultimately lower costs in the long run.

However, industry insiders are pushing back, warning that a rapid shift to domestic production is unrealistic. “Tariffs, at any level, cannot be offset or absorbed,” said Ray Scott, CEO of Lear, a major automotive parts supplier. His concern reflects broader anxieties within the industry, as automakers calculate the financial strain of the tariffs. Analysts at Morgan Stanley estimate that vehicle prices could increase between 11% and 12% in the coming months as the new tariffs take effect.

Automakers have been bracing for the fallout. Detroit’s major manufacturers and industry suppliers have voiced their concerns, emphasizing that transitioning supply chains and manufacturing operations back to the U.S. will take years. Meanwhile, auto retailers have stocked up on inventory, temporarily shielding consumers from price hikes. But once that supply runs low—likely by May—the full impact of the tariffs could hit.

Within the Trump administration, inflation remains a pressing concern, though Trump himself rarely discusses it publicly. His economic team is aware of the potential for tariffs to drive up costs, yet the administration’s stance remains firm: automakers must adapt without raising prices. It remains unclear, however, what actions Trump might take should automakers defy his warning.

The auto industry isn’t alone in its concerns. Executives across multiple sectors, from oil and gas to food manufacturing, have been lobbying against major tariffs, arguing that they will inevitably result in higher prices for American consumers. While Trump has largely dismissed these warnings, some analysts suggest that public dissatisfaction with rising costs played a key role in shaping the outcome of the 2024 election.

With the tariffs set to take effect in just weeks, automakers are left grappling with a difficult reality: absorb billions in new costs or risk the ire of a White House determined to remake America’s trade policies.

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Automotive

Trump announces 25% tariff on foreign automobiles as reciprocal tariffs loom

Published on March 26, 2025

By

From The Center Square

By 

President Donald Trump announced a permanent 25% tariff on automobiles made in other countries that will go into effect on April 2.

Trump made the announcement Wednesday in the Oval Office. He also hinted that the reciprocal tariffs he plans to announce on April 2 could be more lenient, suggesting the tariffs would be less than fully reciprocal.

“What we’re going to be doing is a 25% tariff on all cars not made in the U.S.,” the president said.

Asked if any changes could avert the auto tariffs, Trump said they would be “permanent.”

“This will continue to spur growth like you haven’t seen before,” Trump said.

Trump said the tariffs will be good news for auto companies that already build products in the U.S. He also said carmakers that don’t build in the U.S. are looking to do so.

“We’re signing an executive order today that’s going to lead to tremendous growth in the automobile industry,” Trump said.

The White House said it expects the auto tariffs on cars and light-duty trucks will generate up to $100 billion in federal revenue. Trump said eventually he hopes to bring in $600 billion to $1 trillion in tariff revenue in the next year or two.

Trump also said the tariffs would lead to a manufacturing boom in the U.S., with auto companies building new plants, expanding existing plants and adding jobs.

Trump also urged House Speaker Mike Johnson to approve a measure that would allow car buyers to deduct the interest on loans for cars that are made in America. Trump said that such a plan would make cars nearly free for buyers.

“So when you get a loan to buy a car … I think it’s going to pay for itself, I don’t think there’s any cost,” he said.

Trump also said the reciprocal tariffs he plans to unveil on April 2 would be fair.

“We’re going to be very nice actually,” he said. “It’ll be, in many cases, less than the tariff they’ve been charging us for decades.”

European Commission President Ursula von der Leyen said tariffs would hurt businesses and consumers.

“I deeply regret the U.S. decision to impose tariffs on European automotive exports,” she said. “Tariffs are taxes – bad for businesses, worse for consumers, in the U.S. and the EU.”

Business groups, including the U.S. Chamber of Commerce and American Farm Bureau Federation, have urged Trump to back off tariff threats.

Trump has promised that his tariffs would shift the tax burden away from Americans and onto foreign countries, but tariffs are generally paid by the people who import the products. Those importers then have a choice: absorb the loss or pass it on to consumers through higher prices. He also promised tariffs would make America “rich as hell.” Trump has also used tariffs as a negotiating tactic to tighten border security.

Tariffs are taxes charged on imported products. The company importing the products pays the tariffs and can either try to absorb the loss or pass the additional costs on to consumers.

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