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Northvolt bankruptcy ominous sign for politicians’ EV gamble

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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

Trudeau must repeal the EV mandate

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By Dan McTeague

Last Monday, Transport Canada released a bombshell statement, announcing that the Trudeau government’s program granting a $5,000 rebate to Canadians purchasing an Electric Vehicle (EV) had run out of money and would be discontinued, “effective immediately.” This followed a prior announcement from the government of Quebec that they would be suspending their own subsidy, which had amounted to $7,000 per EV purchased.

This is, of course, a game changer for an industry which the Trudeau government (as well as the Ford government in Ontario) has invested billions of taxpayer dollars in. That’s because, no matter the country, the EV industry is utterly dependent upon a system of carrots and sticks from the government, in the form of subsidies and mandates.

EVs have remained notably more expensive than traditional Internal Combustion Engine (ICE) vehicles, even with those government incentive programs. Without them the purchase of EVs becomes impossible for all but the wealthiest Canadians.

Which is fine. Let the rich people have their toys, if they want them. Though if they justify the expense by saying that they’re saving the planet by it, I may be tempted to deflate them a bit by pointing out that EVs are in no way appreciably better for the environment than ICE vehicles, how all the lithium, nickel, cobalt, manganese, aluminum, copper, etc, contained in just one single EV battery requires displacing about 500,000 lbs of earth. Mining these materials often takes place in poorer countries with substandard environmental regulations.

Moreover, the weight of those batteries means that EVs burn through tires more quickly than gas-and-diesel driven vehicles, and wear down roads faster as well, which among other issues leads to an increase in particulate matter in the air, what in the old days we referred to as “pollution.”

That is a potential issue, but one that is mitigated by the fact that EVs make up a small minority of cars on the road. Regular people have proved unwilling to drive them, and that will be even more true now that the consumer subsidies have disappeared.

Of course, it will be an issue if the Trudeau Liberals get their way. You see, Electric Vehicles are one of the main arenas in their ongoing battle with reality. And so even with the end of their consumer subsidies, they remain committed to their mandates requiring every new vehicle purchased in Canada to be electric by 2035, now just a decade away!

They’ve done away with the carrots, and they’re hoping to keep this plan moving with sticks alone.

This is, in a word, madness.

As I’ve said before, the Electric Vehicle mandate is a terrible policy, and one which should be repealed immediately. Canada is about the worst place to attempt this particular experiment with social engineering. It is famously cold, and EVs are famously bad in the cold, charging much slower in frigid temperatures and struggling to hold a charge. Which itself is a major issue, because our country is also enormous and spread out, meaning that most Canadians have to do a great deal of driving to get from “Point A” to “Point B.”

Canada is sorely lacking in the infrastructure which would be required to keep EVs on the road. We currently have less than 30,000 public charging stations nationwide, which is more than 400,000 short of Natural Resources Canada’s projection of what we will need to support the mandated total EV transition.

Our electrical grid is already stressed, without the addition of tens of millions of battery powered vehicles being plugged in every night over a very short time. And of course, irony of ironies, this transition is supposed to take place while our activist government is pushing us on to less reliable energy sources, like wind and solar!

Plus, as I’ve pointed out before, the economic case for EVs, such as it was, has been completely upended by the recent U.S. election. Donald Trump’s victory means that our neighbors to the south are in no immediate danger of being forced to ditch gas-and-diesel driven cars. Consequently, the pitch by the Trudeau and Ford governments that Canada was putting itself at the center of an evolving auto market has fallen flat. In reality, they’ve shackled us to a corpse.

So on behalf of my fellow Canadians I say, “Thank you,” to the government for no longer burning our tax dollars on this particular subsidy. But that isn’t even half the battle. It must be followed through with an even bigger next step.

They must repeal the EV mandate.

Dan McTeague is President of Canadians for Affordable Energy.

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Automotive

Liberals Have Cut Canada’s Electric Vehicle Subsidies, Now It’s Time to Kill the 2035 Mandate

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By Dan McTeague

Former Liberal MP Dan McTeague calls on Mark Carney and all other leadership candidates to kill Trudeau’s electric car mandate.

President of Canadians for Affordable Energy (CAE) and former Liberal MP Dan McTeague says, “It’s good that the Trudeau government are ending their taxpayer funded electric vehicle subsidy, but it’s time to take the most important step of all and kill the government’s mandate that all vehicles bought in Canada be battery powered by 2035.”

As of January 10th, Transport Canada announced that it “paused” its financial incentive to purchase electric vehicles which had provided up to $5,000 of taxpayers money to anyone who purchases an electric vehicle. Quebec ended its $7,000 subsidy last February. However, the government policy requiring that every car sold in Canada after 2035 be electric remains in force.

“Even with these giveaways in place, it was a stretch for hard working Canadians to afford an EV,” said McTeague. “We at CAE are happy for Canadian taxpayers that the program is coming to an end. But this move must be followed up by abolishing the mandates on unaffordable electric vehicles once and for all.”

“My hope is that each and every Liberal Leadership candidate stands up and acknowledges that mandating that all new cars in Canada be electric by 2035 is wrong and that that policy needs to be scrapped,” added McTeague.

Dan McTeague served in Parliament as a Liberal MP for 18 years, and is now Executive Director of Canadians for Affordable Energy. CAE counts on it’s 60,000 supporters nationwide, you can find more information here: https://www.affordableenergy.ca/

For more information contact: 

Dan McTeague
647-220-0114
[email protected]

Support Dan’s Work to Keep Canadian Energy Affordable!

Canadians for Affordable Energy is run by Dan McTeague, former MP and founder of Gas Wizard. We stand up and fight for more affordable energy.

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