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Quebec Premier Francois Legault attends an announcement on Sept. 28, revealing Northvolt Batteries North America will build a new electric vehicle battery manufacturing plant near Montreal.Christinne Muschi/The Canadian Press

Quebec is trying to strike several more deals with companies tied to electric-battery manufacturing as the province races to build out a next-generation transport industry, having clinched half of the $30-billion worth of private-sector investment it sees coming.

This week’s announcement by Swedish battery maker Northvolt AB – that it will build a giant factory in the greater Montreal region with financial backing from the Quebec and Canadian governments – is a key part of Premier François Legault’s industrial strategy to make the province a global hub for EV battery production and development.

But it’s only the latest project in an ambitious economic vision that could see corporations working on battery materials spend billions more in various corners of the province.

“Quebec is becoming an international player in batteries and in electric transport,” Mr. Legault told the audience at the Northvolt announcement Thursday. “We’re creating wealth here.”

Some $15-billion worth of investments by private-sector companies have been announced since Quebec launched its battery strategy in 2019, and $30-billion will be announced in all, Mr. Legault said. The sector will employ 16,000 people in the province at a minimum, he said.

The desire by Western automakers to cut their dependence on China and map out new EV supply chains in Europe and North America has triggered a reset of their global footprints. Companies are scrambling to secure minerals needed for battery production. And they’re forging alliances with new partners and plotting new factories to feed their dealer showrooms.

It’s a once-in-a-lifetime shift that’s being fuelled by government backing on an unprecedented scale.

Like Ontario, Quebec has moved quickly to grab a big piece of the action, working with Ottawa to lure companies with generous loans and subsidies as well as proximity to the raw materials needed by the auto industry as it goes electric.

Quebec’s cheap, green hydropower – the kind needed for the energy-intensive task of pulling minerals out of the ground and creating battery components such as cathodes and anodes – has also given it a leg up in many of these negotiations.

Several multinationals as well as companies scaling up, such as Northvolt, have made commitments to Quebec. General Motors Co. is partnering with South Korean battery material maker Posco Chemical Co. Ltd. on a new cathode factory in Bécancour, Que. Ford Motor Co. F-N is working with South Korea’s EcoProBM and SK On Co. Ltd. on a $1.2-billion plant that would produce EV battery materials in that same city.

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Quebec has provided public support for 12 projects tied to the EV industry so far, stretching from mining companies to battery cell makers such as Northvolt. Other companies who’ve announced investments include mining companies Nemaska Lithium and Nouveau Monde Graphite, electric school bus maker Lion Electric and electric snowmobile maker Taiga Motors.

Private-sector spending of this scope is almost unheard of in Quebec. And it reflects a choice in Quebec City and Ottawa to push hard on a promising industry instead of letting the investments go elsewhere, namely the United States.

Canada is seeking to compete with a U.S. clean-tech industry that has been turbocharged over the past year by incentives that are part of President Joe Biden’s Inflation Reduction Act. That legislation includes US$369-billion in funding for green energy and related technology, as well as EVs and energy-efficiency measures.

The federal and Ontario governments announced a deal in April to provide Volkswagen with up to $13.2-billion in subsidies for production support after the company builds a battery plant in St. Thomas, Ont. In June, Stellantis NV and LG Energy Solution Ltd. reached a deal with those governments for as much as $15-billion in subsidies to restart construction on their EV battery factory in Windsor, Ont.

Whether these are the right choices remains to be seen. Certainly it comes at great cost, in terms of the billions that could be spent fuelling the economy in other ways. And some analysts are wondering whether the electric-vehicle companies won’t become dependent on state support, in the same way Quebec’s video-game developers have become.

The subsidies granted to attract Northvolt to the Montérégie region are not worth it according to the Montreal Economic Institute, a free-market think tank.

“Quebec’s economic development and prosperity didn’t come about as a result of subsidies, but rather in spite of them,” said Emmanuelle Faubert, an economist with the group. “The government needs to realize this, before it creates a new Gaspésia or McInnis Cement,” she said, referring to two troubled industrial projects.

Eric Girard, Quebec’s Finance Minister, sees things differently.

There isn’t an unlimited war chest to develop the battery industry, he said in an interview Friday in Montreal. The government is making calculated decisions based on modelling the cost of its intervention versus the expected returns and the volume of electricity available for such projects, he said.

Quebec has the financial means to support the $30-billion worth of private-sector spending that’s coming, Mr. Girard said, adding that the province has excellent credit, a diversified economy and a strong economic plan. He said the Northvolt project will take longer to yield a return to the government, however, in part because the subsidies are higher.

“Ontario has Stellantis and Volkswagen. It was important for Quebec to have this complement to our [battery industry],” Mr. Girard said. “It’s an investment with a positive expected return. And in portfolio theory, by the way, the more projects you have, the higher your profile of success. … It’s better to have 26 projects than 10.”

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