The future of a planned Montreal-area EV batter manufacturing plant is in doubt after its owner Northvolt AB filed for bankruptcy in Sweden.

The Stockholm-based company announced that it had exhausted all available options and was unable to secure the financial conditions needed to continue operations. A court-appointed trustee will now oversee the sale of Northvolt’s assets and the settlement of outstanding obligations.

“This was a decision we did not take lightly,” Northvolt chairman Tom Johnstone told reporters during a news conference. “Every avenue had been pursued to avoid bankruptcy.”

He said the collapse puts 5,000 jobs at risk.

Northvolt was seen as a key player in reducing European automakers’ reliance on Chinese battery makers. Its bankruptcy marks one of Sweden’s largest corporate collapses, the most high-profile since car manufacturer Saab Automobile’s downfall more than a decade ago, according to The Globe and Mail.

Northvolt was in the midst of building its giant battery-cell factory in the Greater Montreal Area. The project was heavily backed by the Quebec and federal governments but construction at the Saint-Basile-le-Grand and McMasterville site has been halted in the wake of the bankruptcy filing, with new investors needed now.

The $7-billion project, announced in 2023, was described as the largest private-sector investment in Quebec’s history.

While Northvolt Germany and Northvolt North America are not included in the Swedish bankruptcy filing, they are wholly owned subsidiaries, and their fate will be determined by the trustee in consultation with the company’s lenders, the firm said.

Quebec Economy Minister Christine Fréchette said the province hopes a buyer will take over Northvolt’s North American operations and revive the project.

“We’re obviously disappointed by the situation,” Fréchette told the Globe via email. “We’re weighing our options and we’ll exercise our rights in the event of a liquidation of assets in Quebec.”

Despite the bankruptcy, Northvolt’s North American unit remains solvent and has potential customers lined up.

Quebec has already lost $270 million in financial support provided to Northvolt’s parent company, the Globe reported. Additionally, the province lent the company another $240 million to help purchase land for the plant, a loan secured by the property and other Northvolt North America assets.

The federal government had committed financing for the factory but had not yet disbursed any funds, according to the Globe. In total, Quebec and Ottawa pledged $2.7 billion to support the first phase of the plant’s construction.

The Globe reported that major Canadian pension funds are also facing losses. The Canada Pension Plan Investment Board, Investment Management Corporation of Ontario, Ontario Municipal Employees Retirement System, and Caisse de dépôt et placement du Québec were among the backers of US$2.3 billion in convertible debt financing for Northvolt.

Northvolt had received more than US$10 billion in equity, debt, and public financing since its inception in 2016. Its major stakeholders include Volkswagen, which owns 21% of the company, and Goldman Sachs, which holds a 19% stake.

Once seen as a pillar of Europe’s EV battery sector, but the company could not recover from financial difficulties that began in 2024.

BMW AG cancelled a US$2-billion order in June, citing the company’s failure to meet contract commitments. A downward spiral followed, with Northvolt cutting jobs, scaling back expansion plans, and scrambling to secure additional financing. It filed for creditor protection in the United States last November but was unable to secure funds in time to stay afloat.