By Divya Rajagopal

TORONTO (Reuters) – Canada does not plan to invest anymore in Swedish electric-vehicle battery maker Northvolt in light of its bankruptcy filing in the United States on Thursday, a Canadian government source said.

“Northvolt’s liquidity picture has become dire,” the company said in its Chapter 11 petition, filed in U.S. Bankruptcy Court in Houston.

Northvolt’s Canadian plant under construction in the province of Quebec was a cornerstone of Prime Minister Justin Trudeau’s industrial and climate policies.

“We don’t think giving more money to the company is on the cards for Quebec and the federal government,” the source told Reuters.

Representatives for Quebec and Trudeau did not respond to request for comment.

In its bankruptcy filing, Northvolt said its Canadian and German operations are not part of the bankruptcy proceedings and that progress will continue. Northvolt initially said the Canadian plant would begin operations in 2026, though the company has since said it will take longer.

Northvolt announced in 2023 that it would invest C$7 billion ($5.17 billion) in the Canadian plant. At the time, Northvolt said the Canadian government as well as the Quebec provincial government would each contribute $1 billion for the first phase of construction.

The total outstanding land loan from Canada to Northvolt is $181 million, according to Thursday’s filing. The Canada plant, called Northvolt Six, currently holds approximately $240 million in cash and “represents a key pillar of the company’s future growth strategy,” the bankruptcy filing said.

Trudeau has made EV manufacturing a key plank of Canada’s industrial policy, offering production credits and other support to 13 battery companies and automakers, including Northvolt, worth C$56 billion ($41.34 billion).

(Reporting by Divya Rajagopal in Toronto; Editing by Caroline Stauffer and Matthew Lewis)