Up until just a few months ago, betting on battery gigafactories, green hydrogen fuel cell plants and cleantech manufacturing still seemed like a smart idea.
But despite zero-emission vehicle mandates throughout North America and Europe, and government subsidies for cleantech and clean energy, the space appears to be losing some power.
In December, E-One Moli Energy abruptly announced it was cancelling a $1 billion expansion to its lithium-ion battery manufacturing plant in Maple Ridge. The plan, announced the month before, was backed by $80 million from the B.C. government and more than $205 million from Ottawa.
The company offered little explanation, stating only that the decision was in step with other battery makers suspending similar projects across North America.
Waning enthusiasm around electric vehicles—something that would affect demand for battery manufacturing—raises concerns that Canadian governments, having pledged more than $30 billion in subsidies to attract new battery manufacturing plants to Quebec and Ontario, may have placed the wrong bet.
In 2024, global equity investment in cleantech was at its lowest point in four years, according to a recent Crunchbase report. EV batteries took the biggest hit.
One indicator of this, noted in the report, was the U.S. bankruptcy filing by Sweden’s Northvolt—one of the companies that had announced plans for a multibillion-dollar battery manufacturing facility in Quebec.
The bankruptcy filing has raised concerns the company will not have the financial wherewithal to complete its $7 billion Canadian project.
The hydrogen fuel cell vehicle space also lost momentum in 2024.
Wal van Lierop, founding partner at Chrysalix Venture Capital, said companies in the lithium-ion battery space may be pulling back over concerns they won’t be able to compete with the manufacturing juggernaut that is China, and that some new chemistry may come along that makes lithium-ion batteries obsolete.
“There is a concern that better batteries will appear,” van Lierop said. “One thing that I see now is that a number of people are getting very quickly much more interested in aluminum-ion batteries.”
While the U.S. has been on a re-industrialization campaign in recent years—something that generally bodes well for North American manufacturing—the country’s new administration doesn’t much like anything green, and there is some uncertainty around U.S. incentives for cleantech manufacturing under President Donald Trump.
This, too, could prompt cleantech investors to push pause.
Early in 2024, B.C.’s biggest cleantech manufacturer—Ballard Power Systems, a pioneer in hydrogen fuel cell technology—announced it was rethinking its plans for a new $130 million manufacturing facility in China. Instead, the company proposed a $220 million manufacturing plant in Texas, for which it is eligible for $94 million in government funding.
But even those plans are now on hold, in response to what Ballard says is “a slowing hydrogen and fuel cell policy implementation and market adoption.”
“Given continued uncertainties in hydrogen and fuel cell policies, and the uncertainties relating to the adoption rate and timing for [proton-exchange membrane] fuel cells in heavy mobility applications, we do not see a business case for production capacity expansion investments in the foreseeable future,” Ballard said in a third-quarter management and discussion analysis.
Ballard is now pushing off any investment decision for the Texas plant to 2026, “pending clear market adoption and demand indicators, while still preserving over $94 million of awarded government funding.”
Meanwhile, some B.C. cleantech companies that are still moving forward with new manufacturing plant plans are turning their attention south.
Moment Energy, a Coquitlam-based company that repurposes used electric vehicle batteries to make larger-scale power banks, is planning to build a factory in Texas, and Ionomr Innovations, which developed next-generation ion-exchange membranes for use in hydrogen fuel cells and electrolysers, recently opened a new manufacturing plant in Boston.
“This is not an indictment specifically of cleantech manufacturing or policies around cleantech manufacturing,” said Andrew Wynn-Williams, divisional vice-president for the Canadian Manufacturers and Exporters. “It’s an indictment of the broader malaise of manufacturing created by costs.
“When costs are this high, to get the kind of investment to create or open a new facility like that requires heavy subsidies. That puts you in a position where you’re trying to collect taxes from the industry, and turn around and use it to subsidize a specific industry, as opposed to lowering taxes across the board.”
Merran Smith, president of New Economy Canada, characterizes the recent slowing momentum for the battery sector as a bump in the energy transition road.
“There’s going to be bumps on the road of this massive global energy transition,” she said. “In 2023, there was $1.7 trillion invested in it. That’s a lot of capital, and there’s going to be bumps in the road, like there are in any market segment that is going through that amount of transition.”
It’s not all bad news for cleantech manufacturing. Svante, which makes filters and machines for carbon capture, is nearing completion on a new US$145 million ($200 million) 141,000-square-foot manufacturing plant in Burnaby. And there are other cleantech companies in B.C. quietly building out their manufacturing capacity at home.
Invinity Energy Systems, for example, built a new manufacturing facility in Vancouver a year and a half ago. The company makes vanadium flow batteries used for utility-scale storage. There is a growing market for large-scale energy storage in the intermittent energy space (wind and solar) and in backup power for large data centres—an area in which there is considerable growth potential because of the vast computing power needed for artificial intelligence.
The new plant employs 85 people and has a production capacity of up to 200 one-megawatt modules per year.
The company said it chose to maintain its manufacturing in Vancouver mainly because of B.C.’s engineering talent in the electro-chemical space.
“For now, this is a really good place for us to be simply because of having that ability to close-couple the engineering work with the production,” said Invinity chief commercial officer Matt Harper. “Especially in the electrochemical industries, there’s a phenomenal talent pool here in British Columbia.”
Smith noted that, according to Bloomberg New Energy Finance, global investments in cleantech reached $2 trillion last year, with Canada in 10th spot for new cleantech investments of more than $35 billion.
B.C. is not likely to ever match the manufacturing capacity of Ontario or Quebec, but it remains fertile soil for smaller, high-tech manufacturing, thanks to that talent.
“There’s a place for Vancouver to be a bridge between that research and development and commercialization,” Harper said. “Are we going to see factories at the scale of South China or some parts of Mexico? Probably not. I think we’re always going to be a niche producer.”
