In a quest to empower Europe's electric-vehicle supply chain, Volkswagen and Northvolt have finalised a 50/50 joint venture to build a "gigafactory" for lithium-ion batteries in Germany.
Construction of the production facility is scheduled to start in Salzgitter, Lower Saxony, in 2020, with the start of production planned for the end of 2023 or beginning of 2024. The initial annual output will be 16 GWh.
The finalization of the joint venture is the result of an agreement which both parties concluded in June, which saw investment for a factory in Sweden too, also backed by BMW.
In the wake of the so-called "dieselgate" scandal that broke in 2015, VW has been pushing hard to electrify its fleet.
VW is forecasting, based on the amount of vehicles it intends to role out, that by 2025 it will require more than 150 GWh from 2025 in Europe -- and the same again in Asia.
"Part of the approximately Euro900 million [$1 billion] invested by VW is now flowing into the JV. Another part goes directly to Northvolt. In return, VW has received about 20% of the shares in the Swedish battery manufacturer and a seat on the supervisory board," a statement from both parties read.
Fredrik Hedlund, CEO of the new joint venture and former chief strategy officer of Northvolt, said: "Building a gigafactory in Germany together with VW allows Northvolt to further increase the production capacity of green battery cells with a minimal CO2 footprint. This will have a significant impact on electrification in Europe."
VW is investing more than Eur30 billion into the electrification of its fleet by 2023.
Stefan Sommer, member of the VW AG board of management, said: "The battery cell is the key component for electric mobility. Therefore, VW and Northvolt are together pushing ahead efficient cell production in Europe to accelerate their joint battery activities. With the founding of the JV and the planned construction of a battery cell factory in Salzgitter, we are making a decisive contribution to establishing the core battery cell technology in Germany as well."
VW is planning to launch almost 70 new electric models in the next 10 years. As a result, the projected number of vehicles to be built on the group?s electric platforms in the next decade will increase to 22 million.
