Volkswagen AG and Northvolt AB have created a 50/50 collaboration to build a factory for lithium-ion batteries.

Construction of the production facility is scheduled to start in Salzgitter (Lower Saxony) in 2020.

Start of battery production is planned for the end of 2023/2024.

The conclusion of the deal came in June.

Volkswagen has invested 900 million euros with some going into the joint venture and. Some directly to Northvolt.

In return, Volkswagen has received about 20 percent of the shares in the Swedish battery manufacturer and a seat on the Supervisory Board.

Dr. Stefan Sommer, member of the Volkswagen AG board of management at Northvolt, said: “The battery cell is the key component for electric mobility. Therefore, Volkswagen and Northvolt are together pushing ahead efficient cell production in Europe to accelerate their joint battery activities.

“With the founding of the joint venture 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.”

As part of the electrification strategy, the Volkswagen Group alone has an annual demand of more than 150 gigawatt hours from 2025 in Europe – and in Asia at the same requirement.

The Group intends to launch almost 70 new electric models in the next ten 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.

Volkswagen is investing more than €30 billion into the electrification of the fleet by 2023.

Fredrik Hedlund, chief executive officer of the new partnership, said: “Building a gigafactory in Germany together with Volkswagen 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."