Volkswagen AG and Northvolt AB (www.northvolt.com) have created a 50/50 joint venture to build a factory for lithium-ion batteries.

Construction of the production facility is scheduled to start in Salzgitter, Germany, in 2020.

The start of production is planned for the end of 2023 or the beginning of 2024.

The initial annual output is to be 16GWhr.

The finalisation of the joint venture is the result of an agreement concluded in June.

Part of the 900 million euros invested by Volkswagen is now ‘flowing’ into the joint venture; another part has gone directly to Northvolt.

In return, Volkswagen has received about 20% of the shares in the Swedish battery manufacturer and a seat on the supervisory board.

Stefan Sommer, member of the Volkswagen AG board of management responsible for procurement and member of the supervisory board of Northvolt AB, 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.”

Fredrik Hedlund, CEO of the new joint venture and former chief strategy officer of Northvolt, 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 automotive electrification in Europe.”

The Volkswagen Group 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 its electric platforms in the next decade will increase to 22 million.

Volkswagen will have invested more than 30 billion euros in the electrification of its fleet by 2023.