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Volkswagen, Northvolt to proceed with construction of battery plant in Germany

Volkswagen AG and battery producer Northvolt AB will proceed with building a lithium-ion cell production facility in Germany as part of a 50/50 joint venture between the two companies, according to a Sept. 6 release.

Construction on the plant in Salzgitter will begin in 2020. Production is scheduled to start by the end of 2023 or beginning of 2024, with an initial output of 16 GWh.

In June, the carmaker agreed to invest €900 million in Stockholm-based Northvolt for a 20% stake in the company and a seat on its supervisory board. Volkswagen's investment will be split between the joint venture and the Swedish startup.

Stefan Sommer, head of procurement for Volkswagen Group and now a member of Northvolt's supervisory board, said the companies are accelerating their joint battery activities in Europe with the planned construction of the factory in Germany.

Meanwhile, Fredrik Hedlund, the battery producer's former chief strategy officer who is now the CEO of the venture, said the creation of the gigafactory "allows Northvolt to further increase the production capacity of green battery cells with a minimal CO2 footprint."

As part of the company's electrification strategy announced in November 2018, Volkswagen will invest €30 billion through 2023 to retool three of its German plants and adapt them for high-volume production of electric cars.

The automaker has since said it will also launch around 70 electric vehicles by 2028 and produce 22 million electric cars, more than half of which will be manufactured in China. As such, Volkswagen said in its most recent release that it is pouring more than €30 billion into the electrification of its fleet by 2023.