Volkswagen AG will ramp up talks with Swedish battery startup Northvolt AB on plans to co-produce battery cells in Germany, Reuters reported May 25, citing German-language newspaper Boersen-Zeitung.

The German carmaker announced March 21 its plans to form the European Battery Union with Northvolt, which makes lithium-ion batteries, by 2020. The plan was to create a consortium of research and industry partners from seven European Union member states, which will share results of their battery cell research work.

Reuters said Volkswagen has earlier committed to spend €1 billion on the project, matching the German government's planned investment of €1 billion through 2021 on domestic production facilities of lithium-ion battery cells. Reuters said the company's planned spending depends on certain economic preconditions, such as subsidized electricity.

Volkswagen board member Stefan Sommer reportedly told Boersen-Zeitung that the company "will intensify our talks over the next weeks with regard to a more detailed planning," adding that he is confident that battery cell production in Salzgitter, near Volkswagen's headquarters in the German state of Lower Saxony, would push through.

The report said Volkswagen is also scouting for other potential sites in Europe for battery cell production.