German automaker Volkswagen has purchased a 20% share in Swedish battery company Northvolt.
The investment, valued at $1 billion, will gain Volkswagen a seat on the board, and a 50/50 joint venture between the two companies is expected to result in a 16GWh battery gigafactory, to be built in Germany.
The deal, although confirmed, is yet to be approved by the Swedish competition authority.
Volkswagen Group and Goldman Sachs Merchant Banking Division are leading a $1 billion equity capital raise in Northvolt, along with AMF, BMW Group, Folksam Group and IMAS Foundation.
The facility is expected to begin battery production by the end of 2023, or start of 2024, with construction to commence in 2020.
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The gigafactory is expected to manufacture 16GWh of batteries in its first year of operations, with production expected to rise to 24GWH in subsequent years.
Dr Stefan Sommer, Member of the Volkswagen AG Board of Management responsible for Procurement, said: “Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy.
“With Northvolt, we have now also found a European partner whose know-how and sustainable, CO2-optimized battery cell production processes will enable us to advance cell production here in Germany. The prerequisite for this is, of course, the creation of the necessary economic framework.”