STOCKHOLM (Reuters) – Volvo Cars and battery maker Northvolt will open a joint research and development center in Sweden as part of a SEK 30 billion ($ 3.3 billion) investment, the automaker said on Friday .
In June, the Swedish companies announced their intention to form a joint venture to develop batteries for electric cars, including the establishment of a giga-production plant and an R&D center.
Volvo Cars said the two have now signed a binding agreement for the company. The R&D center, located in Gothenburg, will start operations next year.
“Our partnership with Northvolt ensures the supply of high-quality, sustainably produced batteries for the next generation of pure-electric Volvo,” Managing Director Hakan Samuelsson said in a statement.
Volvo Cars, majority-owned by Chinese company Geely Holding, aims to sell 50% pure electric cars by the middle of this decade and fully electric cars only by 2030.
The Gothenburg-based company added that it plans to confirm a location in Europe for the new gigafactory, with a potential annual capacity of up to 50 gigawatt hours (GWh), in early 2022.
Volvo’s initial public offering (IPO) on October 29 was the largest in Europe so far this year.
Northvolt, whose largest shareholder is Volkswagen, announced in October that it planned to invest $ 750 million to expand its laboratory in Sweden.
The lithium-ion battery maker has raised $ 2.75 billion in equity this year to expand the capacity of its plant in northern Sweden, which is expected to start production this month.
Aiming to take on Asian players such as CATL and LG Chem, it is aiming for a 20% market share in Europe by 2030. It has so far secured more than $ 27 billion in contracts from clients such as BMW, Scania, Volkswagen, Volvo Cars and L’Etoile polaire.
($ 1 = 9,0561 Swedish kronor)
(Reporting by Helena Soderpalm; editing by David Evans)