Volkswagen, Northvolt to build EV battery plant

German auto producer Volkswagen has signed a joint venture agreement with Swedish firm Northvolt to build an electric vehicle (EV) battery plant in Germany's Lower Saxony, accelerating efforts to secure the power packs needed for the new models that the carmaker plans to introduce within the next decade.

The Salzgitter plant will initially have annual production capacity of 16GWh, the companies said. Construction is scheduled to begin next year with production to start in late 2023 or early 2024.

Volkswagen in June agreed to invest 900mn euros ($994mn) in the Swedish battery producer targeting a joint EV battery plant. Volkswagen has made slower progress with South Korean producer SK Innovation, which tentatively agreed last November to jointly build a large-scale battery plant in the US.

There are concerns that a legal battle between SK and South Korean rival LG Chem may be stalling the company's Volkswagen deal. SK, LG Chem and Samsung SDI all have agreements in place to help supply batteries to Volkswagen in Europe. SK set itself apart by also winning a preliminary deal to supply batteries for Volkswagen EVs in North America.

Volkswagen by 2025 expects to need 150GWh of batteries for the EVs it plans to be selling in Europe, as well as an additional 150GWh for Asia-Pacific markets.