Swedish carmaker Volvo and battery cell specialist Northvolt have chosen Gothenburg in western Sweden as site for a new gigafactory that will produce battery cells with a capacity of up to 50 gigawatt hours, sufficient to supply batteries for about half a million electric cars per year.

Construction of the plant in the Torslanda district will start in 2023, with production slated to begin in 2025. Torslanda is close to Volvo Cars largest car plant, and the site has access to a strong pipeline of renewable energy supply.

The factory will churn out battery cells specifically developed for use in cars by Volvo itself, as well as those of EV manufacturer Polestar, which is a unit of Volvo, itself owned by China’s Geely.

“Our battery cell partnership with Northvolt is key to our strategic ambitions in electrification,” said Håkan Samuelsson, Volvo Cars chief executive.

“We are committed to becoming a leader in the premium electric car segment and selling only pure electric vehicles by 2030.”

The plant will be Northvolt’s second gigafactory after the Skellefteå plant in northern Sweden, which in December produced a first lithium-ion battery cell and is currently being ramped up. The company plans to increase output at Skellefteå to 60GWh per year in order to meet $30bn worth of contracts with key customers.

Northvolt already has lined up supply deals with Volkswagen, BMW and Scania, next to Volvo.

“Establishing this gigafactory in Gothenburg is a decisive move, both to continue to transform one of the most dynamic automotive regions in the world, and to become the leading global supplier of sustainable batteries”, said Northvolt CEO Peter Carlsson.

Northvolt and Volvo in December 2021 had already announced the construction of an R&D centre, also in Gothenburg, as part of an investment of about SK30bn ($3.27bn).