Volkswagen and Northvolt have formed a 50/50 joint venture to build a factory for lithium-ion batteries.
Construction is scheduled to start in Salzgitter, Lower Saxony, in 2020.
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The start of production is planned for the end of 2023/early 2024.
Initial annual output will be 16GWh.
The finalisation of the joint venture results from an agreement both parties concluded in June.
Part of the approximately EUR900m invested by VW is now flowing into the joint venture. Another part goes directly to Northvolt.
In return, VW holds about 20 percent of shares in the Swedish battery manufacturer and a seat on the supervisory board.
Fredrik Hedlund, CEO of the new joint venture, said: "Building a gigafactory in Germany allows [us] to further increase the production capacity of green battery cells with a minimal CO2 footprint."
The has an annual demand of 150 gigawatt hours from 2025 in Europe and the same in Asia.
The group is planning to launch 70 new electric models in the next decade and expects to build 22m vehicles on electric platforms.
