Volvo Car Group has announced it intends to establish a joint venture with Swedish battery firm Northvolt to develop and produce more sustainable batteries which it said will be tailored to power the next generation of pure electric Volvo and Polestar cars.

As a first step for the 50-50 joint venture, Volvo Car Group and Northvolt aim to set up a research and development centre in Sweden that will begin operations in 2022.

The centre is intended to build on the battery expertise within both companies and develop next-generation, state-of-the-art battery cells and vehicle integration technologies, specifically developed for use in Volvo and Polestar cars.

The planned joint venture will also establish a new gigafactory in Europe with a potential capacity of up to 50 gigawatt hours (GWh) per year. Production is scheduled to start in 2026.

As part of the plans, Volvo Car Group is also looking to source 15 GWh of battery cells per year from the existing Northvolt Ett battery plant in Skellefteå, Sweden starting in 2024.

“Alongside previously announced battery supply agreements, a partnership with Northvolt will secure the European battery cell needs that will drive Volvo Cars’ ambitious electrification plans,” said Volvo Car Group.

“Volvo Cars aims to sell 50 per cent pure electric cars by the middle of this decade, and by 2030 it aims to sell only fully electric cars.

“Today, the production of batteries for Volvo Car Group’s fully electric cars represents a large part of the car’s total lifecycle carbon emissions.

“By working with Northvolt, a leader in sustainable battery production, and producing batteries near its manufacturing facilities in Europe, Volvo Car Group can reduce the environmental footprint attributable to battery sourcing and production for its future cars.”

Volvo Car Group CEO Håkan Samuelsson said: “By working with Northvolt we will secure a supply of high-quality, more sustainable battery cells for our pure electric cars.

“Working closely with Northvolt will also allow us to strengthen our in-house development capabilities.”

The new gigafactory, planned to be powered by 100% clean energy, is expected to employ around 3,000 people.

The location of the new plant is yet to be decided.

The first car to feature battery cells developed through the joint venture will be the electric successor to Volvo Cars’ best-selling XC60 model.

“Volvo Cars and Polestar are industry leaders in the transition to electrification and perfect partners on the journey ahead as we aim to develop and produce the world’s most sustainable battery cells,” said Peter Carlsson, co-founder and CEO of Northvolt.

“We are proud to become their exclusive battery cell production partner in Europe.”

The partnership and joint venture are subject to final negotiation and agreements between the parties, including board approval.