VW’s Scania plans to invest in $5 billion Swedish battery plant

Volkswagen-owned truckmaker Scania will invest 10 million euros ($12.4 million) in a 4 billion euro ($5 billion) project to build Europe's biggest battery cell plant in northern Sweden.

Sweden's Northvolt, whose CEO Peter Carlsson used to work for Tesla, is racing against rivals such as South Korea's LG Chem to set up large-scale battery cell plants across Europe, where automakers and industrial firms have so far been largely reliant on Asian imports. LG Chem will open a lithium-ion battery factory in Poland next year.

European automakers such as BMW, Daimler, Volkswagen and Volvo Cars are all set to ramp up electric car production in the coming years.

Northvolt and Scania said on Thursday they had agreed to develop and commercialize battery cell technology for heavy commercial vehicles. Scania's investment will go toward building a demonstration production line and research facility for Northvolt in Skelleftea, northern Sweden.

The firms have also struck a deal for future purchases of battery cells, their joint statement said.

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