Volkswagen is set to invest €900m (£801m) in battery cell producer Northvolt AB, acquiring 20% of the Swedish company’s shares.

As part of the investment, a 50/50 joint venture will be launched to build a 16 GWh battery cell factory in Europe later this year. Construction of the production facility is scheduled to start in 2020, with battery cell production for Volkswagen earmarked to commence at the end of 2023.

“Volkswagen is laying the groundwork at all levels for the successful implementation of its electrification strategy,” said Stefan Sommer, member of the Volkswagen AG board of management. “With Northvolt, we have now also found a European partner whose know-how and sustainable, CO2-optimized battery cell production processes will enable us to advance cell production here in Germany. The prerequisite for this is, of course, the creation of the necessary economic framework.”

Northvolt is a European supplier of sustainable, high-quality battery cells and systems. The company is currently setting up pilot production of battery cells and a battery cell production facility with an initial capacity of 16 GWh in Sweden.

Founded in 2016, the company has made progress on its mission to deliver the world’s greenest lithium-ion battery with a minimal CO2 footprint and the highest ambitions for recycling. Apart from Volkswagen AG, Northvolt’s industrial partners and customers include Scania, ABB, BMW, Siemens, Vattenfall and Vestas.

The announcement follows the recent news that former chief executive of Volkswagen, Martin Winterkorn, was among five people charged with fraud for involvement in the company’s diesel emissions scandal in 2015.

Prosecutors in the German city of Braunschweig accused Winterkorn of a “particularly serious” fraud, as well as a breach of competition laws.

The carmaker was forced to recall hundreds of thousands of cars globally in 2015 after illegally installing software in diesel engines to bypass strict US anti-pollution tests. The devices, that were designed to perform better when the car was in test conditions, were described as “useless” by the prosecutors.