STOCKHOLM (Reuters) – Volvo Vehicles and battery maker Northvolt will open a joint analysis and improvement centre in Sweden as a part of a 30 billion crown ($3.3 billion) funding, the carmaker mentioned on Friday.

In June, the Swedish firms introduced plans for a three way partnership to develop batteries for electrical automobiles, together with organising a gigafactory for manufacturing and an R&D centre.

Volvo Vehicles mentioned the 2 had now signed a binding settlement for the enterprise. The R&D centre, situated in Gothenburg, will begin operations subsequent 12 months.

“Our partnership with Northvolt secures the availability of high-quality, sustainably-produced batteries for the following technology of pure electrical Volvos,” Chief Government Hakan Samuelsson mentioned in an announcement.

Volvo Vehicles, majority owned by China’s Geely Holding, goals to promote 50% pure electrical automobiles by the center of this decade and totally electrical automobiles solely by 2030.

The Gothenburg-based firm added it anticipated to verify a location in Europe for the brand new gigafactory, with potential annual capability of as much as 50 gigawatt hours (GWh), in early 2022.

Volvo’s preliminary public providing (IPO) on Oct. 29 was the largest in Europe to this point this 12 months.

Northvolt, whose largest shareholder is Volkswagen (DE:), mentioned in October it deliberate to speculate $750 million increasing its laboratory facility in Sweden.

The lithium-ion battery maker raised $2.75 billion in fairness this 12 months to broaden capability at its manufacturing facility in northern Sweden, which is because of begin manufacturing this month.

Aiming to tackle Asian gamers resembling CATL and LG Chem, it’s aiming for a 20% market share in Europe by 2030. It has thus far secured over $27 billion value of contracts from clients together with BMW, Scania, Volkswagen, Volvo Vehicles and Polestar.

($1 = 9.0561 Swedish crowns)