STOCKHOLM (Reuters) - Automakers Volkswagen and BMW are among the investors in Europe’s biggest lithium-ion battery plant, Sweden’s Northvolt said on Wednesday after it raised $1 billion in equity capital to complete funding for the facility.

FILE PHOTO: Northvolt logo is pictured in the Northvolt office in Stockholm, Sweden June 14, 2018. REUTERS/Esha Vaish/File Photo

Northvolt said construction of the plant in Skelleftea in northern Sweden would begin in August, to provide an initial 16 GWh of cell manufacturing capacity. It added it had already sold a significant part of planned production volumes at a combined order value of more than $13 billion through 2030.

The plant is one of Sweden’s biggest industrial projects in decades and will play an integral part in European efforts to compete with Asian rivals such as CATL, Samsung and LG Chem, which are leaders in the battery market after locking in supply deals with carmakers.

“Today is not only a great milestone for Northvolt, it also marks a key moment for Europe that clearly shows that we are ready to compete in the coming wave of electrification,” Northvolt CEO and former Tesla executive Peter Carlsson said.

Carlsson told reporters at Northvolt’s headquarters in central Stockholm that production would begin in 2021 at the Skelleftea plant, named “Northvolt Ett” - “Northvolt One” in Swedish - in a nod to Tesla’s numerically named Gigafactories in the United States and soon, China.

“From a longer-term perspective, we will be in a constant financing process. If we want to be one of the bigger players in Europe in 2030 we will need to build up towards 150 GWh of capacity,” Carlsson said.

Funding for a project set to cost billions of euros, which envisages the Swedish plant eventually reaching a capacity of at least 32 GWh, had been seen as challenging by some investors despite political and business support in the Nordic country.

Those fears have been laid to rest with big European industrial players coming on board along with international and domestic financial investors.

Swedish pension fund firms AMF and Folksam and IKEA-linked IMAS Foundation also contributed to the equity capital raising, which was led by Goldman Sachs and VW, Northvolt said.

The European Investment Bank is among the project’s lenders and will provide a 350 million euro loan, its largest ever direct financing of battery technology.

Volkswagen said separately it was buying about 20 percent of the shares in the Swedish battery cell producer, with the start of battery production for the carmaker planned for the end of 2023 or early 2024.

The start-up, co-founded by Carlsson, is also setting up a joint venture with Volkswagen to build a second battery plant in Salzgitter, Germany. Including its direct investment in Northvolt, Volkswagen was investing 900 million euros ($1.02 billion), the automaker said.