Siemens is investing €10 million (£8.7m) to support a Swedish start-up company’s project to build Europe’s largest lithium-ion battery factory.

It has partnered with Northvolt, which will become the German engineering firm’s preferred supplier for the batteries once the facility is up and running.

Northvolt intends to build a factory in Sweden with a target production of 32GWh of battery packs a year by 2023, a project that would rival the scale of Tesla’s Gigafactory in Nevada.

Lithium-ion batteries are used in various applications, including cars and home appliances.

Peter Carlsson, Co-Founder and CEO of Northvolt said: “The European industry is moving rapidly towards electrification. With its world-class expertise within electrification, automation and digitalisation, Siemens will become an important technology partners, supplier and customer to Northvolt in this coming transition. Once we begin large-scale production, our aim is to supply the greenest lithium-ion batteries in the world.”

Earlier this year, the European Investment Bank approved a loan of up to €52.5 million (£46.7m) for the project.