FRANKFURT (Reuters) - Germany is and will remain a strong industrial location, Chancellor Olaf Scholz said on Monday as he formally opened construction at Northvolt's battery cell factory in Heide, in the northern state of Schleswig-Holstein.

The Swedish battery developer and manufacturer will produce climate-friendly battery cells for 1 million cars a year at the site.

"Investments like those made by Northvolt are of strategic importance for our country and for Europe," Scholz said at the event. Battery cells "Made in Germany" would help to build cars beyond combustion engines, he added.

Northvolt referred in a statement to the sufficient wind energy available off the west coast of Schleswig-Holstein, where Heide is located.

The company said this was a crucial point in determining the location. The first wind farm in Germany was built in the local Dithmarschen area in 1987, it said.

Cell assembly in the new factory is planned for 2026, and its final expansion is scheduled to be completed in 2029. The investment amounts to 4.5 billion euros ($4.86 billion) and around 3,000 new jobs are to be created, Northvolt said.

First discussions about the project took place in September 2021, and the site will now be built on an area of ​​110 hectares.

The EU Commission in January approved state aid for the project. In total, there are subsidies amounting to 902 million euros - 700 million of which are grants and 202 million are guarantees, as previously reported.

($1 = 0.9255 euros)