German carmaker BMW announced on Thursday that it has entered a long-term supply contract with Swedish company Northvolt for battery cells worth 2 billion euros (2.27 billion U.S. dollars).

"To make an effective contribution to climate protection, we aim to improve our products' overall environmental balance from resources to recycling," said Oliver Zipse, chairman of the board of management of BMW.

The battery cells would be produced from 2024 onwards in Europe at the Northvolt gigafactory currently under construction in northern Sweden. BMW and Northvolt would source the required cobalt and lithium from mines that would fulfill sustainability standards of both companies.

"Northvolt is the third battery cell supplier we have partnered with, alongside our existing partners, CATL and Samsung SDI. Signing this contract is another step towards meeting our growing need for battery cells in the long term," stated Andreas Wendt, member of the board of management of BMW.

BMW had already entered a cooperation with Northvolt in order to develop battery cells two years ago. While BMW contributed its battery expertise, the young Swedish company that was founded in 2016 was providing the necessary production capacities.

BMW is aiming to achieve a car fleet of 25 electrified models by 2025 with more than half of them operating fully electric.