Swedish battery group Northvolt, on December 29, said that it had commissioned its gigafactory at Skelleftea in northern Sweden.
This will be the first of its kind to be undertaken by a European company on the continent.
Intended to compete with US electric car giant Tesla and Asian producers of lithium-ion batteries, the factory in Skelleftea assembled its first battery cell late on December 28, Northvolt said.
"Marking a new chapter in European industrial history, the cell is the first to have been fully designed, developed and assembled at a gigafactory by a homegrown European battery company," Northvolt said.
Once at full capacity, the site is expected to produce enough batteries to power one million electric vehicles annually, with an annual production capacity of 60 gigawatt hours (GWh), according to the firm.
"Today is a great milestone for Northvolt which the team has worked very hard to achieve," Northvolt chief executive Peter Carlsson said in a company statement.
"Of course, this first cell is only the beginning. Over the course of the coming years, we look forward to Northvolt Ett expanding its production capacity greatly to enable the European transition to clean energy," he said.
Tesla is due to launch its first factory in Europe shortly and Asian rivals have significant operations in Poland and Hungary -- but no European firm had yet operated a significant facility until now.
The lithium-ion plant was the first to be built in the European Union by a European company and it is meant to be the launchpad for a regional battery champion that can compete not only with Tesla but also Asian suppliers including Panasonic, LG Chem, and CATL, as per the Reuters report.
Northvolt, one of Europe's leading battery hopefuls, has already secured $30 billion (26.5 billion euros) worth of orders from European car giants including Germany's BMW and Volkswagen, and Sweden's Volvo, with which it plans a second European factory.
The new factory, dubbed "Northvolt Ett" (Northvolt One) in Swedish, already employs 500 people and will likely have as many as 3,000 staff once it reaches full capacity.
The first deliveries to commercial customers will be made in the first part of 2022.
The Swedish company, which has already raised funding of several billion euros, was founded in 2016 by Carlsson and Italian Paolo Cerruti, both former Tesla employees.
Its known shareholders include Volkswagen, Goldman Sachs, BMW, Nordic funds and, since 2020, the founder of Spotify, Swedish billionaire Daniel Ek.
In addition to private funding, Northvolt has also benefited from European loans, as the region plays catch-up in its electric vehicle production capacity.
Faced with China, which dominates the market, Europe accounted for just three percent of world battery cell production in 2020 but aims to corner 25 percent of the market by the end of the decade, with several factory openings planned.
The Covid-19 pandemic had threatened Northvolt's goal of launching production before the end of the year.
Fredrik Hedlund, the head of Northvolt's new gigafactory, told AFP that the site should achieve production capacity for 300,000 vehicles, or 16 GWh, within the next two years.
The gigafactory will only consume renewable energy, according to Northvolt.
Its location, some 200 kilometres (124 miles) from the Arctic Circle, was chosen because it is near important sites of renewable production in northern Sweden, including hydropower.
"Making battery cells is a very energy hungry industry," Hedlund said. "We have the objective to having the greenest cell on Earth."(With inputs from AFP)