Germany wants to rival Tesla’s Gigafactory in battery production to power millions of upcoming electric vehicles and for storing renewable energy.

TerraE Holding GmbH will choose a company out of five candidates next month to build a 34 gigawatt-hour battery factory, according to TerraE’s chief executive Holger Gritzka. The former ThyssenKrupp executive led a consortium of 17 German companies and won government funding for plant.

The plant is scheduled to break ground in 2019 and reach full capacity by 2028, the chief executive said.

TerraE was founded in May 2017 by six member companies wanting to form a consortium supporting large-scale manufacturing of li-ion batteries. These batteries are expected to play an important role in Germany’s economy and carbon emissions policies.

Li-ion batteries provide storage stability to manage intermittent flows of wind and solar power in electricity generation. The advanced batteries will also be pivotal in the goal held by the national government and German automakers to bring out millions of new battery electric vehicles over the next decade.

Tesla is on track to finish building its $5 billion, 35 GWh Gigafactory in Nevada. The company will need greater battery capacity to reach its 500,000 unit target next year and to double that number soon after. The California-based company has been looking at possible locations for Gigafactory 2 in Europe and China.

Bloomberg New Energy Finance reported that South Korea’s LG Ltd. and Samsung SDI Co. currently lead the market; and that Tesla could be number one or two in the near future as Gigafactory product surges.

Total capacity is on a global scale set to more than by double from around 103 gWh in the second quarter this year to about 278 GWh in 2021, Bloomberg reports.

German automakers have been scrambling to take a competitive stance in luxury EVs. It follows Tesla’s strong global presence and over 400,000 advance orders placed last year on the Model 3.

There’s also the crackdown following Volkswagen’s scandal in diesel emissions cheating from 2015. The national government, and the European Union, are changing policies shaping the future of diesel vehicles that can be sold; and making demands on the volume of EVs to be sold.

SEE ALSO:  Germany Acts to Cut Diesel Emissions And Clean Up Testing

German automakers need access to more affordable, long-range batteries to make EV goals set by VW, Daimler, and BMW viable economically.

The project has been funded with about 5.2 million euros ($6.2 million) in subsidies from Germany’s Ministry of Education and Research.

The first focus will be on stationary units for energy storage, as demand for the energy surges. German automakers are following another one of Tesla’s leads by setting up their own energy storage divisions.

In May, German Chancellor Angela Merkel broke ground on a new plant to assemble lithium-ion energy-storage units for Daimler AG.