Volkswagen Group, PowerCo and Gotion High-tech are forming three joint ventures to produce lithium iron phosphate (LFP) battery cells in Valencia, Spain, and Šurany, Slovakia, and LFP cathode material in Kenitra, Morocco. Gotion will invest around €1.1 billion in Valencia, and PowerCo around €470 million in the other sites by 2030.
The Volkswagen Group, its battery subsidiary PowerCo and Chinese battery maker Gotion High-tech are to form three joint ventures to produce lithium iron phosphate (LFP) battery cells and cathode active material for Europe. The joint ventures will be based in Valencia, Spain; Šurany, Slovakia; and Kenitra, Morocco.
PowerCo’s gigafactory under construction in Valencia will be transferred to a joint venture in which PowerCo, based in Salzgitter, Germany, will hold 51%. Gotion, which is headquartered in Hefei, China, is to invest around €1.1 billion for the remaining 49%. The two companies will manage the venture jointly, with the aim of making the site a European production hub for PowerCo’s Unified Cells using LFP chemistry. Planned investments and job creation at Valencia remain as previously announced.
In Šurany, Gotion’s existing cell factory will move into a joint venture in which Gotion holds 51%. It will focus on LFP cells for both electric vehicles (EVs) and energy storage systems (ESS). In Kenitra, a new joint venture, also 51% owned by Gotion, plans to build a plant producing LFP cathode material. PowerCo is expected to contribute around €470 million in total by 2030 for its 49% stakes in the Šurany and Kenitra ventures.
The agreement also covers joint procurement and sales in Europe. It remains subject to regulatory approvals and customary closing conditions, including approval by Gotion’s shareholders’ meeting.
According to Thomas Schmall, member of the board of management for technology at the Volkswagen Group and chairman of the supervisory board of PowerCo SE, the deal extends the carmaker’s battery activities across the whole value chain. “I am delighted that we are expanding our long-standing partnership with Gotion into the joint industrial production of LFP batteries to strengthen Europe’s battery industry. This marks a major breakthrough for both companies and brings us one step closer to the forefront of electric mobility. Volkswagen is the first European automotive manufacturer to cover the entire battery value chain, from development and cathode materials through to production,” he says.
The companies cite forecasts that LFP’s share of the European market could rise from around 10% today to between 40% and 60% by 2030. Europe currently has no relevant LFP production capacity. LFP cells offer lower costs, long service life and robustness, which makes them suited to volume-segment EVs.
“Volkswagen and PowerCo are building Europe’s battery industry. The partnership with Gotion is the next milestone on this path: It strengthens the resilience of our value chain, accelerates industrialisation and combines PowerCo’s capabilities with the strengths of a long-standing partner,” says Frank Blome, chief executive of PowerCo SE.
The three companies have worked together since 2020. Gotion supplies cells to the Volkswagen Group and is a strategic partner of PowerCo.
Separately, the Volkswagen Group has agreed to sell a 5.3% equity stake in Gotion through its subsidiary Volkswagen (China) Investment Co. (VCIC). Volkswagen had previously agreed not to exercise voting rights on part of its holding, so the sale will not reduce the voting rights it exercises in Gotion. Its board representation and nomination rights are also unaffected, and it will remain a strategic investor. The sale is subject to regulatory clearance.
“Through cross-shareholdings and three joint sites, we are anchoring our shared strategy to localise battery production in Europe, racing to seize the opportunities of global electric mobility, and jointly forging a new paradigm of world-class, win-win cooperation in the lithium battery industry,” says Li Zhen, chairman of Gotion High-tech.
PowerCo is building three cell factories with a combined capacity of up to 200GWh per year, in Salzgitter, Valencia and St. Thomas, Canada.
