Volkswagen’s affordable EV plans have a new Chinese partner

Volkswagen has agreed three joint ventures with China’s Gotion to build lithium iron phosphate battery capacity, selling 49% of PowerCo’s Valencia plant and taking minority stakes in a Slovak cell plant and a Moroccan cathode plant. Volkswagen says Europe currently has no relevant capacity of its own in the chemistry.

Volkswagen has agreed three joint ventures with the Chinese battery maker Gotion to build lithium iron phosphate capacity in Europe, InsideEVs reported. Gotion takes 49% of PowerCo’s plant at Valencia, which will run at 29.1 GWh. Volkswagen says Europe currently has no relevant capacity in the chemistry.

It controls one of the three.

Gotion holds 51% of the Slovak cell plant at Surany, rated at 8.4 GWh, and 51% of a Moroccan plant at Kenitra making 100,000 tonnes of cathode material a year, filings show. PowerCo takes 49% of both. Only Valencia stays under Volkswagen control, at 51%.

One of them is not in Europe.

Kenitra sits in Morocco, outside the union, and makes the cathode material rather than the cells. The Valencia investment is put at about EUR 2.26B and the other two at about EUR 480M each. Volkswagen describes the package as strengthening Europe’s battery industry.

The forecast was 2027.

In January 2023 the campaign group Transport and Environment calculated that Europe could produce all its own cells by 2027 and end its reliance on Chinese imports, naming Northvolt among the major producers. Northvolt went bankrupt. The group had warned the projection depended on sufficient and timely funding.

Valencia was meant to be next.

PowerCo commissioned Salzgitter in December and Valencia was scheduled to follow in July 2027, with the Ontario plant slipping to 2029 last week. The Spanish site is now nearly half Chinese-owned. It is described as a European production hub for the unified cell.

Spain is where this is happening.

Stellantis and CATL are building a 50 GWh lithium iron phosphate plant at Zaragoza, due to start producing next year. Together with Valencia’s 29.1 GWh, that is close to 80 GWh of Chinese-partnered capacity in one country. Volkswagen already builds its cheapest electric cars there.

The reason is cost.

Volkswagen calls the chemistry a key technology for affordable electric mobility in the volume segment, and says its European share could rise from 10% today to between 40 and 60% by 2030. China holds the supply chain for it. The cheap cells for Europe’s cheap cars are the ones Europe cannot currently make.