Gotion To Invest $1.25 Billion In Volkswagen’s Spain Battery Plant: Reuters

China’s Gotion High-tech will invest €1.1 billion (US$1.25 billion) in Volkswagen’s battery plant in Valencia, Spain, as part of a broader agreement to develop a European battery supply chain, Reuters reported.

The investment will give Gotion a 49% stake in the Valencia facility, with Volkswagen’s battery business PowerCo retaining the majority stake. The plant is planned to become a European production hub for lithium iron phosphate (LFP) batteries, according to Volkswagen.

Under the agreement, PowerCo will also invest €470 million in two Gotion facilities. These include a battery cell factory in Šurany, Slovakia, and a new cathode-material production facility in Kenitra, Morocco. PowerCo will take a 49% stake in each facility.

Gotion And Volkswagen Expand European Battery Partnership

The agreement expands the existing relationship between Volkswagen and Gotion. Volkswagen is currently Gotion’s largest single shareholder, with a 24% stake. Volkswagen has also agreed to sell a 5.3% stake in Gotion to an unnamed buyer, valued at about $373 million based on LSEG data, Reuters reported.

Volkswagen Chief Technology Officer Thomas Schmall said the agreement represents a further step in the companies’ battery cooperation and European electric vehicle supply-chain plans.

The investment comes as Chinese battery and electric vehicle manufacturers increase their presence in Europe, while the European Union considers measures aimed at protecting local industry from lower-cost imports.

Valencia Plant To Focus On LFP Battery Production

The Valencia facility will focus on the production of LFP batteries, a battery chemistry increasingly used in electric vehicles. The plant will form part of Volkswagen’s broader battery manufacturing strategy in Europe.

Gotion’s investment gives it a significant minority position in the facility, while PowerCo will retain control through its 51% stake.

The agreement also links battery-cell production in Spain with upstream material and cell manufacturing activities in Slovakia and Morocco, creating a supply-chain structure spanning several European and neighbouring markets.

Volkswagen is currently restructuring its operations and has been reducing its investment portfolio as part of a wider cost-cutting programme. Reuters reported that the German automaker is also planning significant workforce reductions.