(Bloomberg) -- Stellantis NV and a Chinese partner plan to invest as much as €4.1 billion ($4.3 billion) in a battery plant in Spain, giving a boost to Europe’s struggling effort to build an electric-vehicle supply chain.
The factory in Zaragoza will start producing lithium-iron phosphate batteries — also known as LFP — by the end of 2026, the automaker and China’s Contemporary Amperex Technology Co. Ltd. said in a joint statement on Tuesday. The facility could reach a 50 gigawatt-hour capacity, they said, which is typically enough to produce hundreds of thousands of batteries a year.
Jeep-maker Stellantis is “embracing all available advanced battery technologies to bring competitive electric vehicle products to our customers,” Chairman John Elkann said.
The plan provides a boost for Europe, which has been struggling in its effort to build a homegrown battery industry that can break China’s dominance in EVs. Swedish battery maker Northvolt AB filed for bankruptcy last month, and other projects have been delayed or canceled.
Spain — Europe’s second largest car producer after Germany — is emerging as a winner for some battery investments, due to advantages such as lower energy costs.
In an effort to bolster Spain’s EV supply chain, Prime Minister Pedro Sanchez traveled to China in September to seek backing for its carmaking sector. Breaking ranks with the EU, he said he opposed the tariffs on Chinese EVs and urged European leaders to rethink their stance. Chinese carmakers have been looking to bolster their manufacturing presence in Europe to counter the tariffs.
Spain will help fund the Stellantis and CATL plant with the EU’s recovery funds, of which the country is the second largest recipient.
Automakers including Stellantis are turning to cheaper LFP batteries to try to lure customers that have so far balked at the high prices of EVs.
The joint venture between CATL and Stellantis will produce batteries for the automaker’s small and mid-sized sedans, crossovers and sport utility vehicles with intermediate ranges. CATL already has two other battery factories in Hungary and Germany.
The factory will complement the Stellantis-backed battery plant in France, the operator ACC said in a statement. ACC, a joint venture with Mercedes-Benz Group AG, will unveil plans next year for sites in Germany and Italy that have been put on hold.
The transaction is expected to close in 2025 and is subject to regulatory approvals.
--With assistance from Clara Hernanz Lizarraga.
(Updates with additional detail throughout.)
©2024 Bloomberg L.P.
