Stellantis and Chinese battery giant CATL have announced a €4.1 billion ($4.33 billion) joint venture to establish electric vehicle (EV) battery factory in Zaragoza, northeastern Spain.
The EV battery manufacturing facility is expected to commence production by the end of 2026, with a planned capacity of 50 gigawatt-hours, sufficient to power approximately 700,000 cars daily, according to the Electric Vehicle Database.
Stellantis said the EV battery plant will focus on producing lithium iron phosphate batteries for affordable small and medium-sized EVs, a significant step in addressing Europe’s challenges in transitioning to EVs amid high costs and intense competition from Chinese automakers.
Spain’s abundant renewable energy resources, lower labor costs, and substantial government incentives likely influenced the decision. The Spanish government has allocated around €300 million to Stellantis from a €5 billion pandemic relief fund aimed at promoting EV and battery production.
Spain, the EU’s second-largest car producer, has become increasingly attractive for green investments due to its cost-effective solar and wind power, with renewable energy making up 80% of installed capacity in the Aragon region.
The move comes as Europe seeks to reduce reliance on Asian battery suppliers and counter the U.S.’s green subsidy initiatives. However, Spain’s abstention from an EU vote to impose additional tariffs on Chinese EV imports likely played a role in securing the deal. Prime Minister Pedro Sanchez has advocated against punitive measures on Chinese EVs to avoid a potential trade war, Reuters news report said.
The EV batter plant in Zaragoza will be CATL’s third European factory, complementing operations in Germany and ongoing construction in Hungary. Stellantis plans to leverage this facility to boost EV production in Spain’s Aragon and Galicia regions, aligning with its broader strategy to strengthen its European EV supply chain.
Stellantis’ Chairman John Elkann highlighted the project’s alignment with the region’s leadership in renewable energy, while CATL’s CEO Robin Zeng emphasized the venture’s role in accelerating the transition to sustainable transportation.