Gotion High-tech and Volkswagen Group plan to jointly invest about €3.22 billion ($3.67 billion) in battery and materials production projects across Europe and North Africa as the companies expand their cooperation on Volkswagen’s European battery supply chain.
The companies plan to establish three joint ventures through their subsidiaries in Spain, Slovakia and Morocco, according to a Gotion stock exchange filing on Monday. Gotion plans to contribute about €1.6 billion, while Volkswagen’s PowerCo is expected to invest approximately €1.62 billion, with funding provided in stages.
Valencia Project to Produce 29.1 GWh of Batteries
The largest proposed project is in Valencia, Spain, where the companies plan to invest about €2.26 billion to establish annual lithium-ion battery production capacity of 29.1 GWh.
Gotion plans to acquire a 49% stake in the existing PowerCo Spain through a capital increase. PowerCo would retain a controlling 51% stake following the transaction.
The battery cells produced by the European projects are intended to primarily serve Volkswagen’s demand in Europe. Specific purchase volumes and supply arrangements will be determined through subsequent definitive agreements.
Slovakia Battery Plant Planned at Šurany
The second battery project is planned for Šurany, Slovakia. The companies expect to invest approximately €480 million to establish annual lithium-ion battery production capacity of 8.4 GWh.
Gotion would hold a 51% stake in the Slovak joint venture, with PowerCo holding the remaining 49%.
Combined, the proposed battery projects in Spain and Slovakia would provide 37.5 GWh of annual production capacity.
Morocco to Produce 100,000 Tonnes of Cathode Materials
The companies also plan to invest about €480 million in a lithium iron phosphate cathode materials project in Kenitra, Morocco.
The facility is planned to have annual production capacity of 100,000 metric tons, with output intended to prioritize supply to the two European battery joint ventures.
Gotion would hold 51% of the Moroccan joint venture, while PowerCo would own the remaining 49%.
The construction scope outlined in Gotion’s filing excludes land and factory buildings. Each of the three projects is expected to take no more than five years to construct, subject to actual progress.
Companies Deepen Battery Supply Chain Cooperation
The proposed investments would further strengthen the existing relationship between Gotion and Volkswagen.
Volkswagen (China) Investment Co held a 24.28% stake in Gotion as of September 20, making Volkswagen the battery manufacturer’s largest shareholder.
Under the proposed cooperation, Gotion would participate in the development of Volkswagen’s key European cell production base, while PowerCo would take stakes in Gotion’s battery and materials projects in Europe and Africa.
The companies intend to use the structure to develop a localized battery supply network serving Volkswagen’s European market.
Investment Still Requires Approvals
Gotion’s board approved the proposal on September 28, but the companies have not yet signed the investment agreement.
The transactions remain subject to shareholder approval and regulatory clearances in China and the relevant overseas markets.
Gotion said the projects would increase its capital expenditure in the near term. Financing arrangements, regulatory approvals and changes in market conditions could affect construction schedules and expected returns, the company said.
