Volkswagen is intensifying its collaboration with its battery partner Gotion High-tech in Europe, marking a significant development in the automotive and battery manufacturing sectors. The battery cell factory currently being constructed by Volkswagen's subsidiary PowerCo in Sagunt, Spain, is transitioning into a joint venture project. In exchange, Gotion is facilitating Volkswagen's entry into battery projects in Slovakia and Morocco. The realization of this substantial deal is contingent upon the approval of shareholders and regulatory authorities.
On Monday, Gotion announced its intentions through a stock market communication, revealing plans to establish three joint ventures with Volkswagen, coupled with a combined investment of €3.22 billion in interconnected battery projects. These ambitious initiatives are already underway: PowerCo is actively constructing a battery cell factory in Sagunt near Valencia, while Gotion is establishing a battery cell factory in Slovakia through its subsidiary Gotion InoBat Batteries, alongside a cathode material factory in Morocco.
The three projects, which were previously pursued independently, will now be managed under new joint ventures established by both companies. This arrangement allows Volkswagen to provide Gotion access to battery cell production in Sagunt, retaining a controlling stake of 51% to Gotion's 49%. Conversely, Gotion will grant Volkswagen a nearly equal partnership in its large-scale battery projects in Slovakia and Morocco, where the ownership shares will flip: 51% for Gotion and 49% for Volkswagen. Each party will appoint its subsidiaries as contract partners, with PowerCo representing Volkswagen.
A noteworthy portion of the joint investment—€2.26 billion—is allocated to the Sagunt facility, while approximately €480 million is designated for both Slovakia and Morocco. The investment is set to be executed in stages, although specific timelines remain undisclosed. Gotion has emphasized its commitment to deepening collaboration within the supply chain for Volkswagen's European market. The battery projects in Spain and Slovakia are expected to produce battery cells with a total annual capacity of 37.5 GWh, primarily designated for Volkswagen's use. The Moroccan factory for LFP (Lithium Iron Phosphate) cathodes aims for an annual output of 100,000 tons, which will supply the two new battery joint ventures in Spain and Slovakia, thereby enhancing Volkswagen's vertical supply chain integration.
This partnership represents a significant evolution in the operational relationship between Volkswagen, PowerCo, and Gotion. Volkswagen holds approximately 25% of Gotion's shares, making it the largest shareholder of the Chinese company, which ranks among the top five cell manufacturers globally. Gotion has been a reliable partner for Volkswagen, supplying standardized cells for models manufactured in Spain, such as the ID. Polo and Cupra Raval, from its factory in Hefei, China, where mass production commenced in November 2025. Gotion was also a technology partner in the development of the standardized cell and the construction of PowerCo's cell production facility in Salzgitter, involving hundreds of Chinese specialists.
The newly announced mega-deal, involving three additional joint ventures, elevates the partnership to a new level. The Sagunt cell factory holds immense significance as one of the three PowerCo locations intended to ensure a reliable supply of proprietary battery cells in the future. Reports from the Spanish trade publication "La Tribuna de Automoción" had suggested in July that Volkswagen might shift Sagunt to a joint venture, and the accuracy of their sources is now evident.
However, Gotion's stock market communication indicates a revised target for annual lithium-ion battery production capacity in Spain, now aimed at 29.1 GWh, down from the previously discussed 40 GWh. Whether this adjustment reflects a change in plans or if the 29 GWh figure represents an initial expansion phase tied to the investment sum remains to be clarified through future corporate communications. Meanwhile, Gotion continues to advance its separate plans for a factory in Valladolid, Spain, where an initial facility for cathodes and battery recycling is set to be established following recent funding commitments from the Perte-VEC program.
Looking ahead to Slovakia, Gotion InoBat Batteries (GIB) began construction of a battery factory in Šurany in 2025, initially targeting pilot production in September 2026 and mass production in 2027. GIB is a joint venture between Gotion and the Slovak company InoBat, with Gotion holding 80% of the shares, thus holding significant influence within the partnership. The future role of InoBat concerning PowerCo's involvement on-site remains unclear.
Gotion aims for an annual production capacity of 8.4 GWh at the new joint venture in Šurany, despite earlier projections of 20 GWh and potential future expansions to 40 GWh. The specifics regarding the quantities produced for Volkswagen, as well as delivery guarantees, will be subject to final agreements yet to be negotiated.
Additionally, Gotion's Moroccan plant will also transition into a joint venture ownership structure. Just weeks ago, the African Development Bank approved a €100 million loan to support the construction of the cathode material production facility in the Rabat-Salé-Kénitra free trade zone. The bank reiterated in July that the initial phase aims for an annual capacity of 10 GWh for LFP cathode materials, with a long-term goal of expanding capacity to 100 GWh, but without providing a timeline.
It's worth noting that Gotion had signed an investment agreement with the Moroccan government in 2024, establishing Gotion Power Morocco as a wholly-owned subsidiary. At that time, an initial annual capacity of 20 GWh was anticipated. However, the recent stock market communication from Gotion only mentions a target output of 100,000 tons annually for the new joint venture era with PowerCo, lacking further details on planned output or timelines. The company has only stated that "the construction period for each project is expected to take no longer than five years, subject to actual construction progress."
Approval from shareholders and relevant regulatory authorities is still required for the investment agreement, despite Gotion's board having approved the proposal on September 28. The status of Volkswagen management's consent remains unclear. The Wolfsburg-based automaker's interest in this mega-deal is understandable, as establishing a proprietary cell manufacturing operation entails substantial financial investments, and Volkswagen is currently navigating a challenging period. The company has been seeking strategies to manage the investments of its subsidiary PowerCo effectively. By partnering with Gotion, Volkswagen anticipates gaining more advantages than disadvantages in financing over the medium to long term.
As reported by electrive.net.
