Strengthening Europe's Battery Industry
Volkswagen Group, PowerCo SE, and Gotion High-tech have announced a significant enhancement of their strategic partnership aimed at accelerating the establishment of a regional battery supply chain within Europe. Building on their collaborative efforts that began in 2020, the trio has agreed to form three joint ventures located in Valencia, Spain; Šurany, Slovakia; and Kenitra, Morocco. These ventures are set to focus on the industrial production of lithium iron phosphate (LFP) battery cells and cathode materials. This partnership also encompasses mutual procurement and sales activities throughout Europe. In addition to this, Volkswagen has finalized binding agreements to sell a 5.3% stake in its Gotion investment, a move intended to optimize its equity structures and unlock long-term strategic synergies. Following the completion of this transaction, Volkswagen will still retain a significant stake in Gotion.
Anticipating Growth in LFP Battery Demand
LFP batteries are recognized for their competitive cost, prolonged lifespan, and robust durability, making them a pivotal technology for affordable electric mobility in the mass market. Forecasts suggest that Europe is poised for a substantial increase in demand for LFP batteries, with market share projections soaring from approximately 10% today to between 40% and 60% by 2030. However, it is important to note that Europe currently lacks significant production capacities for LFP batteries. The partnership with Gotion is expected to bolster Europe's position in the global LFP battery market. Together, the partners will expand regional production of LFP batteries and diversify sourcing for cathode active materials, thereby enhancing supply security and competitiveness within the European battery industry.
Thomas Schmall, a member of the Volkswagen Group Board for Technology and Chair of the PowerCo SE Supervisory Board, expressed enthusiasm about the expansion of their long-standing partnership with Gotion into the joint industrial production of LFP batteries. He emphasized that this development marks a pivotal breakthrough for both companies, bringing them closer to their goal of taking a leading role in electric mobility. Volkswagen is recognized as the first European automaker to cover the entire battery value chain, from development to raw materials and production.
Li Zhen, Chairman of Gotion High-tech, highlighted that six years of close cooperation between Volkswagen and Gotion have fostered deep mutual trust and cultivated a relationship that transcends ordinary business dealings. This partnership, now underpinned by shared aspirations for a sustainable future, seeks to accelerate global strategic collaboration. By establishing mutual investments and three joint locations, they aim to anchor their strategy for localizing battery production in Europe while leveraging opportunities in the global electric mobility landscape.
Frank Blome, CEO of PowerCo SE, noted that the collaboration with Gotion represents a key milestone in building Europe’s battery industry. This partnership strengthens the resilience of their supply chain, accelerates industrialization, and combines PowerCo's capabilities with the strengths of a long-term partner.
Since 2020, Volkswagen Group, PowerCo, and Gotion have been working closely and successfully together, with Gotion serving as both a cell supplier for the Volkswagen Group and a strategic partner for PowerCo. The new joint ventures signify a strategic expansion of this proven collaboration into the industrial production of LFP battery cells and cathode materials. At the three sites, the partners will share investments and industrial responsibilities, thus supporting Volkswagen Group's long-term plans for establishing a European battery supply chain and bolstering PowerCo's growth trajectory.
According to the terms of the agreement, PowerCo is expected to invest around €470 million in the Šurany and Kenitra sites by 2030 to acquire a 49% stake in each. In return, Gotion is projected to invest approximately €1.1 billion to secure a 49% stake in the Valencia site, reflecting the scale and strategic significance of this European production hub. The agreement remains subject to regulatory approvals and customary closing conditions, including the approval of Gotion's general meeting.
Additionally, building on their long-standing partnership and aiming to optimize equity structures while supporting long-term strategic synergies, the Volkswagen Group has finalized binding agreements through its subsidiary Volkswagen (China) Investment Co., Ltd. (VCIC) to sell a 5.3% stake in its investment in Gotion. As Volkswagen had previously agreed not to exercise voting rights for part of its stake, this intended transaction will not reduce the voting rights exercised by the Volkswagen Group at Gotion. Representation on Gotion's Board of Directors and other nomination rights will remain unaffected by the proposed transaction. After the transaction closes, Volkswagen will continue to be involved as a strategic investor in Gotion. The transaction is subject to all necessary regulatory approvals.
As reported by volkswagen-group.com.
