Volkswagen expands LFP battery supply chain with Gotion

Volkswagen is expanding regional production of lithium iron phosphate (LFP) batteries and cathode materials through a partnership with China-based Gotion High-Tech. The joint effort aims to build a more secure European battery supply chain. LFP batteries account for around 10% of the European market today, with that share projected to reach 40% to 60% by 2030.

Under the agreement, Gotion will invest around €1.1 billion (about $1.25 billion) for a 49% stake in Volkswagen's Valencia site in Spain, while Volkswagen battery subsidiary PowerCo keeps the 51% majority. The Valencia facility will produce LFP cells and Unified Cells.

PowerCo will invest roughly €470 million in total by 2030 to acquire 49% stakes in two Gotion facilities: the Šurany cell factory in Slovakia and a cathode-material plant in Kenitra, Morocco. Gotion will hold the 51% majority in both assets. The transactions remain subject to regulatory approvals and a vote by Gotion shareholders.

The relationship began in 2020. Volkswagen currently ranks as Gotion's largest single shareholder with a stake of about 24%. In a separate move, Volkswagen agreed to sell a 5.3% stake in Gotion while retaining its board seats and voting rights, pending regulatory clearance.

Shares of Volkswagen have dropped 26.7% over the past year, while the broader industry declined 20.3%.