Gotion High-tech (SZSE:002074) and Volkswagen Group (ETR:VOW3) have announced a plan to jointly invest about €3.22 billion ($5.22 billion). Those funds will fund battery and materials production projects in Europe and North Africa.
This investment announcement comes along with a plan to establish three joint ventures (JVs) through their subsidiaries in Spain, Slovakia, and Morocco.
Under the plan, Gotion will invest about €1.6 billion. Meanwhile, Volkswagen’s PowerCo will invest around €1.62 billion across a number of stages.
The JVs are meant to strengthen Europe’s position in the global LFP battery market. Reaching that goal requires expanding regional LFP battery production and diversifying supply sources for key cathode active materials. Both moves would improve supply security for Europe’s battery industry.
Volkswagen notes that LFP batteries are competitive in terms of costs, long service life, and robustness, making them ideal for electric mobility. The company predicts that demand in Europe will grow considerably in the coming years, rising from about 10% today to between 40–60% by 2030.
The new JVs will see expansion of production of LFP battery cells and cathode active material across three sites.
In Spain, Volkswagen’s PowerCo gigafactory will be transitioned to a JV, with PowerCo holding a 51% stake. Under the plan, the JV partners will develop the site into a European production hub for unified cells based on LFP technology.
In the Slovak Republic, the Gotion cell factory will be transferred to a JV, with Gotion holding a 51% stake. The JV will focus on LFP cells for electric vehicle (EV) applications and battery energy storage systems (BESS).
Finally, in Morocco, the JV will see the establishment of a new production facility to produce cathode material for LFP batteries. The goal is to diversify sources of supply for key cathode active materials.
Increasing supply security and expanding the regional battery value chain are the outcomes that the diversification is meant to deliver. Gotion will hold a 51% stake in the JV.
The new cooperation agreements and JVs strengthen the companies already firm ties. Volkswagen (China) Investment is Gotion’s largest shareholder, holding a 24.28% stake in Gotion as of 20 September 2026.
The Gotion board approved the proposal on 28 September, but the companies still need to sign the official investment agreement. The agreement still requires shareholder approval and government clearances in China and overseas.
Global EV battery maker expands in Europe
Gotion is a global manufacturer of EV batteries and BESS. Its total EV battery installations reached 34GWh in the first seven months of 2026, up 44.2% from the same period in 2025.
The company ranked fifth globally in that period as one of the world’s top EV battery makers, following behind CATL (HKG:3750), BYD (HKG:1211), LG Energy Solution (KRX:373220), and CALB (HKG:3931), according to SNE Research.
Cost-competitive chemistry gains EU traction
Lithium iron phosphate (LFP) batteries use iron phosphate as the cathode material instead of nickel-cobalt-aluminum or nickel-manganese-cobalt, which are typical chemistries for other LFP batteries.
LFP batteries use iron and phosphate, which are relatively abundant and inexpensive.
In 2025, LFP batteries accounted for over 55% of EV batteries globally, up from close to 50% in 2024. However, deployment is heavily concentrated in China at the moment.
In the EU, LFP batteries accounted for just over 10% in 2025.
The International Energy Agency (IEA) reports that production of LFP cathode materials and their precursors is almost entirely concentrated in China still. However, diversification is starting to take place, with Korean and Japanese producers investing in technology and manufacturing.
The cathode active material is the single most important component in battery cell production costs, accounting for 25–30% for LFP batteries.
The deal is directly tied to raw materials demand. As LFP batteries rely on lithium, iron, and phosphate, Europe’s new production hubs will intensify competition for these inputs. At the same time, this demand creates fresh opportunities for explorers and producers across the global supply chain.
The Volkswagen-Gotion partnership underscores Europe’s accelerating shift toward LFP technology as a growing preferred chemistry for batteries.
With JVs spanning Spain, Slovakia, and Morocco, the deal positions both companies at the centre of Europe’s evolving battery supply chain. It also diversifies critical cathode material sources beyond shareholders, signaling a decisive step in securing Europe’s role in the global battery market.
Write to Amy Rotman at Mining.com.au
Main image: Volkswagen
