Volkswagen and Gotion Anchor a 37.5 GWh LFP Battery Chain Across Spain, Slovakia and Morocco

Introduction

Volkswagen has spent the better part of five years trying to build a European battery industry it can call its own, and until now the results have been mixed. The Salzgitter site that was supposed to anchor that effort has slipped repeatedly, PowerCo has walked back its capacity targets more than once, and the continent has been almost entirely dependent on Asian imports for the cells that go into its electric cars. On Monday, Volkswagen Group, PowerCo SE and Gotion High-tech moved to correct that with the largest coordinated battery announcement the European market has seen: three joint ventures, roughly €3.22 billion of committed capital, and a cell footprint that finally includes the one chemistry Europe does not make at all.

The agreement, disclosed in a Shenzhen stock exchange filing by Gotion on 28 September 2026 and detailed in a Volkswagen Group press release the same day, covers three sites: Valencia in Spain, Šurany in the Slovak Republic, and Kenitra in Morocco. Together the two European cell plants are planned at 37.5 GWh of annual lithium-ion capacity, with a third site supplying 100,000 metric tons a year of lithium iron phosphate cathode active material. What makes the deal more than a capacity announcement is the chemistry: every gigawatt-hour described is LFP, and Europe currently has no relevant LFP production at all.

Three Joint Ventures, Three Different Ownership Splits

The three ventures are not structured identically, and the differences say something about who needed what.

At Valencia, the site where PowerCo's under-construction gigafactory already stands, the existing entity is to be folded into a joint venture in which PowerCo retains 51 percent and remains the majority shareholder, with Gotion acquiring 49 percent through a capital increase. The stated goal is to develop Valencia into a European production hub for Unified Cells based on LFP technology. Gotion is described as participating in the development of Volkswagen's key European cell base, while PowerCo takes minority positions in the Gotion-side projects — a cross-holding structure that ties the two companies together at the asset level rather than only at the supply-contract level.

Šurany inverts the split. There, Gotion already operates a cell factory, and it will hold 51 percent with PowerCo taking 49 percent. The Slovak venture is aimed at LFP cells for both vehicle applications and energy storage systems, which matters because grid storage and vehicle cells are increasingly sourced from the same production lines.

Kenitra in Morocco is the materials end of the chain, and Gotion again holds 51 percent. The Kenitra facility is planned to produce 100,000 metric tons annually of LFP cathode active material, with output prioritised for the two European cell joint ventures. Putting cathode production in North Africa and feeding it northward is an attempt to shorten a supply chain that currently runs from Chinese precursor through Chinese cathode to European cell, and to hold the value-added steps closer to the assembly plant.

On the money, CnEVPost reports Gotion's contribution at about €1.6 billion in total and PowerCo's at about €1.62 billion, with the largest single project — Valencia at roughly €2.26 billion for 29.1 GWh — carrying most of the weight. Volkswagen's own release gives a slightly different cut of the same structure, noting that PowerCo expects to contribute around €470 million to the Šurany and Kenitra sites by 2030 for its 49 percent stakes, in return for which Gotion will invest around €1.1 billion for its 49 percent of Valencia. The two sets of figures are not contradictory so much as differently framed: one counts total project capex, the other counts equity paid for minority positions.

Thomas Schmall, Volkswagen's board member for technology and chairman of PowerCo's supervisory board, framed the move as a break with the continent's dependency problem. Gotion chairman Li Zhen described the structure as a partnership "bound by a shared future" built over six years of cooperation since 2020, and PowerCo CEO Frank Blome positioned it as a milestone in building a European battery industry rather than a sourcing arrangement. Whether those characterisations survive contact with the build schedule is a separate question.

The LFP Gap Is the Actual Story

The reason LFP matters so much here is a numbers problem, and Volkswagen put the numbers in its own release. LFP's share of the global market sits at around 10 percent today. Forecasts cited by the company put it at 40 to 60 percent by 2030. Against that forecast, Europe's installed position is zero.

LFP — lithium iron phosphate — trades the nickel and cobalt of NMC chemistry for iron and phosphorus. The result is a cell that is cheaper, tolerates far more charge cycles, and has a much lower thermal runaway risk profile, at the cost of lower energy density. For a European OEM competing on volume models in a price-sensitive segment, that trade is increasingly easy to accept, because the pack no longer has to clear a premium to justify itself on range.

The asymmetry is the uncomfortable part. The cathode active material that defines an LFP cell is precisely the component Europe has never had a competitive supply of, and it is the part that carries the intellectual property. Manufacturing prismatic cells is a capital and yield problem; manufacturing cathode material is a chemistry and process problem. Gotion is one of the few companies outside China that has industrial cathode scale, and it is also the only one of its kind that Volkswagen already held 24.28 percent of as of 20 September, making it the battery maker's largest shareholder.

That cross-holding is why the announcement carries a piece of fine print worth reading closely. Separately from the joint ventures, Volkswagen Group, through its subsidiary Volkswagen (China) Investment Co, has entered into definitive agreements to sell 5.3 percent of its equity stake in Gotion. The company frames this as optimising equity structures and supporting long-term strategic synergy. Because Volkswagen had already agreed not to exercise voting rights over part of its holding, the sale does not reduce the voting rights it exercises, and its board representation and other nomination rights are unaffected. Volkswagen will remain a strategic investor. The practical effect is that the two companies are locking in a deep industrial integration while trimming the visible size of the cross-shareholding — a structure that is increasingly common in the Chinese EV supply chain, where OEM and supplier ownership ties are normal rather than unusual.

Regulatory and Execution Risk

Neither company presented this as a done deal. Gotion's board approved the proposal on 28 September, but the investment agreements have not been signed. The transaction requires Gotion shareholder approval and regulatory clearances in China and in each of the three host countries. Gotion itself flagged in the filing that the projects will raise capital expenditure in the near term and that financing, approvals, and market changes could all affect construction progress and expected returns.

One detail in the filing deserves attention because it is a scope limit rather than a caveat: the construction scope specified for all three projects excludes land and factory buildings. That is a large carve-out. It is the difference between financing production equipment and financing an industrial site, and it means the €3.22 billion headline is not a complete capital cost for standing up three industrial operations from nothing. Each project is also specified at no more than five years to build.

Gotion's own momentum makes the ambition more credible than a typical greenfield announcement. According to South Korean market research firm SNE Research, cited in the filing coverage, Gotion's global EV battery installations reached 34.0 GWh in the first seven months of 2026, up 44.2 percent year on year, lifting it to fifth place globally with a 4.7 percent share against 3.9 percent a year earlier. For context, the same data set has CATL at 39.9 percent and 289.6 GWh, BYD at 14.7 percent, LG Energy Solution at 8.3 percent, and CALB at 5.1 percent. Gotion is the only company in that top five that is not Korean, Japanese, or already vertically integrated into its own vehicle brand — which is precisely why Volkswagen wanted equity rather than a purchasing contract.

The Gotion name has not been a stranger to European expansion. It already runs the Šurany plant now being folded into a joint venture, and Volkswagen said the Valencia site is envisaged to be transferred, with planned investments and job creation measures remaining as previously announced. Those are the two largest national EV manufacturing commitments in Spain and Slovakia respectively, and both were delivered by a Chinese partner — a reversal of the decade-old assumption that European battery strategy would be built by European and Korean firms. It is also the pattern now visible across the sector, as the wider solid-state and next-generation battery build-out accelerates across Asia and Europe.

Conclusion

What Volkswagen and Gotion announced on Monday is best understood as a bet that Europe's battery problem was never capital but chemistry. The money is large but ordinary — €3.22 billion across three sites is no longer a headline figure in this sector. The unusual part is the specificity: a named cathode material, a named host for it, and a named partner who already knows how to make it at scale, arranged so that the equity moves in both directions at once.

The immediate tests are procedural. Gotion's shareholders have to approve, three governments have to clear, and the investment agreements still have to be signed. Then there is the schedule, which at up to five years per project puts meaningful Valencia output well into the next decade, against a 2030 forecast window in which LFP is supposed to go from 10 percent to as much as 60 percent of the market. If European LFP supply arrives too late, the region will have spent €3.22 billion arriving late.

The one part of the announcement that is already unambiguous is the direction of travel. Europe will make LFP cells, at least some of them, and it will do so with a Chinese partner rather than around one. For an industry that spent two decades assuming it could not make batteries at all, that is a real change — even if the volume arrives later than the press release implies.

Images

Illustrative: an exposed bank of large prismatic cells wired for series-parallel operation. Representative of the cell format these plants will build, not a photograph of any of the three announced sites.

Illustrative: an industrial installation of prismatic cells joined by metal busbars. The busbar-linked cell format used in stationary storage, similar in construction to the unified cells planned for Valencia.

References

• Volkswagen Group — Volkswagen Group, PowerCo and Gotion deepen strategic partnership (press release, 28 September 2026)
• CnEVPost — Gotion, VW plan $3.67 billion investment in European battery supply chain
• electrive — Volkswagen strengthens ties with Gotion with three joint ventures
• SNE Research global EV battery installation data, January–July 2026, as cited in the Gotion Shenzhen stock exchange filing