Stellantis and CATL pump €4.1 billion in joint Spanish battery plant

French-Italian-American car group Stellantis is joining forces with the world’s biggest battery maker, Chinese CATL, to build a new factory at the Stellantis’ Zaragoza site in Spain to produce low-cost lithium iron phosphate (LFP) batteries. For CATL, it will be its third battery factory in Europe.

“Targeted to start production by the end of 2026, the facility could reach up to 50 GWh capacity, subject to the evolution of the European electrical market and continued support from authorities in Spain and the European Union,” the press release states.

In November 2023, Stellantis and CATL announced signing a non-binding Memorandum of Understanding (MoU) for the local supply of LFP battery cells and modules to power Stellantis’ B and C-segment electric vehicles in Europe. Now, they are putting their money where their mouth is, investing 4.1 billion euros in the Zaragosa plant, a 50/50 joint venture.

LFP versus NMC batteries

Lithium-iron-phosphate batteries have a long service life and higher thermal stability and are cheaper than the nickel-cobalt-manganese (NCM) batteries used in most premium EVs today.

Stellantis says it is employing a dual-chemistry approach—lithium-ion nickel manganese cobalt (NMC) and lithium iron phosphate (LFP)—”to serve all customers and explore innovative battery cell and pack technologies.”

Contemporary Amperex Technology Co. Limited (CATL) is the world’s largest EV battery supplier, with a market share of almost 37% from January to October 2024. It has 13 battery factories worldwide, two of which are in Europe today.

CATL started serial production at its new lithium-ion battery cell plant, CATT, in Thuringia, Germany, in December 2022. It was the first battery factory of CATL operational outside of China, with an initial manufacturing capacity estimated at 8 Gigawatt hours per year that will be beefed up to 14 GWh.

Large BMW order

The European factory’s construction was announced in 2018 after CATL reeled in a significant order from BMW for the following years. Meanwhile, the list of European clients is extended with names like Volkswagen, Daimler, Volvo, and Bosch. And one of CATL’s most prominent clients is still American Tesla (in China).

At the same time, the Chinese are finishing a second 100 GWh battery plant in Debrecen in the eastern part of Hungary. The foundation stone was laid in April 2023, with serial operations testing starting in 2024 and production beginning in 2025. Debrecen, Hungary, is also where BMW is building the first EVs from the ‘Neue Klasse’ series.

Mercedes-Benz prime customer

Mercedes-Benz is one of the big consumers of battery cells and modules produced there. Mercedes initiated an alliance with CATL in 2020 and will be the first to use the cells for its next-generation models made in Germany and Hungary.

For Mercedes-Benz, the deal with CATL is another milestone in reaching a production capacity of more than 200 GWh at eight global production sites by the end of the decade. But the Debrecen factory will also supply BMW, Volkswagen, and Stellantis.