Stellantis and CATL Join Forces for Major EV Battery Plant in Spain

Strategic Partnership to Tackle European EV Battery Shortage
Stellantis, one of Europe’s largest car manufacturers, and CATL, a global leader in electric vehicle (EV) battery production, have announced a significant partnership to build a new lithium iron phosphate (LFP) battery factory in Zaragoza, Spain. The facility is expected to start producing batteries by the end of 2026, marking a crucial step in Stellantis’ efforts to meet the European Union’s green transition goals. The joint venture involves an investment of €4.1 billion, and the plant will be carbon-neutral, leveraging Spain’s renewable energy resources such as solar, wind, and hydroelectric power. This new venture is seen as a response to Europe’s increasing demand for locally produced EV batteries as automakers transition away from internal combustion engines.

The EU’s Struggle with EV Battery Production
European automakers are facing mounting pressure to catch up with Chinese and other international manufacturers in the electric vehicle market, which is seen as the cornerstone of Europe’s green transition. The EU aims to phase out the production of internal combustion engine vehicles by 2035, creating a strong need for local EV battery production. However, Chinese companies like CATL have outpaced European manufacturers in terms of battery technology and production capacity. In a bid to protect local industry, the EU has implemented tariffs on electric vehicles imported from China, seeking to encourage Chinese companies to establish production plants in Europe and create jobs in the region.

CATL’s Growing Dominance in the Global EV Battery Market
CATL, which is already operating battery manufacturing plants in Germany and Hungary, remains the dominant force in the global EV battery market. The company’s role in this new venture with Stellantis highlights its ability to lead in the development of high-quality EV batteries. While CATL strengthens its position in Europe, it faces increasing competition from emerging European producers like Northvolt, which recently filed for bankruptcy, underlining the challenges the continent faces in establishing a robust battery supply chain.

Significance for Stellantis and the European Auto Industry
For Stellantis, the collaboration with CATL is vital for securing a consistent and high-performance supply of batteries, which are critical for their electric vehicle production. Brands under the Stellantis umbrella, such as Chrysler, Jeep, Citroen, Peugeot, and Fiat, will benefit from this supply as they transition to electric models. The new plant will help Stellantis comply with EU regulations requiring higher EV production volumes and reduce reliance on non-European suppliers. As the factory will be built with renewable energy in mind, it also positions Stellantis as a key player in the EU’s push toward green manufacturing.