Volkswagen’s PowerCo unit is to deepen its European battery manufacturing partnership with Gotion High-tech in a combined investment agreement worth more than €1.5 billion ($1.2 billion), focused on industrial production of LFP battery cells and cathode active materials.

The companies have committed to accelerating development of a regional battery supply chain for Europe by setting up joint ventures at sites in Spain, Slovakia and Morocco.

Under the terms of the expanded partnership, announced on September 28, the firms will establish three joint ventures at Valencia (Spain), Šurany (Slovakia) and Kenitra (Morocco) to produce LFP battery cells and cathode material.

Separately, Germany-based Volkswagen has entered into definitive agreements to sell a 5.3% equity stake in Gotion but will continue to hold an unspecified “significant stake” in the Chinese partner.

The PowerCo gigafactory, currently under construction in Valencia, is envisaged to be transferred to a joint venture. The agreement provides for PowerCo to hold a 51% stake in the JV and to remain the majority shareholder. One major goal is to develop the site into a European production hub for unified cells based on LFP technology.

The Gotion cell factory in Šurany is also intended to be transferred to a joint venture, with Gotion holding a 51% stake. The JV will focus on LFP cells for both EVs and ESS.

The joint venture in Kenitra is planning to establish a new production facility to produce cathode material for LFP batteries. Gotion will hold a 51% stake.

In terms of investment, PowerCo is expected to contribute in total around €470 million to the Šurany and Kenitra sites by 2030 to acquire its 49% stake. In return, the agreement provides for Gotion to invest around €1.1 billion to acquire its 49% stake in the Valencia site, reflecting the scale and strategic importance of what will be the partners’ European production hub.

The agreement remains subject to regulatory approvals and customary closing conditions, including approval by Gotion shareholders.

Thomas Schmall, member of the board of management for technology at Volkswagen and chairman of the PowerCo supervisory board said the agreement marked a major breakthrough for both companies.

“Volkswagen is the first European automotive manufacturer to cover the entire battery value chain, from development and cathode materials through to production.”

Gotion chairman Li Zhen said: “Six years of close collaboration have built deep mutual trust and a relationship that empowers both sides… Through cross-shareholdings and three joint sites, we are anchoring our shared strategy to localise battery production in Europe, racing to seize the opportunities of global electric mobility, and jointly forging a new paradigm of world-class, win-win cooperation in the lithium battery industry.”

Batteries International reported in July 2026 that the African Development Bank Group had given the green light for a €100 million loan to Gotion’s North African subsidiary, Gotion Power, for a LFP battery gigafactory project in Morocco.

In August, European Commissioner for climate, net zero and clean growth, Wopke Hoekstra, accused China of “ruthlessly weaponising” its dominance of the battery sector — using massive state subsidies and economic espionage to gain access to Europe’s single market.