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CATL and Stellantis will build a €4.1bn lithium battery factory in Spain, expanding China’s manufacturing footprint on European soil and boosting the European carmaker’s pivot to electric vehicles.
The factory in Zaragoza, northeastern Spain, is scheduled to start production by late 2026 under a 50-50 joint venture between the world’s biggest battery maker and the fourth-largest carmaker, owner of the Peugeot, Jeep and Fiat brands.
Europe has tried to reduce its reliance on Chinese batteries by investing in developing the technology. But those efforts have stumbled, with its biggest battery hope Northvolt filing for Chapter 11 bankruptcy in the US.
Stellantis has been open to partnering with Chinese companies, with the group in crisis following a management upheaval and declining sales in the US and Europe.
After winding down its ventures in China, the European carmaker took a 20 per cent stake in Chinese start-up Leapmotor for €1.5bn, giving it exclusive rights to build and sell Leapmotor cars outside China through a joint venture.
Leapmotor in turn uses a Stellantis plant in Poland to produce its T03 compact EV so that the company can avoid the EU’s higher tariffs on imports of Chinese EVs.
CATL, headquartered in Ningde, eastern China, had a global market share of about 38 per cent in the first half, according to SNE Research. It boasts industry-leading economies of scale and research spending, and its sales have been buoyed by the Chinese market, amid inconsistent EV demand in Europe and the US.
The Spanish factory is CATL’s third big investment in Europe. It is already operating plants in Germany and Hungary.
The deal comes despite plans from Brussels to force Chinese companies to transfer intellectual property to European businesses in return for EU subsidies, as part of a tougher trade regime for clean technologies, as reported by the Financial Times last month.
The Chinese group, which is a key Tesla supplier, has been working to expand in Europe as tensions between Beijing and Washington threaten its growth plans in North America.
CATL is also working with Elon Musk’s company as well as Ford to license its battery manufacturing technology for factories in Nevada and Michigan respectively.
Stellantis chair John Elkann said the group was “embracing all available advanced battery technologies to bring competitive electric vehicle products to our customers”.
Elkann is chairing an interim executive committee as the group searches for its new chief executive following the abrupt resignation of Carlos Tavares, in the wake of a sharp deterioration in its financial performance.
CATL’s decision is a victory for Spain, the EU’s second-biggest car producer after Germany, even though all of its factories are ultimately owned by non-Spanish companies.
The country has been battling to maintain its relevance as the industry transitions to electric vehicles and the Socialist-led government had sought to woo Stellantis in October by offering a €133mn grant for the potential Zaragoza project, funded with EU post-pandemic recovery funds.
Prime Minister Pedro Sánchez met Robin Zeng, CATL’s chair and CEO, at his residence in Madrid on Monday. The premier said the Chinese group welcomed Spain’s “firm commitment” to decarbonisation but said nothing about the impending announcement. Sánchez has gone further than many other EU leaders in his efforts to court China, meeting President Xi Jinping for the second time in 18 months in Beijing in September.
On that trip, Sánchez caught his EU peers off guard by declaring that the bloc needed to “reconsider” its plans to impose tariffs on Chinese electric vehicles. Spain ultimately abstained in the vote when EU members approved EV tariffs in October, saying more dialogue and negotiation was needed.
Jorge Azcón, the conservative president of the Aragón region which counts Zaragoza as its commercial capital, said the announcement was the “best possible news” and would “anchor the future of a strategic sector” in the region.