Boost for Stellantis and CATL as they team up for EV battery venture

European car markers are struggling to keep up with their Chinese counterparts in electric cars, a key pillar of the green transition that the EU is pursuing in order to bring in electric-only vehicles by 2035.

Chinese electric battery giant CATL and car maker Stellantis have announced they are to build a major battery factory in northern Spain.

The partners said the plant will be located in Zaragoza and start producing lithium iron phosphate batteries by the end of 2026.

The joint venture represents an investment of @4.1bn, they said in a statement. The plant plans to be carbon neutral, apparently by making use of Spain’s ample supplies of solar, wind and water power.

The announcement comes after CATL and Stellantis agreed in November 2023 to collaborate on fabrication of batteries to help build electric cars in Europe.

CATL is already producing batteries at two European factories in Germany and Hungary.

The deal comes a day after Spanish Prime Minister Pedro Sánchez met with CATL Chairman Robin Zeng in Madrid. Spain produces the second most cars in the European Union after Germany.

European car makers suffer due to lower take-up of electric cars

European car markers are struggling to keep up with their Chinese counterparts in electric cars, a key pillar of the green transition that the EU is pursuing. Its 27 member states won’t be able to produce internal combustion cars after 2035.

The EU, like the United States, is applying tariffs on electric vehicles imported from China to help protect domestic producers and encourage Chinese car makers to move production to Europe and create local jobs.

CATL and other Chinese battery makers are far ahead in the critical area of producing batteries for electric vehicles. Northvolt, Europe’s great hope for catching up, filed for bankruptcy last month.

Stellantis includes the Chrysler, Citroen, Dodge, Jeep, Peugeot, Fiat, Opel and Alfa Romeo brands, among others.