Since their arrival on the scene, LFP batteries have made a significant impact on the market, often seen as a formidable competitor to traditional lithium-ion batteriesWith a surge in adoption, especially in the Chinese market, CATL's LFP batteries have seen impressive sales figures, achieving 107.5GWh of installations within China alone from January to October 2024 and claiming a market share of 36.5%—making it the market leader.

During the signing ceremony, Stellantis Chairman John Elkann emphasized the strategic importance of this manufacturing hub, highlighting how the Zaragoza facility has evolved into the group’s center for new energy vehicle manufacturing since the establishment of a battery assembly workshop in 2021. The new joint venture with CATL is poised to introduce innovative battery manufacturing capabilities that will be pivotal for the group's broader strategic goals.

CATL Chairman Zeng Yuqun echoed this sentiment, stating, “Leveraging CATL’s advanced battery technology and outstanding operational expertise, combined with Stellantis’ decades of local business experience in Zaragoza, this project is set to be a significant success story in the industry.”

What sets this project apart from previous Chinese investments in European battery factories is its structure as a joint venture, with equal stakeholding

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Historically, Chinese battery manufacturers entering Europe have generally followed two distinct approaches:

1. Independent factories: Chinese battery companies build factories independently, often with backing from European automotive clients and financial support from local governments and investment institutionsProjects such as CATL’s facilities in Germany and Hungary, along with Envision AESC’s projects in the UK, France, and Spain, exemplify this model.

2. Supplier-based partnerships: In cases where European manufacturers take the lead, Chinese companies provide technological support and servicesAn example is Gotion High-Tech's involvement in Volkswagen's Salzgitter battery factory in Germany, where despite originally favoring European suppliers, a comprehensive comparison led Volkswagen to prefer Chinese equipment after analyzing the recommendations from their Chinese partners.

The collaboration between CATL and Stellantis introduces a new paradigm for Chinese firms establishing manufacturing in Europe

Both parties will share equal stakes, creating a joint venture that will construct the battery factory within an already-existing and successful vehicle manufacturing base.

While the strategy of partnering with automotive companies in Europe is novel for CATL, it echoes their long-standing methods within ChinaFor instance, joint ventures with various Chinese automotive firms—such as SAIC Motor, GAC Group, and Geely—have been commonplace since 2017, with CATL holding majority stakes in most of these collaborations.

The manufacturing facilities built through these joint ventures are primarily located within CATL’s existing manufacturing bases—such as the Sichuan plant for the GAC partnership—yet the absence of expansive operational bases in Europe necessitates this innovative approach to collaborating with established manufacturers.

Moreover, Spain's geographical and resource advantages significantly contribute to the attractiveness of the new production facility

The country is on track to reach nearly 200GWh of battery production capacity, ranking second in Europe after HungaryNotably, when it comes to LFP battery capacity, Spain leads the packThe proximity of Morocco, which boasts 71% of the world's phosphate mineral reserves, only 14 kilometers away across the Strait of Gibraltar, further strengthens this position.

Historically, Morocco’s phosphate was chiefly utilized for fertilizer productionHowever, the advent of LFP battery technology has shifted the focus, drawing considerable attention from Chinese battery and upstream enterprisesCompanies such as Gotion High-Tech, BTR, and Huayou Cobalt are among the numerous players exploring investments in Morocco, across the entire lithium battery value chain.

Despite the resource wealth, Morocco faces significant challenges owing to its high illiteracy rate, reported at 34.9% in 2020, resulting in a workforce that often lacks the required educational background for high-tech industries