Volkswagen is looking to Kénitra for a key raw-material link in a new battery chain stretching from Morocco to Spain and Slovakia, as the German carmaker moves to build European production of a battery technology it expects to take as much as 60 per cent of the market by the end of the decade.
Volkswagen Group, its battery subsidiary PowerCo and China’s Gotion High-Tech said on Monday they had agreed to set up three joint ventures covering the production of lithium-iron-phosphate (LFP) battery cells and cathode material.
The division of labor gives Kénitra the upstream end of the chain. A new plant there will produce cathode active material for LFP batteries, while the ventures in Valencia and Šurany will manufacture the cells themselves.
Gotion will own 51pc of the Moroccan venture and PowerCo 49pc, with the two companies jointly managing it.
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For Volkswagen, the arrangement tackles a hole in a European supply chain it is trying to build closer to home.
LFP batteries are cheaper, durable and robust, making the chemistry increasingly attractive for mass-market electric cars. Volkswagen estimates that LFP’s share of the European market could rise from about 10pc today to between 40pc and 60pc by 2030.
Europe, the group says, currently has no relevant LFP battery production capacity.
Kénitra has been handed part of the answer.
Rather than duplicating cell factories being built in Europe, the Moroccan venture will make cathode material—one of the principal ingredients of a battery cell and a major determinant of its chemistry, cost and performance.
Volkswagen said the plant would diversify its sources for key cathode materials, reduce supply risk and extend the regional battery value chain.
In Valencia, PowerCo’s gigafactory now under construction is to be transferred to a joint venture in which the Volkswagen subsidiary will retain 51pc. Gotion will take the remaining 49pc.
The partners want Valencia to become a European production hub for Volkswagen’s Unified Cell using LFP chemistry.
The ownership is reversed in Šurany, where Gotion’s cell factory will be transferred to another joint venture. Gotion will keep 51pc and PowerCo will take 49pc, with production aimed at both electric vehicles and energy-storage systems.
The money will move across the three sites in much the same fashion. PowerCo expects to put about €470 million into Šurany and Kénitra by 2030 to acquire its 49pc holdings in the two ventures. Gotion, in turn, is expected to invest around €1.1 billion for its 49pc stake in Valencia.
The partners will jointly handle procurement and sales activities in Europe, knitting the three production sites into a wider commercial arrangement.
Their relationship goes back to 2020, with Gotion already supplying cells to Volkswagen and working as a strategic partner of PowerCo. It is now becoming more industrial even as Volkswagen trims its direct shareholding in the Chinese company.
Volkswagen has separately agreed to sell a 5.3pc equity stake in Gotion as part of what it called an optimization of the two groups’ shareholding structures. It will remain a significant strategic shareholder after the transaction.
The German group said the sale would not reduce the voting rights it currently exercises because it had already agreed not to exercise voting rights attached to part of its holding. Its board representation and nomination rights at Gotion are also to remain unchanged.
The factory deals and share transaction still require regulatory clearances, while the joint-venture agreement is also subject to approval by Gotion shareholders.
For Kénitra, the cathode plant will sit alongside a much larger Gotion battery manufacturing build-out already under way in the free zone.
The Chinese group has previously said the first cell-production line at its Moroccan complex is due to start in October, followed by a second in November.
