Volkswagen and the Chinese battery manufacturer Gotion are establishing three joint ventures in Spain, Slovakia, and Morocco to produce lithium-iron-phosphate (LFP) batteries and related materials. These partnerships will focus on manufacturing LFP battery cells and cathode materials, a technology gaining attention in Europe for its cost-effectiveness, durability, and longer lifespan compared to other battery types. The move aims to support the growing demand for electric vehicles by securing a local supply of these batteries. The first joint venture will be located in Valencia, Spain, where a plant is currently under construction. PowerCo, a subsidiary of Volkswagen, will hold 51% of the ownership, while Gotion will invest about 1.1 billion euros to acquire the remaining 49%. This facility is expected to become a major European hub for producing Volkswagen's "Unified Cell" in LFP chemistry. The plant's annual production capacity is projected to be 29.1 GWh, enough to power around 790,000 ID. Polo electric cars with a 37 kWh battery. However, this is less than the 40 GWh initially announced by PowerCo in 2023. The second joint venture will be at Gotion's existing plant in Šurany, Slovakia. In this case, Gotion will maintain a majority stake with 51%, and the facility will produce LFP cells for both electric vehicles and stationary energy storage systems. The annual capacity is expected to be 8.4 GWh. The third joint venture in Kenitra, Morocco, will not involve battery assembly. Instead, the factory will focus on producing active cathode materials for LFP cells, with an annual output of 100,000 tons. This material will mainly supply the Spanish and Slovakian plants. PowerCo plans to invest about 470 million euros in these projects to secure a 49% stake in each venture. According to Volkswagen, LFP batteries currently make up around 10% of the European market, but the company expects that share to grow to between 40 and 60% by 2030. Europe currently lacks significant LFP battery production capacity, so Volkswagen is relying on Gotion's expertise rather than building the entire supply chain independently. The partnership between Volkswagen and Gotion began in 2020, and although Volkswagen is still a shareholder in Gotion, it has also signed an agreement to sell 5.3% of its shares. The shift to LFP batteries is expected to reduce Volkswagen's battery costs, which in turn could lower the price of its electric vehicles. On average, LFP battery packs cost 81 dollars per kWh, compared to 128 dollars per kWh for nickel-manganese-cobalt (NMC) batteries. For a 37 kWh battery like the one in the ID. Polo, this difference amounts to about 1,500 euros. However, the cost savings may not be immediately reflected in vehicle prices, as full production at the Valencia plant is not expected to begin until July 2027.