Here is a fun way to think about joint ventures in the electric-vehicle era. You are a big European carmaker. The cheap batteries in your cheapest electric car are made by your Chinese supplier, in China, which is a little awkward given that the whole point of your industrial policy — and your government’s — is to not depend on China for exactly this. What do you do? You could build your own battery factories. Or you could do what Volkswagen announced on Monday, September 28: let the Chinese supplier buy nearly half of your battery factory, while you buy nearly half of two of its factories, and call the whole thing European production.
The specifics, via the group’s statement reported by Numerama: Volkswagen, its battery subsidiary PowerCo and the Chinese battery maker Gotion are setting up three joint ventures in Spain, Slovakia and Morocco, worth a combined €3.22 billion, all devoted to LFP cells — lithium-iron-phosphate, the chemistry in the entry-level ID. Polo that Volkswagen sells for €24,995. Right now, the cells in that car come from Gotion’s plant in Hefei, China. The three ventures are meant to relocate that production to Europe within five years.
The swap
The biggest piece is Sagunto, near Valencia, where PowerCo is building a cell plant. Gotion is investing about €1.1 billion to take 49% of it, with Volkswagen keeping 51%. In exchange, PowerCo will put in roughly €470 million by 2030 to take 49% of two Gotion sites: a cell factory in Šurany, Slovakia, and a plant in Kenitra, Morocco, that is supposed to produce around 100,000 tonnes a year of LFP cathode material — the lithium, iron and phosphate powder. So money flows from China to Spain, and from Germany to Slovakia and Morocco, and everyone ends up a minority-ish partner in everyone else, which is one way of making sure nobody walks away.
Why LFP? Arithmetic. In an LFP battery the cathode uses iron and phosphate instead of nickel and cobalt — much more abundant, much cheaper stuff. According to BloombergNEF’s annual survey published in December 2025, cited by Numerama, an LFP battery averaged $81 per kWh (about €71), versus $128 (about €113) for an NMC (nickel-manganese-cobalt) one. On the ID. Polo’s 37 kWh pack, those averages work out to a gap of more than €1,500 per car. When your whole pitch is a €24,995 electric Volkswagen, €1,500 is not a rounding error; it is the pitch.
The catch is that LFP stores less energy per kilo. So Volkswagen keeps the chemistry in its lane: the 52 kWh NMC battery goes in the more powerful ID. Polo versions, which start at €35,820. Cheap battery for the cheap car, expensive battery for the expensive car. Segmentation, but electrochemical.
How big, exactly?
Gotion says Sagunto will have capacity of 29.1 GWh a year, which on paper is enough to equip roughly 790,000 ID. Polos with the 37 kWh battery. That is a lot of small Volkswagens. It is also, awkwardly, less than what Volkswagen used to say. The specialist outlet Electrive points out that PowerCo had previously announced 40 GWh for Sagunto, while Bloomberg puts the figure at barely 30 GWh. Šurany has shrunk too: Gotion talked about 20 GWh back in 2025 and now announces 8.4 GWh.
If the shrinkage is real, the likely explanation is the least surprising one in European industry: making things in Europe costs more. BloombergNEF reckons that in 2025, batteries cost on average 56% more to produce in Europe than in China. You are not building these factories to save money; the €1,500-per-car saving comes from the chemistry, not the postcode. What you are buying is supply security and sovereignty — the ability to keep making your cheapest car even if shipping batteries from Hefei becomes politically or logistically complicated.
Volkswagen is betting that this chemistry takes over. It estimates LFP will go from about 10% of the European market today to 40% to 60% by 2030, and it wants Valencia to be the continent’s LFP hub, in a Europe that, in the group’s words, currently has “no significant LFP production capacity.” Just significant LFP plans. Stellantis and CATL announced theirs back in late 2024 — a joint venture for an LFP plant in Zaragoza, where production is due to start at the end of 2026 at a capacity that could reach 50 GWh.
Notably, nobody is pretending the Chinese partner goes away once the factory is on European soil. Gotion owns 49% of Sagunto; PowerCo owns 49% of Šurany and Kenitra. The announced solution to dependence on Chinese battery production turns out to be Chinese battery production, relocated, with reciprocal shareholdings as the glue. Which is perhaps the honest version of European industrial sovereignty in 2026: not making the dependency disappear, but making sure it is mutual, and within driving distance of the dealership.