by Giulio Piovaccari

MILAN (Reuters) – Stellantis plans to build a new gigafactory in Europe to produce more affordable lithium iron phosphate (LFP) batteries as part of a possible joint venture with China’s CATL, the company announced on Tuesday. director of purchasing and supply of the automobile manufacturer.

This fourth European gigafactory of the group born from the merger between PSA and FCA would make it possible to accelerate the deployment of cheaper electric vehicles in the face of the upcoming arrival on the continent of a very competitive offer of Chinese models.

Stellantis and the Chinese battery supplier announced earlier on Tuesday that they had signed a non-binding agreement for the local supply of LFP battery cells and modules intended for the production of electric vehicles by the Franco-Italian automaker in Europe.

They also announced that they were considering the creation of an equal joint venture. Asked about the choice of the European site for the new gigafactory, Maxime Picat refused to comment.

Stellantis is already planning three battery gigafactories in Europe, the first of which, owned with TotalEnergies and Mercedes, is entering production this year in the North of France. This site also produces lithium-ion batteries, but with a cathode technology other than LFP, nickel manganese cobalt (NMC), more powerful and intended for more expensive vehicles with longer autonomy.

Financial details of the agreement between Stellantis and CATL were not disclosed.

“This partnership between our iconic brands and CATL, an industry leader in this sector, will enable us to deliver innovative and accessible battery technology to our customers while helping us achieve carbon neutrality by 2038,” said the general director of Stellantis Carlos Tavares, quoted in the press release.

Thanks to LFP technology, Stellantis will be able to offer a new electric Citroën C3 next year from 23,300 euros, as well as probably the new electric Panda.

For CATL, this would be the latest investment as part of its expansion outside its national market, after the projects already announced in Hungary (7.3 billion euros for a capacity of 100 GWh) or in Germany, where it plans to increase the production capacity of its factory near Erfurt from 8 to 14 GWh.

European carmakers and governments are currently injecting billions of euros into building battery production sites at home to reduce their extreme dependence on imports from Asia, while Chinese battery makers are simultaneously investing to produce in Europe batteries for vehicles assembled on the continent.

Maxime Picat specified that the agreements with CATL, which will also initially deliver batteries to Stellantis vehicles, would complete the electrification strategy of the group with 14 brands, the LFP helping to reduce production costs in Europe while maintaining NMC production for more expensive vehicles.

“What we’re looking to do is grow these LFP batteries across multiple segments, because the notion of affordability is important across a lot of different segments,” he added.

“The LFP today is the best technology that can be found on the market in this compromise between autonomy and cost. This is where this second very important part of our strategy in Europe comes in.”

(Report by Giulio Piovaccari; Gaëlle Sheehan, with Gilles Guillaume in Paris, edited by Blandine Hénault and Kate Entringer)

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