Summary
Deepening Cooperation, Accelerating Global Expansion
While most Chinese battery companies are still at the stage of product export and establishing wholly-owned overseas factories for their global expansion, Gotion High-Tech and Volkswagen's PowerCo have unveiled an overseas joint venture plan with a total investment of EUR 3.222 billion.
On September 28, Gotion High-Tech issued an announcement stating its intention to establish three joint ventures with PowerCo, the battery subsidiary of Volkswagen Group, in Spain, Slovakia, and Morocco, to build lithium battery factories and lithium iron phosphate (LFP) cathode material bases.
The equity distribution among the three joint venture entities is quite interesting, as neither party holds full control.
For the 29.1 GWh lithium battery factory in Valencia, Spain, with a total investment of EUR 2.262 billion, PowerCo holds a 51% controlling stake, while Gotion holds 49%. Meanwhile, a Gotion subsidiary has secured the EUR 1.094 billion engineering, procurement, and construction (EPC) contract for the project, exporting its comprehensive factory construction capabilities.
For the 8.4 GWh lithium battery factory in Šurany, Slovakia, Gotion holds a 51% controlling stake.
For the 100,000-ton LFP cathode material base in Kenitra, Morocco, Gotion also holds a 51% controlling stake, responsible for the upstream cathode material supply.
Gotion's total investment amounts to approximately EUR 1.598 billion, while PowerCo's investment is approximately EUR 1.624 billion, with both parties contributing roughly equal amounts of capital.
Tracing the six-year cooperation trajectory between Gotion and Volkswagen reveals that this joint venture has broken out of the traditional single framework of supplier and purchaser.
The earliest starting point was in 2020. Volkswagen China invested approximately EUR1.1 billion to acquire a stake in Gotion High-Tech through the transfer of existing shares and a private placement, becoming the largest shareholder.
At the same time, a shareholders' agreement was signed, in which Volkswagen voluntarily waived certain voting rights to ensure that Gotion's original management team retained control of the listed company, forming a unique capital relationship where Volkswagen is the largest shareholder but does not hold a controlling stake.
Early cooperation between the two parties was concentrated in the domestic Chinese market.
In 2022, Gotion secured the designated supplier status for Volkswagen China's standard cells in both ternary and LFP chemistries;
in 2023, it won the designation for Volkswagen's overseas LFP standard cells, with supplies covering overseas models of Volkswagen, Škoda, and SEAT;
By the end of 2025, the Hefei UC factory achieved mass production and delivery of Volkswagen's standard cells, with the order cycle covering 2026-2032, marking the official entry of domestic supply chain cooperation into the stage of large-scale delivery.
During this phase, Gotion's role was that of a cell supplier for Volkswagen. Volkswagen's demand was to have an additional alternative supplier for standard cells.
However, the current three overseas joint ventures are expanding the boundaries of cooperation outward.
It has evolved from simply selling cell products in the past to a deeply integrated model now, involving co-building capacity through capital, exporting factory engineering and construction, and providing upstream material support.
For the Spanish factory, Gotion is not only investing capital to take a stake but also undertaking the EPC contract, meaning that its manufacturing processes and production line construction experience will be directly introduced to the local European base.
The cathode material factory in Morocco, on the other hand, aims to keep upstream cell materials within the joint venture system, reducing the reliance of European cell production on externally purchased materials.
Viewed against the broader industry backdrop, this is also a choice made by Volkswagen's PowerCo under practical pressures.
Europe has been pushing for the construction of a local battery supply chain, but building GWh-level gigafactories independently faces numerous challenges.
Local energy and labor costs in Europe are relatively high, the yield ramp-up cycle for new production lines is long, and multi-billion capital expenditures will continuously drain automakers' cash flows;
meanwhile, the EU Battery Regulation and the Critical Raw Materials Act impose rigid requirements on local capacity and the localization rate of materials.
Building entirely in-house carries enormous investment risks, while relying completely on external procurement would result in the loss of bargaining power in the industrial chain.
The joint venture with Gotion is equivalent to risk sharing: Volkswagen shares the massive capital pressure of factory construction while securing localized cell capacity; Gotion exports its manufacturing and material technologies, locking in capacity absorption from a major customer.
The equity design also conceals a balance of demands between the two parties.
Valencia in Spain is the main cell base near Volkswagen's core vehicle cluster in Europe. With PowerCo holding the controlling stake, it safeguards the control of local European automakers over core battery assets;
Meanwhile, the Slovakia cell plant and the Morocco cathode material plant are handed over to Gotion for a controlling stake, granting Gotion greater operational say in manufacturing processes and upstream materials.
For Gotion High-Tech itself, this is a crucial step in its globalization strategy.
According to the 2026 semi-annual report, Gotion's revenue in the first half of the year reached CNY 27.776 billion, of which overseas revenue accounted for CNY 9.476 billion, representing 34.11% of total revenue. Overseas business has become a significant growth curve.
Prior to this, Gotion's capacity in Europe mainly relied on its wholly-owned factory in Göttingen, Germany.
By tying up with Volkswagen to co-build three overseas bases this time, Gotion does not have to bear all the capital and market risks alone, directly locking in the fundamental demand of the Volkswagen Group.
However, asset-heavy overseas joint ventures also face unavoidable practical tests.
The first is capital expenditure pressure. The total investment of EUR 3.222 billion will be spread over the coming years, continuously consuming the company's cash flow.
The semi-annual report shows that in the first half of 2026, Gotion's net cash flow from investing activities was CNY -8.478 billion, and the scale of construction in progress continued to rise. Subsequent construction and equipment procurement for the European projects will require continuous investment.
The second is the difficulty of localized operations in Europe. Beyond construction, factors such as production line yield ramp-up, union labor rules, energy consumption costs, carbon tariffs, and changes in industrial policies across different countries will all affect the final cost and return of the projects.
Third, the projects are still at the agreement stage and have not yet been approved by the shareholders' meeting, the EU, and North African regulatory authorities. There are variables between signing the contract and actual implementation and production.
Placed in the sample library of Chinese battery companies going global, the model between Gotion and Volkswagen is relatively unique.
Currently, the industry's global expansion routes are roughly divided into two categories: one is where companies build their own factories overseas to serve all external customers; the other is pure product export, focusing only on sales overseas.
Gotion, however, belongs to a different category: the automaker is a major shareholder of the listed company, and they further co-invest in building factories overseas through joint ventures, coupled with EPC contracts and upstream material support. This represents a multi-dimensional binding of capital, technology, manufacturing, and supply chain.
Of course, a unique model does not guarantee results. The joint venture is just the starting point; the subsequent focus will be on whether the production lines can be built on schedule, whether the yield can be successfully ramped up, and whether the costs can be made competitive.
If the projects are successfully implemented, Gotion will truly transform from a cell supplier exporting from China into a local battery capacity player in Europe; meanwhile, a crucial piece of the puzzle for Volkswagen's electrification supply chain in Europe will also be completed.