CATL $3750 (-0,38%) and Stellantis $STLAM (+2,7%) committed to the major project almost a year ago and announced the prospect of 4.1 billion euros in investment. The plant for LFP battery cells and modules is being built in Figueruelas near Zaragoza. As Reuters reports, construction has now begun. And specifies: "Around 2,000 Chinese workers will help build the plant, and later 3,000 Spanish employees will be hired and trained." The latter figure is congruent with the 3,000 direct jobs that the project is expected to create. According to the regional government of the Autonomous Region of Aragon, it is currently organizing work permits for the new arrivals and is working in parallel to bring other parts of the battery supply chain to the region.
"We don't know this technology, these components - we've never produced them before," David Romeral, General Director of CAAR Aragon, a network of automotive companies in Aragon, is quoted as saying by Reuters. "They are years ahead of us. We can only watch and learn." José Juan Arceiz, General Secretary of the UGT trade union in Aragon, expressed a similar view: "They are the ones who know how to build a gigafactory." The unions were waiting for CATL's qualification requirements in order to set up training programs together with the local university.
Some Chinese technicians and managers from China are said to have already arrived in Figueruelas. The approach of bringing skilled workers from China is new for CATL. At its plant in Debrecen, Hungary, mainly locals were employed for construction. However, there are said to have been bottlenecks in recruitment - and the start of production has now been postponed from the end of 2025 to 2026.
Stellantis and CATL have placed the construction and operation of the factory in the hands of a 50:50 joint venture. The planned site is located next to the existing Stellantis vehicle plant in Zaragoza. The investment volume is expected to amount to the aforementioned 4.1 billion euros, with the project receiving over 300 million euros in EU funding.
The start of production has so far been somewhat unclear. Construction work is due to be completed in March 2028 with an annual capacity of 50 GWh. However, Stellantis and CATL intend to start production in the "existing Zaragoza vehicle plant" at the end of 2026, as Jorge Azcon, President of the Autonomous Community of Aragon, was quoted as saying in "La Tribuna de Automoción" at the end of 2024. It is known that the cell factory is to be built right next to the existing Stellantis vehicle plant on an 80-hectare site. However, Azcon did not specify why production is to start at the car factory. The current Reuters report also does not provide any further details.
Be that as it may, the alliance between CATL and Stellantis in battery production did not come as a surprise. The fact that Stellantis is looking for a location for a European battery cell factory outside of the Automotive Cells Company (ACC) joint venture already leaked out almost two years ago. Even then, Spain was considered the most likely location, as Stellantis operates three vehicle plants there (Madrid, Vigo and Zaragoza). The name CATL was also mentioned early on in the Spanish media as a likely project partner. At the end of November 2023, the automotive group had already made a partnership with CATL for LFP batteries in Europe official.
The background to the new initiative is that things are not going well at ACC. The battery joint venture between Stellantis, Total and Mercedes-Benz has announced three battery factories in Douvrin, Kaiserslautern and Termoli, but the latter two projects are currently on hold. In both cities, work is officially on hold "in order to switch from nickel-based cell chemistry to more cost-effective battery technologies while still in the early construction phase", as stated in the early summer of 2024. In the middle of this month, we received the news that the Italian ACC battery factory in Termoli is probably on the verge of being shut down for good.
Stellantis has now paved the way with the CATL cooperation to secure its own LFP batteries. It is unclear what will happen to the ACC site in Germany in parallel. In any case, Stellantis is now pursuing a "dual-chemistry approach" - NMC batteries have not been written off, but will continue to exist alongside LFP batteries. The question that remains unanswered, however, is what the mix will look like and how many NMC cell plants will actually be needed in the end.
