Volkswagen’s battery gigafactory in Sagunto, Valencia, is still under construction, but Gotion is investing 1.1 billion euros for a 49 percent stake. Reuters reported that the deal was confirmed on September 28, 2026, as part of Volkswagen’s effort to build a local battery supply chain in Europe. The agreement still needs regulatory and shareholder approval. If approved, Gotion and Volkswagen’s PowerCo will run the plant together. The site is set to become Europe’s basic hub for lithium iron phosphate (LFP) battery production.
Europe has relied on Chinese-made LFP battery cells for years. Volkswagen and Gotion want to build a regional supply chain and reduce that reliance. The Sagunto plant will anchor a network of joint ventures spanning Spain, Slovakia and Morocco, focused on manufacturing LFP cells and cathode materials. Volkswagen Group’s official press release says the Valencia project is planned as a joint venture, with PowerCo and Gotion sharing management.
The Sagunto plant’s initial phase is planned to have an annual capacity of 29.1 GWh. After full ramp-up, later targets call for up to 60 GWh.
The partnership reaches beyond Valencia. PowerCo will invest 470 million euros in new plants in Surany, Slovakia, and Kenitra, Morocco, taking a 49 percent stake in each. Along with Sagunto, the sites are intended to speed up the rollout of affordable, strong LFP batteries across Europe. The companies describe the technology as offering “competitive prices, long life and great robustness.” Anadolu Agency and other industry sources put total investment in these joint ventures across Europe and North Africa at about 1.5 billion euros.
PowerCo will retain a 51 percent majority in the Sagunto joint venture. The original investment of over 2.3 billion euros remains in place, along with the commitment to create more than 1,500 direct jobs in the first phase. Both companies have publicly promised to maintain jobs and investment levels in the region. Joint management will oversee the next steps. El Norte de Castilla reports that the companies reaffirmed those commitments after setting up the new partnership structure.
Volkswagen is also making a financial move: it has signed binding agreements to sell a 5.3 percent stake in Gotion. The stated aim is to improve its shareholder structure and deepen long-term synergies. Volkswagen will retain a impressive stake in Gotion, which should help keep the alliance stable.
Industry analysts expect Europe’s LFP battery market to grow rapidly. Its share could rise from about 10 percent now to as much as 40 to 60 percent by 2030. Volkswagen acknowledges that Europe still lacks meaningful LFP production capacity, and the deal aims to close that gap. Reports from just-auto and other sector analysts say the Sagunto project is expected to help Europe reduce its reliance on imported Chinese LFP cells.
Spain’s car industry has seen a surge in foreign investment and new competition, a trend highlighted in a recent report on the changing field among carmakers. The Gotion-Volkswagen alliance adds another chapter to that shift, with Valencia emerging as a basic player in Europe’s electric future.
The deal also aims to secure technology and strengthen supply chains in a market long dominated by Asia. By building LFP battery production in Spain and expanding into Slovakia and Morocco, Volkswagen and Gotion are shaping the next phase of European electromobility. The scale of the investment and the job commitments, alongside the focus on affordable battery technology, point to a strategy that could reshape Europe’s place in the global auto supply chain.
