Stellantis and CATL have broken ground on a €4.1 billion ($4.8 billion) lithium iron phosphate battery gigafactory in Zaragoza, Spain, locking in a key European supply line for the cost-down EV strategy the automaker is betting on after a punishing 2025.
The 50-50 joint venture, executed through Contemporary Star Energy, S.L., will reach up to 50 gigawatt-hours of annual capacity at full ramp — enough cells for roughly one million electric vehicles per year. The site is designed to be carbon-neutral and targets first production by the end of 2026, supporting 4,000 jobs.
Why LFP, and why now
LFP chemistry trades top-end energy density for far lower cost, better cycle life and freedom from cobalt and nickel. That makes it the default chemistry for affordable B and C-segment EVs in Europe, the price point where Stellantis is most exposed to Chinese competition. Locating production in Spain insulates the JV from EU tariffs on cells imported from China.
CATL's European footprint
The Zaragoza plant adds to CATL's growing European production map, alongside facilities in Germany and Hungary. The deal also blunts pressure on the world's largest battery maker as Brussels tightens rules on Chinese content in EV subsidies. For Stellantis, it complements supply agreements that previously left it dependent on imports for entry-level EVs.
Cost and EV strategy
The JV is a direct response to a brutal year for Stellantis, which booked a $26.2 billion EV loss in 2025. CEO Antonio Filosa has been pruning unprofitable programs and doubling down on LFP-powered smaller EVs, alongside deals like an expanded Qualcomm software pact. Zaragoza is the manufacturing spine that strategy depends on.
Outlook
If Stellantis and CATL can hit end-2026 production, the JV will be one of the largest LFP plants outside China and a benchmark for how quickly Europe can localize lower-cost battery chemistry. Execution risk centers on hitting yield targets at a Western LFP line and the evolution of EU support schemes that the joint venture's economics partially assume.
Reporting based on coverage from Battery Tech Online, Automotive Logistics and Stellantis press releases.