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Volkswagen Taps Gotion to Expand Europe's LFP Battery Supply Chain
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Key Takeaways
Volkswagen and Gotion plan to expand LFP battery and cathode material production in Europe.
Gotion will invest 1.1 billion in the Valencia site and take a 49% stake in the plant.
The three sites in Spain, Slovakia and Morocco will produce LFP cells and cathode materials.
Volkswagen AG (VWAGY - Free Report) is strengthening its position in the European electric vehicle (EV) battery market through a partnership with China-based Gotion High-Tech. The companies plan to expand regional production of lithium iron phosphate (LFP) batteries and cathode materials, supporting Volkswagen’s strategy to establish a competitive and more secure European battery supply chain.
LFP batteries offer competitive costs, long service life and strong durability, making them increasingly important for affordable EVs in the volume segment. Their share of the European battery market is expected to increase from around 10% currently to 40-60% by 2030.
Volkswagen Expands LFP Production With Gotion
Under the agreement, Gotion will invest around €1.1 billion (about $1.25 billion) for a 49% stake in the Valencia site, with PowerCo retaining a 51% majority. The Valencia plant is expected to become a European production hub for LFP battery cells and Unified Cells.
PowerCo is expected to contribute around €470 million in total by 2030 to acquire a 49% stake in the Šurany cell factory in Slovakia and a new cathode-material facility in Kenitra, Morocco. Gotion will hold the 51% majority in both. The deal remains subject to regulatory approvals and Gotion shareholder approval.
VWAGY Strengthens European Battery Supply Security
The agreement builds on a partnership between Volkswagen and Gotion that dates back to 2020. Gotion already supplies cells to Volkswagen and works with its battery arm, PowerCo, as a strategic partner. Volkswagen is currently Gotion's largest single shareholder, holding about 24%. Separately, it has agreed to sell a 5.3% stake, while keeping its board representation and voting rights, pending regulatory clearances.
The joint ventures are expected to strengthen regional battery production, reduce supply-chain concentration and improve access to key cathode materials.
The agreement marks a major breakthrough for both companies and brings them closer to the forefront of electric mobility.
Price Performance of VWAGY
Shares of VWAGY are down 26.7% over the past year compared with the industry’s 20.3% fall.
The Zacks Consensus Estimate for CTOS’ current-year earnings is pegged at 13 cents per share, indicating a 192.9% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average earnings surprise being 52.5%.
The Zacks Consensus Estimate for GTX’s current-year earnings is pegged at $1.91 per share, indicating a 25.6% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average earnings surprise being 16.8%.
The Zacks Consensus Estimate for HLLY’s current fiscal-year earnings is pegged at 39 cents per share, indicating a 116.7% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the average earnings surprise being 0.3%.
View the Zacks #1 Rank List
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Volkswagen Taps Gotion to Expand Europe's LFP Battery Supply Chain
Key Takeaways
Volkswagen AG (VWAGY - Free Report) is strengthening its position in the European electric vehicle (EV) battery market through a partnership with China-based Gotion High-Tech. The companies plan to expand regional production of lithium iron phosphate (LFP) batteries and cathode materials, supporting Volkswagen’s strategy to establish a competitive and more secure European battery supply chain.
LFP batteries offer competitive costs, long service life and strong durability, making them increasingly important for affordable EVs in the volume segment. Their share of the European battery market is expected to increase from around 10% currently to 40-60% by 2030.
Volkswagen Expands LFP Production With Gotion
Under the agreement, Gotion will invest around €1.1 billion (about $1.25 billion) for a 49% stake in the Valencia site, with PowerCo retaining a 51% majority. The Valencia plant is expected to become a European production hub for LFP battery cells and Unified Cells.
PowerCo is expected to contribute around €470 million in total by 2030 to acquire a 49% stake in the Šurany cell factory in Slovakia and a new cathode-material facility in Kenitra, Morocco. Gotion will hold the 51% majority in both. The deal remains subject to regulatory approvals and Gotion shareholder approval.
VWAGY Strengthens European Battery Supply Security
The agreement builds on a partnership between Volkswagen and Gotion that dates back to 2020. Gotion already supplies cells to Volkswagen and works with its battery arm, PowerCo, as a strategic partner. Volkswagen is currently Gotion's largest single shareholder, holding about 24%. Separately, it has agreed to sell a 5.3% stake, while keeping its board representation and voting rights, pending regulatory clearances.
The joint ventures are expected to strengthen regional battery production, reduce supply-chain concentration and improve access to key cathode materials.
The agreement marks a major breakthrough for both companies and brings them closer to the forefront of electric mobility.
Price Performance of VWAGY
Shares of VWAGY are down 26.7% over the past year compared with the industry’s 20.3% fall.
VWAGY’s Zacks Rank & Key Picks
VWAGY currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Auto-Tires-Trucks space are Custom Truck One Source, Inc. (CTOS - Free Report) , Garrett Motion Inc. (GTX - Free Report) , and Holley Inc. (HLLY - Free Report) . CTOS sports a Zacks Rank #1 (Strong Buy), while GTX and HLLY carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CTOS’ current-year earnings is pegged at 13 cents per share, indicating a 192.9% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average earnings surprise being 52.5%.
The Zacks Consensus Estimate for GTX’s current-year earnings is pegged at $1.91 per share, indicating a 25.6% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average earnings surprise being 16.8%.
The Zacks Consensus Estimate for HLLY’s current fiscal-year earnings is pegged at 39 cents per share, indicating a 116.7% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the average earnings surprise being 0.3%.