European car makers are facing increasing challenges in keeping up with Chinese competitors in the electric vehicle (EV) sector. As the EU aims to transition to electric-only vehicles by 2035, the pressure to improve EV production intensifies. This shift is a key pillar of the EU’s broader green transition, which seeks to reduce carbon emissions across all sectors.
Chinese battery giant CATL and global car maker Stellantis have announced plans to build a major battery factory in northern Spain. The facility, located in Zaragoza, is expected to start producing lithium iron phosphate batteries by late 2026.
Significant Investment to Support European EV Ambitions
The joint venture represents an investment of €4.1 billion and plans to achieve carbon-neutral operations by utilizing Spain’s renewable energy. With abundant solar, wind, and water resources, Spain is well-positioned to support sustainable manufacturing initiatives.
The collaboration builds on a November 2023 agreement between CATL and Stellantis to enhance the production of EV batteries in Europe. CATL, already operating two factories in Germany and Hungary, is expanding its footprint to strengthen Europe’s EV supply chain.
Spain plays a strategic role in this development as the EU’s second-largest car producer, following Germany. Spanish Prime Minister Pedro Sánchez recently met with CATL Chairman Robin Zeng to discuss the project. This partnership aligns with Spain’s commitment to advancing green technologies.
Despite these efforts, European car makers face stiff competition from China, which continues to dominate the EV battery market. The EU and the United States are applying tariffs on Chinese EV imports to protect domestic industries and encourage local production.