Stellantis and CATL to boost electric vehicle production in Europe with LFP batteries

Stellantis, the world’s fourth-largest automaker, and CATL, the leading battery manufacturer in China, have signed a strategic memorandum of understanding (MoU) for the local supply of lithium iron phosphate (LFP) batteries for the European market. The MoU aims to enhance the competitiveness and sustainability of electric vehicles (EVs) produced by Stellantis in Europe and support the transition to a low-carbon economy.

What are LFP batteries, and why are they essential for EVs?

LFP batteries are a type of lithium-ion battery that uses iron phosphate as the cathode material instead of the more common nickel, cobalt, or manganese. LFP batteries have several advantages over other lithium-ion batteries, such as:

Longer life cycle and higher durability
Lower cost and higher availability of raw materials
Higher safety and stability, especially at high temperatures
Lower environmental impact and toxicity

LFP batteries are particularly suitable for EVs that require high power output, fast charging, and long driving range, such as commercial vehicles, vans, and pickup trucks. LFP batteries also have a higher energy density than lead-acid batteries, which are still widely used in some EV segments.

How will Stellantis and CATL collaborate on LFP batteries?

According to the MoU, Stellantis and CATL will work together to develop and produce LFP batteries for the European market, focusing on the specific needs and standards of Stellantis’ EV brands and models. The MoU covers the entire battery value chain, from cell design and manufacturing to module and pack assembly to recycling and reuse.

Stellantis and CATL will also jointly invest in a new battery plant in Europe, which will have an initial annual capacity of 15 gigawatt-hours (GWh), equivalent to powering about 250,000 EVs. The plant is expected to start production in 2026 and will be located near one of Stellantis’ existing vehicle assembly plants in Europe. The exact location and investment amount have not been disclosed yet.

The MoU also includes a long-term supply agreement, under which CATL will provide Stellantis with LFP batteries from its existing and future plants in Europe, starting from 2023. The supply volume and value have yet to be revealed either, but Stellantis has stated that it expects to source more than 130 GWh of batteries from various suppliers by 2025, of which 80 GWh will be for the European market.

What are the benefits and challenges of the MoU for Stellantis and CATL?

The MoU between Stellantis and CATL is expected to bring significant benefits for both parties, as well as for the European EV market and the environment. Some of the benefits are:

Strengthening the competitiveness and profitability of Stellantis’ EV portfolio in Europe by offering more affordable, reliable, and sustainable battery solutions to its customers
Expanding the market share and presence of CATL in Europe by leveraging its expertise and experience in LFP battery technology and production
Reducing the dependence on imported batteries and raw materials from Asia by increasing the local production and sourcing of LFP batteries in Europe
Supporting the EU’s green deal and climate goals by contributing to the reduction of greenhouse gas emissions and the promotion of a circular economy in the battery sector

However, the MoU also faces some challenges and uncertainties, such as:

The regulatory and policy framework for EVs and batteries in Europe is still evolving and may affect the demand and supply of LFP batteries in the future
The technological and innovation trends in the battery industry may lead to the emergence of new and better battery solutions that could challenge the dominance of LFP batteries in some EV segments.
The competitive and collaborative dynamics in the EV and battery market may result in new alliances and rivalries among automakers and battery makers, both within and outside Europe.

Conclusion

The MoU between Stellantis and CATL is a strategic and ambitious move to boost the production and adoption of EVs in Europe by leveraging the advantages of LFP batteries. The MoU is expected to create value and benefits for both parties, as well as for the European EV market and the environment. However, the MoU also faces some challenges and uncertainties, requiring close cooperation and adaptation from Stellantis and CATL.