Stellantis, the company behind global brands like Fiat and Jeep, has announced plans to partner with Chinese battery maker CATL to build another European electric vehicle battery factory. The factory will produce CATL’s low-cost lithium iron phosphate (LFP) batteries, which will be used to power Stellantis’ electric vehicles (EVs) in the European market.
This move reflects automakers’ increasing efforts to localize EV production. By partnering with CATL, Stellantis aims to solidify its supply chain in Europe, where it has significant operations. CATL is known for manufacturing cheaper LFP batteries, which offer more durability but less range compared to NMC batteries. Despite the trade-off, these batteries enable the production of more affordable EVs, making them an attractive option for Stellantis.
The partnership may also lead to a joint venture between Stellantis and CATL, allowing for local battery production and supply in the European market. Stellantis plans to introduce a 25,000 euro Fiat and a Citroen C3 EV, both priced similarly, for Europe and the United States. Local supply is advantageous for Stellantis’ European operations, but it means the company won’t be eligible for the large EV battery credits available to US manufacturers.
The move towards localizing EV production is part of a larger trend in the automotive industry. As labor negotiations take center stage in the US, automakers are looking to establish strong supply networks in various regions. This strategy allows them to reduce costs and environmental impact by sourcing and producing materials locally.
In addition, a recent report from Goldman Sachs indicates that battery prices, particularly on the anode side with lithium, are expected to drop significantly between 2022 and 2025. This cost reduction could lead to even cheaper localized EVs and potentially accelerate the production timeline for affordable electric vehicles. The prospect of a $25,000 EV, which seemed unrealistic, may become a reality within the next three years.
The partnership between Stellantis and CATL represents a significant step in the company’s expansion in the EV space. By leveraging CATL’s expertise in low-cost battery production, Stellantis aims to strengthen its position in the European market and meet the growing demand for affordable electric vehicles.