(Yicai) Dec. 10 -- China’s Contemporary Amperex Technology and European automaker Stellantis will invest EUR4 billion (USD4.2 billion) to build a plant in northern Spain that will make electric vehicles batteries.

The pair have set up a joint venture for the project and expect to begin production at the factory in Zaragoza, which will have an annual capacity to turn out 50 gigawatt hours of lithium iron phosphate batteries, by the end of 2026, Ningde-based CATL announced today.

CATL’s subsidiary in Luxemburg will own 50 percent of the JV, and Stellantis's French and Spanish units will hold 40 percent and 10 percent respectively. The project is still subject to approval by the Chinese and Spanish authorities, CATL said.

The decision to build a plant in Spain is part of CATL’s broader strategy to invest in manufacturing facilities in key global markets, including Europe. As the demand for EVs continues to grow globally, producers such as Netherlands-based Stellantis are also on the lookout for reliable battery suppliers.

The new project aims to deepen CATL's long-term strategic partnership with Stellantis in the new energy vehicle arena, it said, adding that by fully leveraging the strengths and resources of both parties in their respective fields, the goal is to jointly promote global electrification and clean energy transformation.

The tie-up comes at a difficult time for Europe’s electric vehicle ambitions, with several of the continent’s leading automakers including Stellantis struggling to maintain profits.

CATL’s battery plant in the German state of Thuringia started production in January last year, and BMW Group was the first client. Another factory the world's biggest EV battery supplier has built in the Hungarian city of Debrecen is also operational, and Mercedes Benz will be its main client in the initial stage.

Editor: Tom Litting