Valencia Battery Industry: A New European Hub or a New Technological Dependency?

The Valencia battery industry may be becoming one of Europe’s most important industrial test cases.

Within only four days, two major developments placed the Spanish region at the centre of Europe’s changing relationship with China.

First, Ford and Geely announced a joint venture at the Almussafes vehicle plant. Soon afterwards, reports emerged about advanced talks between Volkswagen, PowerCo and Gotion concerning the battery plant in Sagunto.

These developments are not identical. One is an official agreement. The other remains a reported negotiation.

However, together they point towards a wider industrial shift.

Europe is not separating from China. Instead, it is renegotiating where Chinese technology, capital and production will enter the European value chain.

Two industrial moves put Valencia in the spotlight

On 23 July 2026, Ford Motor Company and Geely Auto announced an agreement to create a Europe-focused joint venture at Ford’s manufacturing site in Almussafes.

Ford will hold 66% of the company, while Geely will own 34%. The venture is expected to begin operations during the first half of 2027, subject to regulatory approval. The first new vehicles should leave the production line in 2028.

The partners plan to manufacture five vehicles at the plant. These will include models for both Ford and Geely. The agreement should increase the use of an industrial site that has been operating below its former production capacity.

Only four days later, Reuters reported that Volkswagen and Gotion were holding advanced discussions about a possible stake in PowerCo’s battery plant in Sagunto.

According to the report, Gotion executives had visited the site to assess the operation. However, PowerCo stated that it did not plan to give up control of the plant.

Therefore, this second development should not yet be presented as a completed agreement. It remains a strategic negotiation with potentially important consequences.

Why the Valencia battery industry matters

From our perspective at Revive Batteries, the location is highly significant.

Valencia already has an established automotive base. It also offers industrial expertise, infrastructure and direct access to European and Mediterranean markets.

Moreover, Almussafes and Sagunto are not isolated projects. They form part of a wider regional ecosystem that could connect vehicle assembly, battery production, logistics and materials management.

This creates a major opportunity.

Valencia could attract investment, protect industrial employment and support the production of more affordable electric vehicles. It could also become an important location for the management of production scrap and end-of-life batteries.

Nevertheless, the opportunity comes with a strategic question.

Will Europe use these partnerships to build its own industrial capacity? Or will it simply move its technological dependency inside European borders?

Europe needs scale, while Chinese companies need proximity

European manufacturers face several pressures at the same time.

They need to reduce production costs. They must improve factory utilisation. In addition, they need to launch affordable electric vehicles more quickly.

Chinese companies have different, but complementary, objectives.

They want to manufacture closer to European customers. They also want to reduce exposure to trade barriers and integrate more deeply with European vehicle manufacturers.

The International Energy Agency shows why this relationship is becoming difficult to avoid. In 2025, China accounted for more than 80% of global battery manufacturing output. Chinese producers also supplied almost 75% of batteries deployed in electric cars worldwide.

Within the European Union, Chinese battery producers represented more than half of the market in 2025. That share had almost doubled since 2023.

Therefore, Europe faces a practical dilemma.

It needs Chinese expertise and scale to compete in the short term. However, it must also develop its own engineering, materials and decision-making capacity for the long term.

Gotion is already more than a Volkswagen supplier

Volkswagen’s relationship with Gotion is not new.

In 2020, Volkswagen announced that it would acquire a 26% stake in Gotion High-Tech. The investment made Volkswagen the battery manufacturer’s largest shareholder.

Since then, both companies have cooperated on battery technology and industrial production.

However, a direct Gotion participation in the Sagunto plant would represent a different level of integration.

Gotion would no longer act only as a technology partner or supplier. It could become directly involved in one of Europe’s most strategic battery assets.

That would offer clear industrial benefits. Gotion could contribute experience in cell production, process optimisation and lithium iron phosphate technology.

Yet Europe would need to protect its own interests.

The key issue is not the nationality of the partner. The key issue is how much technology, knowledge and industrial control remains in Europe.

“Made in Europe” is not enough

A battery can be manufactured in Europe without creating full European industrial sovereignty.

The factory may be European. However, the equipment, intellectual property, active materials, software and core process knowledge may still come from outside the continent.

For that reason, local production should be measured through more than factory capacity.

Europe should also assess:

• how much engineering takes place locally;
• whether European suppliers participate in the project;
• who owns the process knowledge and industrial data;
• where the active materials come from;
• whether recycled materials return to European production;
• and who controls strategic investment decisions.

International partnerships can strengthen European industry. However, they should also create skills, technology and local supplier capacity.

Otherwise, Europe may localise production without reducing dependency.

European regulation will shape the new partnerships

The European Battery Regulation adds another layer to this industrial transformation.

Regulation (EU) 2023/1542 introduces requirements covering the full battery life cycle. These include carbon footprint information, recycled content, due diligence, labelling, collection, recycling efficiency and material recovery.

The regulation also introduces the digital battery passport for relevant battery categories. This will provide data that supports repair, repurposing, remanufacturing and recycling.

As a result, manufacturing inside Europe will involve more than locating a factory within EU borders.

Companies will need reliable information about materials, carbon emissions and end-of-life management. They will also need compliant systems for production waste and defective batteries.

This creates an important role for European circular-economy operators.

LFP batteries are changing recycling economics

Gotion’s experience with lithium iron phosphate batteries is especially relevant.

LFP technology has grown rapidly because it offers lower material costs, good durability and strong safety performance. It also avoids nickel and cobalt in the cathode.

According to the International Energy Agency, LFP represented more than 55% of global EV battery deployment in 2025. LFP battery packs were also more than 40% cheaper per kilowatt-hour than NMC alternatives, on average.

However, Europe still depends heavily on China for this technology. In 2025, LFP accounted for more than 10% of EU electric vehicle battery demand. Almost all of those batteries came from China, either directly or inside imported vehicles.

This chemistry also changes the economics of battery recycling.

NMC batteries contain nickel and cobalt, which can generate significant recovery value. LFP batteries do not contain these metals. Therefore, their residual material value is lower.

The International Energy Agency warns that this lower value can make LFP recycling more difficult to finance. It also increases the need for new pricing structures and specialised business models.

What LFP means for the recycling value chain

The growth of LFP does not make recycling less important.

Instead, it makes operational efficiency more important.

The industry will need better battery identification and sorting. Operators must know the chemistry, condition and ownership status of each battery before treatment.

Moreover, logistics will play a larger role. Low-value material cannot support inefficient transport over long distances.

Safety will also remain critical. Batteries may arrive damaged, charged or without reliable technical information.

Therefore, the future LFP recycling model will depend on several connected capabilities:

• efficient reverse logistics;
• safe packaging and transport;
• complete traceability;
• battery diagnostics and classification;
• controlled discharge and dismantling;
• high-quality mechanical pre-treatment;
• efficient lithium recovery;
• and better recovery of graphite.

At Revive Batteries, we believe this shift will reward companies that manage the complete chain. Simply producing black mass will not always be enough.

The strongest models will combine logistics, safety, data, pre-treatment and access to downstream recovery.

Morocco expands the Mediterranean battery corridor

Gotion’s activities in Morocco add another strategic dimension.

The African Development Bank’s environmental documentation describes a planned project in the Kenitra region with capacity for up to 20 GWh of LFP batteries and 100,000 tonnes of cathode materials during Phase I.

A later African Development Bank financing announcement refers to an initial 10 GWh cell-and-pack scope. It also describes a long-term plan to expand capacity to 100 GWh.

These different figures appear to reflect separate stages or scopes within a larger industrial programme.

In either case, the direction is clear.

Morocco is building a major position in the battery value chain. Its location also gives it direct access to European and African markets.

This could create a new Mediterranean industrial corridor. Materials and battery components could move through Morocco, Spain and the wider European market.

Such a corridor would create opportunities for manufacturing and logistics. However, it would also increase the need for clear traceability, regulatory control and cross-border waste management.

What Europe should demand from these partnerships

Europe should not reject cooperation with Chinese industrial groups.

That approach would be unrealistic and could slow the energy transition.

Instead, Europe should define clear conditions for strategic partnerships.

Projects should develop local engineering and technical skills. They should create opportunities for European equipment providers and suppliers.

They should also support research, intellectual property development and industrial data ownership within Europe.

Most importantly, battery projects should include circularity from the beginning.

Factories will generate production scrap, defective cells, rejected modules and damaged packs. These materials need safe and compliant management from the first day of operation.

Later, the same ecosystem must handle batteries that return from vehicles and energy storage applications.

Therefore, recycling and reverse logistics cannot remain secondary considerations. They must become part of the industrial design.

Revive Batteries’ perspective

Valencia has a real opportunity to become a leading European battery and electric vehicle hub.

The partnerships involving Ford, Geely, Volkswagen and Gotion could protect jobs, attract capital and accelerate industrial production.

However, factory announcements alone will not create sovereignty.

Europe must retain knowledge, build local suppliers and recover strategic materials. It must also control battery data and create efficient circular systems.

The question is not whether Europe should cooperate with China.

The real question is how Europe can cooperate without giving up its long-term industrial capacity.

Valencia may become one of the first places where that question receives a practical answer.

At Revive Batteries, we see circularity as a central part of that answer. Smart reverse logistics, safety, traceability, reuse and recycling can help Europe turn industrial production into long-term material resilience.