Chinese battery maker Gotion High-Tech and Spain’s Ministry of Industry have officially confirmed a €950m (US$1.09bn) project in Valladolid to build a battery cathode plant and a recycling facility, aimed at supporting the development of a circular economy in a region with substantially more limited access to raw materials than the company’s native China. Gotion, whose single largest shareholder is the Volkswagen Group, aims to begin construction in 2027.

However, construction will be split into two phases. Phase One, budgeted at €411.5m, will target the recycling plant, capable of processing up to 200,000 tonnes of battery material a year. Phase Two, budgeted at €539.1m, will produce 200,000 tonnes of cathode material annually. Gotion has not given a firm timeline for either the completion of the first phase or the start of the second.

The investment is bolstered by €138m in grants from the Spanish government under the PERTE funding programme, €46m more than had previously been reported in May. PERTE has previously supported Volkswagen’s Seat brand, Stellantis Group and Volkswagen’s own battery division, PowerCo, with hundreds of millions of euros each.

Spanish Transport Minister Óscar Puente told local newspaper El País that Gotion “aims to bring the plants online very soon,” describing the cathode facility as “unique in the European Union”” and the recycling plant as featuring differentiating technology. Puente added that the Ministry expects Gotion’s total Spanish investment, alongside partner InoBat, eventually to reach €5bn covering the full battery supply chain, reducing exposure to tariffs and international market swings.

The Valladolid plants were originally linked to Slovak battery maker InoBat, which took on the project before failing to submit the guarantees required by the Spanish government; Gotion, already a shareholder in InoBat, then stepped in. The company plans to run the Spanish facilities alongside a planned 20 GWh battery cell plant in nearby Morocco, pairing lower-cost North African production with EU-based finishing and market access.

The project adds to a fast-growing cluster of Chinese-linked battery and electric vehicle investment in Spain, including CATL’s joint venture with Stellantis in Aragon and Envision AESC’s plant in Extremadura, alongside vehicle assembly moves from Chery, SAIC’s MG brand, Leapmotor and Geely. Spain has increasingly positioned itself as a preferred entry point for Chinese capital inside the EU’s tariff wall. Hungary is vying for the same position, and plays host to both BYD’s regional headquarters and its first major car factory inside the bloc.

Cathode production is arguably the supply chain gap Europe most needs to close, since cell manufacturing capacity is scaling faster than access to upstream materials that remain heavily dependent on Chinese processing. That the plant expected to fix this sits partly under Volkswagen ownership only underscores how tangled Europe’s push for battery independence has become.