Stellantis and CATL announced on Tuesday that they have reached an agreement to invest up to 4.1 billion euros ($4.32 billion) to form a joint venture that will build a lithium iron phosphate battery plant in Zaragoza, Spain.

The transaction is expected to close in the course of 2025 and is subject to customary regulatory conditions, said the two companies.

Targeted to start production by end of 2026, the facility could reach up to 50 GWh capacity, subject to the evolution of the electrical market in Europe and continued support from authorities in Spain and the European Union.

The 50-50 joint venture will enable the automaker to offer more high-quality, durable and affordable battery-electric passenger cars, crossovers and SUVs with intermediate ranges.

"Stellantis is committed to a decarbonized future, embracing all available advanced battery technologies to bring competitive electric vehicle products to our customers," said Stellantis Chairman John Elkann.

The deal came after the two companies signed a non-binding memo of understanding in November 2023 for the local supply of LFP battery cells and modules for electric vehicle production in Europe.

Robin Zeng, chairman and CEO of CATL, said the joint venture has taken its cooperation with Stellantis to new height.

"I believe our cutting-edge battery technology and outstanding operation knowhow combined with Stellantis' decades-long experience in running business locally in Zaragoza will ensure a major success story in the industry," he said.

CATL is bringing state-of-the-art battery manufacturing technology to Europe through its two plants in Germany and Hungary, which are already operational.

The Spanish facility will enhance its capabilities to support customers' climate goals, further underscoring its commitment to advancing e-mobility and energy transition efforts in Europe and the global market.