Stellantis battery factory: Portugal and Spain compete for Iberian Peninsula site

Carlos Tavares, Stellantis CEO, has placed the Iberian Peninsula - Portugal and Spain - among the potential locations for the group’s next battery factory.

Speaking at a round table attended by Razão Automóvel, held alongside the announcement that the Stellantis Production Centre in Mangualde will build electric cars from 2025, Carlos Tavares said the final site for the group’s new battery plant would be revealed soon.

For the time being, the only certainty is that it will be based in the Iberian Peninsula. Once again, however, Portugal is competing with Spain to secure this major investment.

Portugal and Spain compete for Stellantis battery factory

The location of the group’s fourth battery factory should be confirmed within a few months, and Tavares indicated that Portugal has strong prospects. “Not everything has been decided yet. We intend to conclude this matter in the coming weeks.” He then highlighted Portugal’s principal advantage:

“One of Portugal’s competitive advantages is its energy production, which includes 60% renewable energy, and that is a very important factor when choosing a factory.”

Carlos Tavares, Stellantis chief executive

Carlos Tavares did not only identify the country’s competitive strengths; he also pointed to its shortcomings:

“Portugal needs to cut bureaucracy and speed up its processes.”

Carlos Tavares, Stellantis chief executive

As for Stellantis, the company is taking the necessary steps, according to Tavares: “At this stage, nothing has been negotiated, but we are doing our share of the work. We are talking to partners, defining the economic conditions, the required capacity and the battery chemistry. By the end of the summer, we should have all the answers.”

This naturally raises the question of whether Portugal is also doing its share of the work.

“It is not yet, because we have not made a proposal. But it could be, and I already have assurances from the Portuguese state that they are clearly interested in that possibility. Indeed, Portugal and Spain, and all southern European countries.

The reasoning is very simple for us: we want to manufacture cars close to the points of consumption. It is in southern Europe that demand for smaller cars is concentrated.”

Carlos Tavares, Stellantis chief executive

LFP vs NMC

Stellantis currently has three battery plants in Europe through ACC, its joint venture with TotalEnergies and Mercedes-Benz for battery production: one each in France, Italy and Germany. Battery manufacturing is expected to begin in France this year, followed by Italy in 2024 and Germany in 2025.

Stellantis LFP battery production in the Iberian Peninsula

This fourth European battery factory for Stellantis will differ from the other sites in the type of batteries it produces. While ACC’s three European plants will manufacture NMC lithium batteries - nickel, manganese and cobalt - the new factory will focus on lithium iron phosphate batteries, better known as LFP.

“The Iberian Peninsula is the region that makes the most sense for LFP battery production, because demand for affordable vehicles is highest here.”

Carlos Tavares, Stellantis chief executive

The key difference between LFP and NMC batteries is their lower cost, by around 20%. This is crucial for reducing the price of electric vehicles, particularly those in the lower segments, where prices remain very high.

Chinese manufacturers - BYD, for instance - along with Tesla to some extent, have been the companies investing most heavily in LFP batteries for precisely that reason. Their drawback is that they do not offer the same energy density as NMC batteries, meaning they take up more space and weigh more.

A month ago, Carlos Tavares spoke about the need for these batteries: “Stellantis needs LFP batteries and will have them, because they are cost-competitive and make it possible to produce electric cars that are affordable for the middle class”.