(Yicai) Sept. 29 -- Gotion High-Tech’s shares jumped after the Chinese power battery supplier said it is expanding its partnership with German carmaker Volkswagen Group through a EUR3.2 billion (USD3.66 billion) investment in new battery and battery materials plants in Spain, Slovakia, and Morocco.

Gotion [SHE: 002074] jumped by its 10 percent daily trading limit to CNY28.68 (USD4.28) per share soon after the market opened in Shenzhen today and has held that gain.

Gotion, in which Volkswagen has 24 percent stake, will sign deals with VW and its wholly owned subsidiaries to build battery plants in Valencia, Spain and Šurany, Slovakia along with a battery materials plant in Kenitra, Morocco, which will mainly supply the two other facilities, the Hefei-based company said late yesterday. Construction could take up to five years.

The Chinese company and its subsidiaries will contribute about half of the funding.

The Valencia project represents the largest investment, at around EUR2.26 billion, and will have planned annual lithium-battery capacity of 29.1 gigawatt-hours. Once operational, it will become one of Volkswagen's main battery cell production hubs in Europe. Gotion's Spanish unit has separately signed a EUR1.09 billion engineering, procurement, and construction contract for the project.

PowerCo, Volkswagen’s battery cell subsidiary, will own 51 percent of the Spanish joint venture, while Gotion and its units will hold the rest.

The Slovakian project will require EUR480 million of investment and have planned annual lithium-battery capacity of 8.4 GWh, while the Moroccan project will need the same amount and is expected to turn out 100,000 tons of lithium iron phosphate cathode materials annually.

Both the Slovakian and Moroccan JV project companies are controlled by Gotion, which has a 51 percent stake in each. PowerCo owns the remainder.

The projects will deepen Gotion’s long-term strategic partnership with VW, strengthen the integration of their businesses, and expand the Chinese firm’s European battery manufacturing footprint, it said. While capital expenditure will rise in the near term, the company expects the projects to contribute positively to earnings once they are operational.

In a separate announcement late yesterday, Gotion said Volkswagen China Investment had agreed to sell a 5.3 percent stake in Gotion to an investment vehicle controlled by the Hefei municipal government for CNY2.32 billion in a deal that values the shares at CNY24.09 each, a 6.6 percent discount on Gotion’s CNY25.80 closing price on Sept. 28. VW China's shareholding in Gotion will fall to around 19 percent from a little over 24 percent.

Editor: Tom Litting