MILAN (Reuters) - Stellantis is aiming to build a gigafactory in Europe with China's Catl, its fourth plant in the region, in a bid to produce cheaper batteries and more affordable electric vehicles.

Stellantis and Chinese battery group Catl announced this morning the signing of a non-binding Memorandum of Understanding (MOU) to supply lithium iron phosphate (Lfp) battery cells and modules to power Stellantis electric vehicles produced in Europe, adding that they are also exploring the possibility of creating a joint venture with equivalent holdings.

During a conference call, Stellantis' global purchasing and supply chain manager Maxime Picat explained that the planned JV with with with Catl is aimed at building a new gigafactory in Europe for the production of Lfp batteries.

These batteries are cheaper to produce but less powerful than nickel manganese cobalt (NMC) batteries, the other current main technology.

Picat said that discussions are ongoing with Catl on the JV project and that a few more months are needed to finalize it, but he did not provide details on where the new battery plant will be located.

In Europe, Stellantis-owner of brands such as Jeep, Peugeot, Fiat and Alfa Romeo-is building three gigafactories, in France, Germany and Italy, through its Acc joint venture with Mercedes and TotalEnergies

(Giulio Piovaccari, translated by Chiara Scarciglia, editing Andrea Mandalà)