On Tuesday, Stellantis announced it had signed a preliminary agreement with Chinese EV battery giant CATL for the supply of battery cells and modules for the production of the automaker’s electric vehicle models in Europe.

In a joint statement, the two companies also announced that they were looking at possibly investing in a joint, 50-50 venture which would support the electrification strategy of the automaker.

Although financial details of the deal were not released, the agreement will see CATL supply lithium iron phosphate (LFP) batteries to the French, American, and Italian maker of such automobile brands as Jeep, Peugeot, Fiat and Alfa Romeo.

The statement noted that the LFP batteries will be used by Stellantis to produce high-quality, affordable, and durable passenger sedan, crossover SUV and small and medium-sized SUV EVs.

According to Stellantis and CATL the memorandum of understanding (MoU) inked between the two companies will be the basis of a long-term collaboration between the them which would involve “identifying opportunities to further strengthen the battery value chain.”

CATL Chairman and General Manager Robin Zeng said, “We believe the partnership will be a decisive step on both parties’ journey towards carbon neutrality goals.”

Carlos Tavares, the CEO of Stellantis, called the MoU on LFP battery chemistry “another ingredient in our long-term strategy to protect freedom of mobility for the European middle class.”

Through its ACC joint venture with Mercedes and TotalEnergies, Stellantis is building three gigafactories in France, Germany, and Italy to supply its EV battery needs in Europe, as others appear ready to follow in its footsteps in the region.

Stellantis, which formed in 2021 through the merger of Fiat Chrysler with Peugeot maker PSA, has been lining up several supply agreements for the  materials it will need for its global EV production.