China's Gotion invests $1.25 billion in Volkswagen battery plant in Spain

(changes "bln" to "billion" in headline)

BERLIN, Sept 28 (Reuters) - China's Gotion will invest €1.1 billion ($1.25 billion) in Volkswagen's battery plant in Valencia, Spain, becoming a major investor in the site under a broader plan to jointly develop a European battery supply chain.

Volkswagen on Monday said it would sell a 5.3% equity stake in the Chinese battery maker, after which it would "continue to hold a significant stake in Gotion", the German carmaker said in a statement.

Gotion had previously announced that it would set up a series of joint ventures with Volkswagen.

The company will take a 49% stake in the Valencia plant of Volkswagen's battery business PowerCo, which will remain majority shareholder in the site, Volkswagen said, adding that it would become a European production hub for lithium iron phosphate battery, or LFP, batteries.

The companies will also partner at Gotion's cell factory in Surany, Slovakia and build a new plant in Kenitra in Morocco. Both will be jointly managed by Gotion and PowerCo, with the Chinese partner retaining a 51% stake.

Volkswagen technology chief Thomas Schmall hailed the expansion of the company's long-standing partnership with Gotion.

"This marks a major breakthrough for both companies and brings us one step closer to the forefront of electric mobility," Schmall said.

($1 = 0.8800 euros)

(Reporting by Rachel More, editing by Thomas Seythal)