Spain is moving aggressively to land new battery and electric vehicle (EV) plants, using billions of EU COVID-19-pandemic relief funds to avoid being left behind as the global auto sector undertakes the biggest technology transformation in a century.
As Europe’s second-largest vehicle-producing nation, behind Germany, and with the automotive sector accounting for 10 percent of its economy, Spain has a lot to lose as automakers overhaul supply chains and manufacturing for electric vehicles.
Germany and No. 3 European producer France are already pouring funds into battery plants, supporting their respective national champion automakers, and Volkswagen AG and Renault SA are investing heavily in EVs on their home turf.
Less wealthy, without a major automaker of its own and with EV sales lagging the EU’s average, Spain is fighting back by deploying to EV projects some of the 140 billion euros (US$169 billion) of EU COVID-19 relief funds it is entitled to.
“We have a clear goal. We want Spain to remain the EU’s second-largest car producer in 2030, 2040 and 2050, regardless of the technology there is,” said Raul Blanco, junior industry minister for Spain, also the world’s eighth-largest automaker.
Of the 70 billion euros to be sent from Brussels in the form of grants, the Spanish government plans to spend 13 billion euros on sustainable mobility through 2023.
That would mostly be used to promote domestic sales of EVs, improve charging infrastructure and build its first battery cell plant.
In one of the highest-profile uses of EU funds in Spain, the government in March announced a public-private partnership aimed at promoting electric vehicles, with a bidding process due to start in July and winners to be announced by the end of this year.
The project, in which central and regional governments might hold a stake, would cover the manufacturing of batteries and EVs in Spain, demand promotion for electric vehicles and the development of infrastructure to support them.
A 40-gigawatt battery cell plant constructed as part of the project would cost more than 2.5 billion euros, Blanco said.
The proposal has sparked competition among Spain’s regions, with Catalonia offering land, public loans and aid to attract a battery plant, and neighboring Aragon and Valencia also in contention.
While few private sector bidders have yet publicly emerged, Volkswagen’ Spanish SEAT brand and utility Iberdrola have formed an alliance to work on a bid.
Their involvement would fit within a wider project they are planning, covering all elements of EV production from mining to battery production to the manufacturing of a finished vehicle at SEAT’s Catalonia assembly plant.
“The project is on the starting block. Its execution will hinge upon a clear commitment by the European Commission,” SEAT chairman Wayne Griffiths said in an e-mailed statement referring to the EU funds. “Spain cannot miss this historic opportunity.”
Spanish firm Phi4tech, which has its own separate cell plant project in the Extremadura region tied to a lithium reserve that is among Europe’s largest, is advising SEAT and Iberdrola on battery production.
The Spanish government’s plans to promote “electromobility” have convinced Renault and Ford Motor Co, which import batteries to the country, to announce new investments to build hybrid vehicles and engines.
A Renault source and a Ford spokeswoman said that they were monitoring battery-making projects in the country, a potential future source of components.
Madrid is wooing Volkswagen, which makes electric vehicles in Germany and Slovakia, to choose Spain over France and Portugal for a southern Europe battery gigafactory by 2026. SEAT is also weighing whether to start producing 500,000 EVs a year at its Martorell plant outside Barcelona in 2025.
However, Spain faces significant competition from elsewhere in Europe to attract automakers looking to invest.
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