Volkswagen has increased its electric vehicle investment in Spain to €10 billion

According to the company’s chief executive, Volkswagen AG and its partners would invest €10 billion ($10.6 billion) in Spain to create electric vehicles and batteries. This represents a €3 billion increase above its previous pledge.

The company also announced a partnership with Iberdrola (IBE.MC), Spain’s biggest power utility, to establish a solar park in the municipality of Sagunto, near Valencia, to help power the battery plant. Ignacio Sanchez Galan, Iberdrola’s Chief Executive Officer (CEO), told reporters that the business would invest €500 million in the electrification plan, although did not explain.

Volkswagen announced in March that it would invest 7 billion euros in a battery facility and the production of electric vehicles at its two automobile facilities in Spain, while CEO Herbert Diess stated that the amount had been increased to 10 billion due to the arrival of new partners.

“We are going to electrify Europe’s second-largest vehicle manufacturer (Spain) with a fresh gigafactory of batteries and electric vehicle production in two sites,” Diess said in Sagunto, adding that the goal was to create “a whole ecosystem of vendors from lithium extraction to battery assembly.”

Diess was speaking during a tour of the plant site with Spanish Prime Minister Pedro Sanchez. Construction on the 40-gigawatt-hour (GWh) facility is planned to start in the first quarter of 2023, with serial production starting in 2026. By 2030, Volkswagen expects the plant to employ roughly 3,000 employees.

Spain, which is the second-largest automaker in Europe after Germany, launched a bidding process this month for almost €3 billion in loans and subsidies to promote the production of electric vehicles (EVs). Volkswagen and its Spanish subsidiary SEAT have presented a bid.

“We will make an investment of over € 3 billion in the battery Gigafactory, but the PERTE funding will be crucial if we are to realize our ambition of making Spain a European electric vehicle powerhouse. The battery plant in Sagunto will be the third of six Gigafactories the company plans to build across Europe, with a total area of 200 acres. For the battery speed-up in Spain and Europe, sustainability and a tight value chain loop are important. Our new factory in Valencia, for example, will be a showcase for the circular economy, with 100% renewable energy utilized to operate the Gigafactory, which is a local-for-local strategy, and the recovery of important raw materials, to name a few characteristics “n site,” said Thomas Schmall, Chairman of the Board of SEAT S.A. and Chief Technology Officer of Volkswagen AG.

The PERTE monies, which are mostly composed of European Union (EU) pandemic assistance money, are going to be allocated this year. The company plans to spend €3 billion on the Sagunto plant, €3 billion on four SEAT sites, including the Martorell plant in Barcelona, and €1 billion in Pamplona.

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