Volkswagen To Build $7 Billion Battery Plant in Spain

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Volkswagen AG (Wolfsburg, Germany) and its subsidiary SEAT car company have unveiled a 7 billion euro (US$7.7 billion) plan to build an electric vehicle (EV) battery cell plant in Spain.

The so-called Gigafactory Valencia plant will be located near the small town of Sagunt, 25 kilometers from Valencia and will, if successful, have a battery production capacity of 40 gigawatt-hours (GWh) per year. The companies will immediately apply for the Spanish government's Electric Vehicle PERTE program, which will open for applications on April 1. Employing up to 3,000 people, the Sagunt plant would be VW's second European battery plant after Salzgitter in Germany and the first outside of that country.

"This project is highly important -- for Volkswagen, for Spain, and for the whole of Europe," said Thomas Schmall, Volkswagen Group board member for technology. "It's our ambition to electrify Spain and we are willing to invest more than seven billion euro together with external suppliers for the electrification of our Martorell and Pamplona plants and the localization of the battery value chain in Valencia. In Valencia, we are planning to build up nothing less than next-generation cell production: A standardized factory, producing Volkswagen's cutting-edge unified cell and supplied with renewable energy, enabling a sustainable battery production. It will create a strong pulling effect in the whole battery value chain in Spain and beyond."

Wayne Griffith, president of SEAT, added: "'Future Fast Forward' has the potential to transform the Spanish automotive industry and democratize electric mobility across Europe. The more than 7 billion euros Volkswagen Group and SEAT S.A. would mobilize for Future: Fast Forward would represent the largest industrial investment in Spanish history."

In total, Volkswagen plans to build six gigafactories in Europe with, an annual capacity of 240 GWh, with partners. The group's demand for premium cells will be met by Northvolt (Stockholm, Sweden) in Skellefteå, Sweden. VW said that the selection process for the new plant was "tough and Valencia emerged as the strongest location based on more than 100 criteria such as qualified workforce, public support, good logistic connections and green energy." It said that the "timeline is tight" and that in order to be ready to start production in 2026, construction of the plant should begin by the end of the year.

Schmall added: "Transforming an entire industry is a huge challenge. To be competitive in the new electric world, we now have to raise productivity in our Spanish car production. And we need to qualify many of our people for new tasks, including battery development and production. This calls for a lot of flexibility by everyone and a possible change of jobs. But the important news is: The overall effect on employment will be positive -- despite the faster assembly times in the electric car manufacturing. If we do it right and get the right support from the Spanish government, we will be able to create additional jobs in this transition for Spain."

Industrial Info is tracking a recent surge in new European EV battery plant projects from companies including Northvolt, Volvo Cars (Gothenburg, Sweden) and Ford (NYSE:F). For additional information, see February 15, 2022, article--Volvo Green Lights EV Battery Plant with Northvolt and March 31, 2022, article--Ford Goes 'All-In' for European EV Drive.

Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.