Volkswagen’s Spain unit SEAT said it would proceed with an electric vehicle project in Spain after addressing initial concerns with the local government about the size of the subsidy for the venture.
The SEAT-led project, with 60 other companies also taking part, requires a $10.06 billion investment to electrify Spain’s auto industry and transform the country on the Iberian peninsula into a European hub for electronic vehicles and battery production.
The government said last month VW-SEAT would receive 397.4 million euros out of a total of 877 million euros in the first phase of its PERTE electric vehicle financing program using the EU’s pandemic recovery fund.
Although SEAT received the largest allocation, initially it was said that the funding was insufficient. It was not immediately clear whether financing had been increased. Local media reported the local government had offered some additional subsidies and loans.
“The acceptance of PERTE by the Volkswagen Group and SEAT is a sign of our strong commitment to Spain and Europe,” SEAT chief Wayne Griffiths said in a video, calling it a “historic day for all of us”.
The Volkswagen group will electrify its Martorell and Pamplona plants and Spain will have its first battery plant in Sagunto, he said, adding that the project would create thousands of jobs.
Spain is Europe’s second-largest car producer after Germany and plans to use the European Union’s pandemic relief fund to strengthen its industry.
A further round of subsidies will see more than 2 billion euros disbursed to provide the sustainable support the sector needs to successfully tackle electrification, the government said.
“This is the first step and now we will continue to look for solutions to develop our ambitious electrification plan,” said Griffiths.