Together with external suppliers, Volkswagen is ready to invest 7 billion euros in a plant in Spain, part of which goes to the Martorell and Pamplona sites.
The automaker said the investment would be the largest in Spanish history although all plans were still subject to approval.
“This project is very important for Volkswagen, for Spain and for all of Europe,” said Thomas Schmall, a member of the VW board.
The EV battery cell plant, which will employ 3,000 people, will start operating in 2026 and will have an annual production of 40GWh.
Valencia itself is home to the Ford car factory, which has given the region a reputation for manufacturing vehicles.
Spain is targeted as an electrification cluster not without challenges. Spain will need to drastically increase the number of electric vehicle chargers by 2025 in order for it to meet its electric car targets.
Last year, VW and SEAT signed a deal with energy company Iberdrola to upgrade local charging infrastructure.
The agreement also focuses on renewable energy supplies, which is significant, as electricity prices in the country soar and could hurt EV adoption.
Over the next five years, VW will spend 52 billion euros in the development and production of new EVs.