MADRID -- Spain will invest 4.3 billion euros ($5.11 billion) to support the production of electric vehicles and batteries as part of a major national spending program financed mostly by European Union recovery funds.
The plan, which aims to spur private investment, would include the whole production chain from extracting lithium to assembling battery cells and manufacturing electric vehicles, Prime Minister Pedro Sanchez said in a presentation on Monday.
"It is important for Spain to react and to anticipate this transformation in Europe's automotive sector," he said, adding that the private sector could contribute a further 15 billion euros to the initiative, according to government estimates.
Volkswagen's Group's Seat brand and utility Iberdrola have formed an alliance to work on an application for money from the funds.
Their involvement would fit within a wider project they are planning, covering all elements of electric vehicle production from mining to battery production to the manufacturing of a finished vehicle at Seat's assembly plant outside Barcelona.
The program could spur the creation of up to 140,000 new jobs and boost the national economy by 1 percent to 1.7 percent, the government projects.
It aims for the number of new electric vehicles registered to reach 250,000 in 2023, a big jump from the 18,000 registered in 2020, thanks to government-sponsored initiatives to buy cleaner cars and expand charging stations.
After Germany, Spain is Europe's second-largest auto producer and the world's eighth-largest.
As the industry confronts a tectonic shift toward electric vehicles and greater technological integration, Spain is racing against Germany and France to overhaul supply chains and retool its manufacturing bases.
With the new investment program, which forms part of a 13-billion euro package earmarked for sustainable mobility, Sanchez expects the sector's contribution to economic output to reach 15 percent by 2030, from around 10 percent now.
The program will include 1 billion euros to boost charging infrastructure, Sanchez said.
As one of the main beneficiaries of a 750 billion euro ($908 billion) EU recovery scheme, Spain will get around 70 billion euros in grants until 2026 to help revive its economy, which has been hit hard by the COVID-19 crisis.