VW's Seat to go ahead with Spanish e-car, battery project

MADRID -- Volkswagen Group's Spanish unit Seat will go ahead with a project to make electric vehicles and batteries after overcoming initial reservations about government subsidies, it said on Wednesday.

The project, in which 60 other VW Group-linked companies will also take part, foresees an investment of 10 billion euros ($10.06 billion) to electrify Spain's auto industry and turn the country into a European hub for e-vehicle and battery production.

VW Group said in March that it plans to build a battery cell plant  in Sagunto on the outskirts of Valencia with about 3,000 employees and a production of 40 gigawatt hours (GWh) a year.

Starting in 2026, the battery factory will supply cells to car plants in Martorell and Pamplona. The factories will build electric small cars for VW Group brands.

"This is a first step and now we will continue to look for solutions to develop our ambitious electrification plan," Seat chief Wayne Griffiths said in a video.

The battery factory will be Spain's first and the third of six battery plants in Europe VW Group plans to build across Europe by 2030.

The Spanish government said last month that VW and Seat would receive 397 million euros of the 877 million total in the first phase of the electric vehicle financing program using EU pandemic recovery funds. Although it was the carmaker that received the largest allocation, Seat initially said the funding was not sufficient.

Spain is Europe's second-largest car producing nation behind Germany and is planning to use European Union pandemic relief funds to strengthen its industry.

A further round of subsidies will see another more than 2 billion euros disbursed to provide the continued support the sector needs to successfully tackle electrification, the government has said.