The Spanish Ministry of Industry is recently reported to have pledged a total subsidy of €133 million to the Franco-Italian automotive group Stellantis for the construction of a battery factory complex next to its Figueruelas car plant near Zaragoza. Additionally, the Spanish Ministry of Industry has agreed to increase the financial subsidy for the Volkswagen Group's battery subsidiary PowerCo's battery factory in Sagunto, Spain, from €98 million to €152 million.
Spanish Ministry of Industry to Provide €133 Million in Funding for Stellantis Battery Factory
It is reported that Stellantis is considering collaborating with China’s top battery manufacturer CATL to build the Figueruelas battery factory, which is expected to create approximately 3,000 jobs and require a total investment of around €2.8 billion. The specific production capacity has not been disclosed.
The Spanish Ministry of Industry will provide a funding subsidy of €133 million for the battery factory project through the third round of the PERTE funding program ('Strategic Project for Economic Recovery and Transformation', funded by the NextGenerationEU fund). This new sum will bring the Spanish government's financial support for Stellantis' battery project to nearly €300 million, including €272 million in grants and €26 million in loans.
So far, Spain's PERTE funding program has provided financial support for electric vehicle, power battery, or battery material projects of companies including Seat, Ford, Renault, BASF, AESC Envision, and Lotte Energy Materials.
Stellantis, along with TotalEnergies/Saft and Mercedes-Benz's joint venture ACC battery subsidiary (with Stellantis holding 45%, Mercedes and Saft holding 30% and 25% respectively), has planned a total of five battery giga factories in Europe and North America, aiming to reach a battery production capacity of 400 GWh by 2030. Three of the battery plants are located in Europe: Billy-Berclau Douvrin in France, Termoli in Italy, and Kaiserslautern in Germany. The first phase of the Billy-Berclau Douvrin battery super factory, with a capacity of 13 GWh, began production in June 2023, and the second phase is currently under construction. ACC has been searching for a location for its fourth European battery giga factory, and Zaragoza, Spain, which hosts three car plants operated by Stellantis in Madrid, Vigo, and Zaragoza, is considered the top choice for its fourth battery factory in Europe.
According to media reports, Stellantis may plan to operate the aforementioned battery factory with CATL to produce low-cost lithium iron phosphate (LFP) batteries. According to the memorandum of understanding signed by Stellantis and CATL at the end of November 2023, CATL will supply Stellantis with LFP cells and modules locally in Europe to support Stellantis's electric vehicle production in the European market. At the same time, to further support Stellantis's ambitious electrification strategy and goals, the two parties will also explore the possibility of establishing a battery joint venture with an equal stake.
In June of this year, multiple media outlets reported that Stellantis and ACC suspended their battery factory plans in Italy and Germany and are considering adjusting their battery technology focus to produce low-cost LFP batteries. In light of this, Italian Minister of Industry Adolfo Urso pressured Stellantis at the end of August to promptly construct the Termoli battery factory in Italy.
Spanish Ministry of Industry Plans to Increase Funding for Volkswagen Group's PowerCo to €152 Million
The Spanish Ministry of Industry will also increase the financial subsidy for the Volkswagen Group's PowerCo battery factory project in Valencia through the PERTE funding program, from €98 million to €152 million.
Volkswagen officially approved the construction of the battery factory in Sagunt, near Valencia, in spring 2023, which is managed by its battery subsidiary PowerCo and is currently under construction. The factory, covering an area of about 130 hectares, has an initial annual production capacity of 40 GWh and is expected to start production in 2026, creating more than 3,000 direct jobs. The factory will also use renewable energy sources such as wind and photovoltaic power and may build a battery recycling facility. According to initial plans, the factory's production capacity will be expanded to 60 GWh and create up to 30,000 indirect jobs for suppliers and partners in Spain.
In the future, the battery factory will supply unified batteries to Volkswagen Group's car plants in locations such as Martorell and Pamplona, Spain. The Volkswagen Group plans to produce electric vehicles for Volkswagen, Skoda, and Cupra brands at its car plant in Martorell, Spain, starting in 2025. The Volkswagen Group's car plant in Pamplona, Navarra, Spain, ceased production of the Polo compact car at the end of September this year and will instead produce affordable pure electric compact cars.
PowerCo, established by the Volkswagen Group in 2022, is headquartered in Salzgitter, Germany, and is responsible for battery development, production, and vertical integration of the value chain. PowerCo is currently building three battery factories with a total annual production capacity of 20 GWh: Salzgitter, Germany; Valencia, Spain; and St. Thomas, Canada, scheduled to commence production in 2025, 2026, and 2027, respectively.
Spanish Minister of Industry Jordi Hereu believes that the electrification transformation of the automotive industry is irreversible, which is why the Spanish government has allocated most of the funds to support the automotive industry. The minister also called for the fourth round of funding under the PERTE program, which is expected to be announced by the end of this year.
