Volkswagen raises electric car investment in Spain to €10 billion

German carmaker Volkswagen AG and partners have announced plans to invest €10 billion into producing electric vehicles and batteries in Spain – €3 billion more than it previously promised.

Volkswagen also announced a partnership deal with Iberdrola, Spain’s largest power utility. The pair aim to build a solar park that will partly power the battery plant, which will be built in Sagunto, near Valencia.

Iberdrola is to invest €500 million into the electrification plan said its CEO Ignacio Sanchez Galan.

In March, Volkswagen announced that it would invest €7 billion into a battery plant and electric vehicle production in its car factories in Spain, but CEO Herbert Diess has since announced a raise in that figure to €10 billion with the new partners joining.

“We will electrify the second-largest car producer in Europe (Spain) with a new giga-factory of batteries and the production of electric cars in two plants,” Diess said, adding the plan was to create “a full ecosystem of suppliers from lithium extraction to the assembly of batteries.”

Volkswagen plans to start building the 40-gigawatt-hour (GWh) plant at the beginning of 2023, ahead of serial production which aims to start by 2026. Then, by 2030, the site will hire more than 3,000 staff.

Volkswagen and its Spanish unit SEAT presented a bid to Spain after the country launched a bidding process for around €3 billion in loans and grants to promote electric vehicle production.

Winners of the programme will be chosen this year.

The carmaker will invest €3 billion towards the plant in Sagunto, and another €3 billion towards four SEAT factories in Spain.