Volkswagen to spend €7bn on Spanish battery plant in European e-car push

Volkswagen plans to invest about €52bn over the next five years in the development and production of new electric vehicles.

Volkswagen has said it will invest more than €7bn in Spain, including a battery plant alongside a range of suppliers to establish an electric-vehicle supply chain in the country.

Europe’s biggest car maker, which owns the Seat brand, plans to create an e-mobility hub in Spain led by a battery factory in Valencia and transform its local Martorell and Pamplona car-making facilities to start making electric vehicles, it said. The battery factory will have a capacity of 40 gigawatt-hours and start output in 2026.

“Transforming an entire industry is a huge challenge,” Thomas Schmall, VW’s head of development and leader of the Seat brand, said.

“To be competitive in the new electric world, we now have to raise productivity in our Spanish car production.”

Volkswagen, which has previously said it is open to listing its battery business, plans to invest about €52bn over the next five years in the development and production of new electric vehicles, the industry’s biggest push.

Valencia will be Volkswagen’s first battery factory outside of Germany and its second overall as part of a plan to establish six plants across Europe.

Valencia’s battery site will employ 3,000 people, and VW plans to retrain some of the local car-making workforce as electric vehicles require less time to assemble.

Earlier this week, VW also announced it had reached pacts with two Chinese companies to form joint ventures for the production and refining of nickel and cobalt, two key raw materials to make batteries.

Call for Renault boycott

Meanwhile, a UK opposition politician who has been campaigning for the sanctioning of Russian oligarchs like Roman Abramovich is calling for British car buyers to boycott Renault.

“Renault resumes manufacture in Russia,” Labour's Chris Bryant, tweeted. “It’s time we stopped buying them in the UK.”

Renault, which gets about 10% of its revenue from Russia, has been reluctant to pull back from the country as all other major car makers have since the invasion of Ukraine. 

Rival Stellantis suspended car imports and exports as part of a broader retreat by companies including Volkswagen, Toyota and Mercedes-Benz. Even Renault’s Japanese partner Nissan halted exports to the country.

Renault has kept longstanding ties with Russia intact because it is worried about the high cost of pulling out of its Avtovaz venture. The car maker also owns a plant near Moscow. 

The French government, Renault’s most powerful shareholder, has been backing the company’s position.

• Bloomberg