Spain ups electric car investment after Volkswagen threatens to pull project

By Alyssa McMurtry

OVIEDO, Spain (AA) - The Spanish industry minister announced Friday that Madrid will increase its investment in the electric car industry after Volkswagen said it was reconsidering a key project.

The budget for the first round of the electric vehicle investment project will increase by nearly 30% to €880 million, Reyes Maroto said.

On Thursday, Spanish media quoted Volkswagen sources as saying that the company was losing patience and reconsidering opening a 40-gigawatt battery cell factory in Valencia.

The Spanish government was expected to present the full details of the program in early October.

Meanwhile, the construction of the massive factory, which would employ around 3,000 workers, remains in the air.

Maroto said the government’s program to help the electric vehicle industry is a “unique” opportunity because the government “has never before” invested so much in the sector.

Electric vehicles are one of 11 strategic sectors the Spanish government has earmarked for significant loans and subsidies.

The public-private programs are funded by the Next Generation EU funds, benefiting other sectors such as semiconductors, aerospace and renewable energy.

In August, American car brand Ford renounced the €106 million that Madrid was offering through the same program to build electric cars in another Valencian factory.

The Ford plant in Valencia is now facing a fresh round of layoffs, with the management set to meet with union leaders on Monday.

Ford says vehicle production has slowed “substantially” in Spain due to the semiconductor shortage that continues to plague the automotive industry.