The Spanish Ministry of Industry is set to provide subsidies to Stellantis totalling €133M (US$145M) for a battery cell gigafactory near Zaragoza whilst increasing the funding for PowerCo’s Sagunto gigafactory from €98M (US$107M) to €152M (US$166M).

In a strategic move, the Spanish Ministry of Industry has announced a further €184M (US$200M) in support of gigafactory projects in Spain. Stellantis remains on the fence about whether it will build a joint gigafactory with CATL in Zaragoza, but the Ministry hopes this latest funding will entice action. This package would then bring the total aid provided to Stellantis to €298M (US$325M), representing just over 10% of the required fee reported to build the gigafactory.  

The second funding package will be directed towards PowerCo, a battery manufacturer owned by VW. PowerCo is constructing a facility in Sagunto, Valencia, and is targeting production for 2026. The funding package will, therefore, aid the development of the project to bring cells to market during the challenging construction and ramp-up period. Following the cut-back in ambition for many battery projects in Europe, this may keep the momentum going to completion.  

The announcement also signals Spain’s intent to double down the electrification of the automotive sector in what has been a challenging year for the industry. Although EV sales figures for 2024 have not hit the highs of previous years, Project Blue’s long-term projections estimate EV sales figures to be strong. Spain’s bet to become an EV and battery manufacturing hub may, therefore, place the country in a good position as demand grows over the coming years. Moreover, Project Blue forecasts that Europe will be in a supply deficit for lithium-ion battery cells this decade, partly due to a lack of tier 1 and tier 2 projects. Investment in projects that are paired with tier 1 producers such as CATL may, therefore, prove to be pivotal if Europe is to source battery cells domestically.