Volkswagen seeks substantial public funding to sustain the Sagunto battery gigafactory project in Valencia. Government discussions point to a range of roughly 300 to 380 million euros, while the German group is aiming for a total near 700 million, according to reports from La Tribuna de la Automoción and relayed by Levante-EMV from the Prensa Ibérica group, all cited as credible sources. Beyond the headline figures, the company has not altered its stance on the final decision, stating it will act promptly once PERTE support for electric mobility is confirmed. Previously, around 167 million euros received provisional approval. The Sagunto gigafactory is part of a broader plan that envisions 3.5 billion euros in investments, 3,000 direct jobs, and 12,000 indirect roles.
The company has expressed frustration over the slow allocation of funds. In a firm statement, it urged a timely and favorable PERTE decision, aligning with the investments proposed by all players and speeding up the industry’s transformation along the entire value chain.
sixty companies
The Volkswagen Group and sixty partners in the Future: Fast Forward initiative are ready to take action. They propose injecting up to 10 billion euros to electrify Spain’s auto sector and position the country as a European hub for electric mobility. This ambitious investment, one of the largest in Spain’s industrial history, has historically tied to Next Generation EU funds via PERTE VEC. Once PERTE VEC receives its final green light, SEAT SA, the Volkswagen Group, and the 60 Future: Fast Forward partners will assess the decision and determine how to advance the various projects within the initiative.
Government and regional sources indicate that while there are contradictions, efforts are underway to resolve them. Other reports note that the Generalitat is actively working to ensure the Sagunto project proceeds as planned.
There is concern within Volkswagen that inconsistent aid levels could jeopardize the broader electrification program in Spain. Insiders emphasize that the issue goes beyond the Sagunto gigafactory alone, potentially impacting investments at Martorell and Navarra as well.
Alarm
In September, the group raised alarms about the need for substantial public subsidies, warning that its Spanish plants and the Sagunto project would not advance the electrification process without strong backing. Earlier in the year, the government announced that the electrification initiative would receive only 167 million euros (95 million in grants and 72 million in loans). The overall Fundable budget, pegged at 362 million euros, fell well short of the company’s expectations. Although management anticipated final approval in September, the process has stretched as the company seeks a higher funding level. It remains unclear how a project expected to mobilize 10 billion euros could be supported by a cap of 362 million.
The risk for the Valencian Community is that the multinational may relocate the gigafactory to another European country.
Should the relocation occur, the Valencian Community would lose a major economic engine. The company plans to establish six dual-battery gigafactories with a combined capacity of 40 GWh per year. The first plant is under development in the German town of Salzgitter, a second is planned for Sweden, and Sagunto would be the third. The remaining three projects are still awaiting approval and funding.
From the outset, the company stressed that the construction of the massive factory depended on public aid. It had hoped to begin construction in early 2023 so Sagunto could start production by 2026. Despite the delays, the government remains hopeful the disputes will be resolved, even as frustration grows within the German group due to the delayed concessions and high expectations for aid.