VW Group’s CEO attended the event at Barcelona, Spain

According to USNews, Volkswagen’s Chief Executive Officer, Herbert Diess, referred to the production of Electric Vehicles in Spain.

On March 4th, the Spanish government announced it will use European Union funds to create a public-private consortium. The collaboration will proceed with SEAT, which is a Volkswagen’s subsidiary, and power company Iberdrola. They will build Spain’s first factory for Electric Vehicle batteries.

In 2020, SEAT showed its intention to produce a small Electric Vehicle in Spain from 2025. However, the Spanish automotive company needs public aid for the production of EVs to meet tougher emissions regulations.

Diess, Spanish King Felipe and Prime Minister Pedro Sanchez attended the event at SEAT’s plant in Martorell near Barcelona. Diess mentioned the potential project would include battery production and receive EU’s pandemic recovery funds. However, he stressed more backing was needed at the same time.

Who is Volkswagen Group?

Volkswagen Group is a German multinational automotive manufacturer, and was founded in 1937. Its head office is located in Wolfsburg, Lower Saxony, Germany. The Group comprises 12 brands from 7 European countries. They are Volkswagen, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN.

The Volkswagen Group is on the way to realize the biggest change in its history with “TOGETHER – Strategy 2025” program. The German automotive giant wants to become a globally leading provider of sustainable mobility. To achieve that, the Group will be transforming its automotive core business. Thus, it will launch a further 30-plus fully electric cars by 2025. In addition, it will expand battery technology and autonomous driving as new core competences.

Why is an Electric Vehicle important in Spain?

According to ANFAC’s report, gasoline engine was accounted for 47.8% of units sold in Spain in February 2021. In addition, diesel engine and others such as BEV, PHV, HV, FCV and CNG were 23.1% and 29.0%, respectively. Therefore, the data shows the demand of eco-friendly vehicles is increasing.

On the other hand, Spain is the second largest country in Europe in terms of the production volume of vehicles. Therefore, EVs production becomes more important from not only customer perspective but also business perspective.

Volkswagen made a clear decision

Volkswagen Group will focus in new areas other than combustion or diesel engine vehicles. New areas are Electrification (Electric Vehicles), battery technology and autonomous driving. The German company will invest 73 billion EUR in electrification, hybrid powertrains and digital technology over the next five years.

Therefore, Volkswagen Group has already made a big decision and shown the clear direction in the future. However, the competition among automotive companies becomes intensified and more difficult, because the competitors also took bold actions.

For example, its German rival, Daimler, decided to seek for Electrification and Autonomous Driving separately. The Chinese hardware companies collaborate with the software companies. For example, there are co-manufacturing EVs between Baidu and Geely, or the partnership between BYD and Didi Chuxing.

Battery production in automotive makers

The most valuable automotive company, Tesla, has the gigafactory in Nevada and other factories in Shanghai and Berlin. In addition, it unveiled that it would operate in India in 2021. Tesla announced that it would produce its own battery cell in Battery Day, which was held in September 2020.

In this sense, Volkswagen’s subsidiary, SEAT, seems behind in Electric Vehicle production. This is because the company wants to manufacture EVs from 2025. In addition, batteries can be bottle neck for EV production in Spain as well as Europe. Thus, the government support is necessary to realize this schedule and speed up it more.

Large corporation’s leaders such as Volkswagen should dialogue with several stakeholders including politicians. It is tough but critical to make their business successful and sustainable.