7 billion EUR investment

According to its official press release, SEAT S.A. and the Volkswagen Group have announced their intention. They are planning to invest more than 7 billion EUR to electrify Spain. This will be a part of their commitment to the country and developing the electric vehicle.

In fact, this investment would be the single largest industrial investment in Spanish history. In addition, The Future: Fast Forward program would include the installation of a battery cell factory in Sagunto, Valencia. Thomas Schmall, chairman of the SEAT S.A. Board of Directors, mentioned in the following.

“This project is highly important for Volkswagen, for Spain, and for the whole of Europe. This is because it is our ambition to electrify Spain. Also, we are willing to invest more than 7 billion Euro together with external suppliers for the electrification of our Martorell and Pamplona plants and the localization of the electric battery production value chain in Valencia”.

Battery factory in Valencia

Volkswagen Group realizes a production capacity of 40 GWh annually and plans to employ more than 3,000 people in Valencia. To be honest, the timeline is tight.

To be ready to start production in 2026, construction of the plant must start by the end of 2022. The first milestone must be the positive outcome of the PERTE submission and finalized permits.

“In Valencia, we will build up nothing less than next-generation cell production. A standardized factory, producing Volkswagen’s cutting-edge unified cell and supplied with renewable energy. As a result, it will enable Volkswagen group to achieve a sustainable battery production. And it will create a strong pulling effect in the whole battery value chain in Spain and beyond”.

Negative results in 2021

SEAT S.A. has experienced the difficult time in terms of financial results in 2021 as well. Due to uncertainty and the global shortage of semiconductors, the company could not achieve the recovery it had hoped for. However, the financial results also contained several trends that will be important for the future in 2022.

SEAT experienced a massive loss of production volume in 2021. It led to negative impact on sales, and a negative operating result of -371 million EUR. (2020: -418 million EUR). Profit after tax was -256 million EUR. (2020: -194 million EUR) Also, turnover increased to 9,256 million EUR (+5.4% compared to 2020).

“Despite the negative environment and losses, we continued on our aggressive investment path. It means that we invested more than 900 million euros in R&D and investment expenditures in 2021, a 7% increase vs 2020. This shows our strong and ongoing commitment to bring future products to the market. In addition, we continued to make significant investments in building the CUPRA brand,”

Effect on employment

Of course, this investment is not officially approved by the Spanish government. However, its potential is huge. This is because Spain is one of the highest unemployment rate countries among advanced countries. The unemployment rate in Spain was 12.7% in January 2022, according to the data. On the other hand, the rate of Germany, the UK and France were 3.1%, 3.9% and 7.0%, respectively.

Therefore, this investment will help not only the future in the Spanish automotive market but also the Spanish labor market.