Spain Frontloads Subsidies For Electric Car Projects As VW Appears In Doubt

The Spanish government vowed more European funds than initially planned to investors in the first phase of support of electric mobility projects, ranging from vehicle batteries to cars, and said it sought to work with Volkswagen after the German automaker reportedly threatened to pull out.

Industry Ministry said that the subsidies to be disbursed this year under the so-called PERTE scheme using EU pandemic relief funds would rise to 877 million euros ($860 million) from 600 million euros, meaning the total planned amount of nearly 3 billion will be slightly more front-loaded.

The rest of the money remains to be awarded in the second phase next year.

"Right now, all the projects have guarantees that they can be developed according to the needs outlined by the companies," Industry minister Reyes Maroto said. The amount that Volkswagen and others will receive will be defined next week, her ministry added.

Volkswagen's Spanish unit SEAT, the Volkswagen Group and 60 associated companies want to mobilise 10 billion euros to electrify the automotive industry in Spain and turn the country into a hub for electric mobility in Europe, producing electric cars and batteries.

Other projects vying for the funds focus mainly on batteries.

A Volkswagen spokesperson declined to comment on reports that the carmaker was set to receive less than it needed to progress with the investment, stating it had not made public a minimum figure and would not comment on speculation before the final offer was announced.

Several Spanish media outlets have said Volkswagen had pressed the government to announce the disbursement promptly and threatened to drop its plans for a factory if it was too low.

SEAT was allocated 167 million euros in the PERTE programme's first provisional results announced on Aug. 1.

"We will keep working with the VW-SEAT group and other producers for Spain to be a global reference for electric cars, including batteries," Prime Minister Pedro Sanchez said.