Seat is inclined to accept the Perte and invest in the Sagunt battery plant

After weeks of intense negotiations to obtain more aid, the Seat-VW group is inclined to continue with its investments in Spain, including the Sagunt battery factory.

Thomas Osborne
Thomas Osborne
08 November 2022 Tuesday 23:44
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Seat is inclined to accept the Perte and invest in the Sagunt battery plant

After weeks of intense negotiations to obtain more aid, the Seat-VW group is inclined to continue with its investments in Spain, including the Sagunt battery factory. Today is the deadline for companies to communicate whether or not they accept the allocation of aid that has been awarded to them with the Perte del automobile and, barring any surprises, Seat's response will be positive.

Yesterday there were still some fringes to be resolved, but the most important stumbling blocks were considered to be on track. Since a provisional liquidation of the Perte funds for the electric vehicle was known in the summer, the viability of the Seat project was left up in the air. In the end, 397 million euros have been awarded to the group, less than 4% of the announced investment, some 10,000 million euros between Seat and the 60 partners that accompany it. “Insufficient”, warned the CEO of Seat, Wayne Griffiths, triggering all the alarms. Even more so if you take into account that of the total aid only 214 million are subsidies. The rest are loans, something irrelevant for the Volkswagen group, because its problem is not liquidity.

Given the risk of a withdrawal from Seat, the Ministry of Industry advanced that at the beginning of the year there will be a second call for Perte and the autonomous communities also mobilized. The Valencian Community, chaired by Ximo Puig, will contribute around 60 million, while Catalonia could help with 50 and Navarra with around 40 million. And from the central government it is ensured that there will be a second round of aid. "Collaboration between administrations has been key," say sources familiar with the negotiation.

A resignation of Seat would have been a resounding failure for the Ministry of Industry and for the entire Government, as it would reveal an inability to manage European funds through the Perte (strategic plans for economic recovery and transformation). Given the strategic interest of the Sagunt gigafactory, Ximo Puig has put pressure on Minister Reyes Maroto and the Government in general to ensure a second round of aid to avoid the possible loss of the investment. The message from the Government is that there will be more money, although not all of it now.

The anger with the Government, which began in the summer, has reached the VW headquarters in Wolfsburg, where this week several procedures will have to be overcome for the definitive green light, in particular the placet of the supervisory council that meets on Friday .

In Wolfsburg, the expectations of aid were much higher considering that there was talk of aid for almost 3,000 million, but only 30% of the available funds have been awarded, because it has been shown that the process of presenting candidate projects was too complex.

Seat-VW is the main beneficiary with 397 million, but very far from its aspirations. In the sector media it is even commented that with the previous president of VW, Herbert Diess, the risk of breaking with the Government and withdrawing from the project would have been very high. Diess was the one who announced the group's project during a visit to the Sagunt land together with the Prime Minister, Pedro Sánchez.

The reality, however, is that the group needs a battery plant in southern Europe and that the Seat factories in Martorell and Volkswagen in Navarra can only survive if they are converted to electric vehicles. Combustion cars can only be sold outside Europe from 2035. And the batteries could be brought from central Europe, but that would increase costs.

To defend the need to receive more aid funds, the group highlights that the 10,000 million project represents "the largest investment in the history of Spain." In addition to Seat, another nine companies have obtained aid from Perte, which they must ratify if they accept it.