The Volkswagen group and the Spanish government staged a scuffle a few months ago over public aid to build a battery plant in Sagunto. The automobile company demanded more resources to carry out the project. Now that situation is reproduced worldwide in the framework of competition between the US and Europe.
The ambitious aid program promoted by President Joe Biden's Administration through the Inflation Reduction Act (IRA) makes it more attractive to start by investing in a battery plant in the United States than in Europe. The Financial Times has advanced that the German multinational could receive up to 10,000 million dollars in aid for its plant in the US, for which reason it would be considering prioritizing the start-up of that plant. Another advantage of investing first in the US is that energy costs are lower in that market than in Europe.
Volkswagen group sources said that “we are still evaluating suitable locations for our next battery cell factories in Eastern Europe and North America. No decisions have been made yet. We stick to our plan to build factories for about 240 GWh in Europe by 2030, but for this we need a framework of competitive conditions. That is why we are waiting for what the so-called Green Deal (Green Pact) of the EU will bring”.
The aforementioned European Green Pact is a package of political initiatives whose objective is to place the EU on the path towards an ecological transition to achieve climate neutrality by 2050.
The fact that a plant is built in the United States first does not mean that the project of building another in Eastern Europe is abandoned. One cannot be substituted for the other, as battery factories must be close to vehicle assembly plants.
Volkswagen wants to increase the production of batteries in Europe in the next seven years to ensure the supply of these components to its car assembly plants. Each of the battery factories has a capacity of 40 gigawatts.
The Spanish one of Sagunto, a project that in no case is now put in doubt by the US project, will have an investment of about 3,000 million. Additionally, the group will allocate 3,000 million to the Seat plant in Martorell and another 1,000 to the facilities in Navarra. Together VW and its partners will allocate some 10,000 million to its electrification plan in the country. Aid from Spain to the group amounts to 397 million.
The head of Technology of the Volkswagen group, Thomas Schmall, wrote a few days ago on the Linkedin social network after meeting with several European commissioners, including Margrethe Vestager (Competition) and Thierry Breton (Internal Market), that "the conditions of the IRA law They are so attractive that Europe risks losing billions in investments that will be decided in the coming months and years."
