Tesla is negotiating to invest 5,000 million in Valencia in a car plant

The Generalitat Valenciana announced a few days ago that it was about to close an agreement with a multinational to install a factory plant for electric cars and batteries in Valencia, without specifying the identity of the company.

Oliver Thansan
Oliver Thansan
08 June 2023 Thursday 11:05
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Tesla is negotiating to invest 5,000 million in Valencia in a car plant

The Generalitat Valenciana announced a few days ago that it was about to close an agreement with a multinational to install a factory plant for electric cars and batteries in Valencia, without specifying the identity of the company. Since then, the circle around Tesla has been narrowing. Elon Musk's company is interested in investing around 5,000 million euros in the Valencian Community to have its second European plant after the one in Berlin, which is the spearhead of the multinational in Europe. This investment will be higher than the 3,000 million that is being executed by Volkswagen and its subsidiary PowerCo for the gigafactory that is being built in Sagunto and that will come into operation in 2026.

From the presidency of the Generalitat Valenciana, which is the one that directly leads the negotiations, it is neither denied nor confirmed that this is the company. They point out that they must respect the "confidentiality" signed with the multinational for an agreement that is not yet completely closed, but that could be confirmed in a few days and that President Ximo Puig has been negotiating in person for a year. If this is the case, the Valencian Community would become the most important electric automotive area in southern Europe. Tesla would join Power Co's cell plant, which will directly and indirectly employ 10,000 people, and the electrification of Ford's car plant in Almussafes, in full conversion to manufacture electric cars.

Tesla has invested more than 5,000 million euros in Germany in its first gigafactory and electric car factories in Europe. The megafactory, which is in the vicinity of Berlin, produces cars and batteries to respond to a growing market that is forced to abandon combustion cars in a few years. But Elon Musk's firm wants to find another location for a second factory in southern Europe, in line with what Volkswagen has done.

Weeks ago, during the electoral campaign, Ximo Puig already announced that there were talks with "important multinational companies" interested in investing in the Valencian Community. He went so far as to talk about global investments of more than 24,000 million euros, without mentioning companies. He also said that some of these negotiations "were very advanced". The presidency of the Generalitat does not want to talk about the exact figure of the investment that the arrival of Tesla in the Valencian Community will entail, but consulted sources point out that it would be higher than the 4.5 billion euros that were discussed in some media yesterday, that is, it will be equal to or higher than that of Berlin.

Like what happened with the Volkswagen gigafactory negotiations, the presidency of the Generalitat has tried to maintain absolute discretion in the negotiations. The Valencian administration would have offered a location plan suitable to the demands of Tesla, like the German multinational, and allocate part of the European funds to this objective, so the complicity of the Spanish Government is necessary.

With the PowerCo gigafactory, the battle was very tough, since the Valencian Community was not initially included as a geography in which to set up. After Volkswagen gave up Catalonia for its cell plant, the central government opted for Aragon or Extremadura. Finally, the management of the Generalitat Valenciana achieved what seemed impossible: that the Valencian Community was the place selected to locate a plant that will manufacture batteries not only for its brand, but also for others, such as Ford.

These sources emphasize that the installation of the Volkswagen gigafactory in Sagunto has been a key element for Tesla to be interested in the Valencian Community. Electrical component factories tend to be geographically concentrated for environmental and logistical reasons. In addition, the Valencian administration has already studied the protocols to speed up the administrative procedures. This competitive advantage has played in favor of talks that have not yet ended, but which seem to be well advanced, so that the Valencian Community will soon be the most important electric automotive logistics hub in the south of Europe Now we just have to wait for confirmation.