According to media reports, executives from Volkswagen Group's Spanish operations have indicated that the group's battery and electric car production business in Spain might be affected due to low local demand.
Wayne Griffiths, head of the Volkswagen Group's brand Seat, stated that although Spanish consumers have not fully embraced electric cars yet, the Volkswagen Group has begun construction of a €3 billion (US$3.2 billion) battery factory near Valencia.
Griffiths told the media at an industry event in Madrid, "From next year, nearly half of the company's business will be producing electric cars. However, Spain does not have this market yet, which makes me very concerned."
The Volkswagen Group plans to invest over €7 billion in establishing a battery supply chain in Spain and producing compact electric cars for its brands in the country.
Seat has previously had success with various internal combustion engine models, including the Ibiza hatchback and its sporty offshoot brand Cupra, which has also performed well in markets outside Spain.
Currently, the Volkswagen Group is also advancing another crucial initiative in Spain, which is the construction of its third battery cell factory near Sagunto, Valencia, expected to start production in 2026.
However, across Europe, demand for electric cars has decreased, exposing the competitive weaknesses of European car manufacturers against Chinese carmakers and Tesla. The situation is particularly dire in Spain, where acceptance of battery technology lags noticeably behind neighboring countries. Last year, pure electric cars accounted for only 5.6% of local new car sales, compared to 15% for the EU.
One of the main factors contributing to the difficulty of popularizing electric cars in Spain is their higher prices. Surveys conducted among consumers show that Spaniards on average expect to spend less than €28,000 on a new car, and there are few electric models available below this price point.
The Chinese-made MG ZS meets this requirement, with a starting price of €20,480 for the compact SUV. In December last year, this model (including the cheaper petrol version) ranked first in the sales chart in Spain.
Seat plans to start producing compact electric cars for multiple brands, including Cupra, from 2025 onwards. Griffiths, who has been in charge of Seat since October 2020, expressed his concerns, saying, "I am very worried that we will start producing electric cars next year, but why do it when electric cars only have a 5% market share in Spain?"
