MADRID, Oct. 4 (Xinhua) -- Spain builds more than 2 million vehicles a year as Europe's second-largest vehicle producer, but many decisions shaping its automotive industry are made abroad. With Volkswagen considering a possible phase-out of its Spanish brand SEAT after 2030, a new battery partnership with China's Gotion High-Tech highlights Spain's efforts to secure its place in the electric-vehicle value chain.
Volkswagen Group, its battery unit PowerCo and Gotion announced on Sept. 28 that Gotion will invest around 1.1 billion euros (1.29 billion U.S. dollars) for a 49-percent stake in PowerCo's battery-cell plant in Sagunto, eastern Spain. PowerCo will retain 51 percent, with the venture intended to be jointly managed and operations to start in 2027.
Jose Diez, second vice president of the Valencian regional government, said the partnership would combine "industrial experience and technological knowledge" to make the project more competitive.
A POWERHOUSE WITH LIMITED CONTROL
Spain has an extensive automotive manufacturing ecosystem spanning assembly plants, component makers and supplier network. According to ICEX, Spain's state export and investment agency, nine multinational groups operate 18 vehicle assembly and component plants in the country. The broader automotive industry accounts for around 10 percent of gross domestic product (GDP) and 16 percent of goods exports.
Yet much of that industrial strength sits within multinational groups, leaving Spain exposed to investment and production decisions made elsewhere.
Uncertainty over SEAT has brought that vulnerability into focus. In September, Volkswagen said tighter CO2 rules, electrification costs and the investment needed for a new generation of electric models were making further investment in the brand increasingly complex. Volkswagen's options beyond 2030 include a gradual phase-out.
The announcement has stirred concerns in Spain. El Pais reported that SEAT's direct and indirect economic footprint is estimated at around 4 percent of Catalonia's GDP and 3 percent of employment.
Matias Carnero, president of SEAT's works council and currently a member of Volkswagen's supervisory board, has warned against allowing SEAT to become "a mere assembly plant." He told Catalan newspaper La Vanguardia that SEAT still retains activities spanning design, production and sales. "The whole value chain - that is what matters," he said.
WHY CHINESE TECHNOLOGY MATTERS
Electrification is changing what gives automotive manufacturers a competitive edge.
"It is no longer just about who manufactures better, but who controls batteries, software, costs and the speed of innovation," Xavier Ferre, partner responsible for automotive and transport at EY Spain, told local media La Vanguardia.
Batteries illustrate that shift. According to Volkswagen, Europe still lacks significant industrial-scale production capacity for lithium iron phosphate (LFP) batteries, a technology increasingly used in lower-cost mass-market electric vehicles. Gotion brings established expertise in LFP technology and large-scale manufacturing.
The new partnership aims to make Sagunto a European production hub for LFP-based Unified Cells. The plant's first phase is now planned at up to 30 GWh of annual capacity, 50 percent above the 20 GWh initially considered.
The cells are intended to feed Volkswagen Group's electric-vehicle production network in Spain, including small electric models assembled at SEAT's Martorell plant in Catalonia and Volkswagen Navarra.
Another major project is taking shape in Zaragoza, where Stellantis and China's CATL are investing up to 4.1 billion euros (4.62 billion dollars) in a 50-50 joint venture to build an LFP battery plant with a capacity of up to 50 GWh. Construction began in 2025, and production is scheduled to start by the end of 2026.
Such projects could help Spain anchor battery manufacturing alongside vehicle assembly, strengthening its position as production shifts toward electric models.
FROM COMPETITION TO INDUSTRIAL COOPERATION
Spain's partnerships with Chinese companies extend beyond batteries. Chery has partnered with Spanish brand Ebro to revive production at Nissan's former Barcelona plant. Ford and Geely have agreed to form a joint venture around the Almussafes plant in Valencia, pending regulatory approval. Stellantis is also deepening industrial cooperation with Leapmotor, with production planned in Zaragoza.
These alliances offer ways to sustain factories and supplier networks while attracting new technology and investment.
Battery investment is pushing localization further upstream. Gotion's separate project in Valladolid includes cathode production and advanced battery recycling, adding activities beyond vehicle assembly. When the project was announced in July, the Spanish government described it as a "historic opportunity" to strengthen the country's electric-vehicle industrial base, with thousands of jobs expected to be created.
Josep Maria Vall, president of the Catalan Automotive Industry Cluster (CIAC), said Spain's manufacturing history and experienced component makers give it the capacity to integrate Chinese manufacturers into its industrial ecosystem. CIAC Manager Josep Nadal said deeper investment and industrial alliances could help Europe "retain the value chain."
Pablo Sanz, a professor at Spain's National University of Distance Education, told Xinhua that Chinese brands are pushing European companies to improve quality, accelerate innovation and increase efficiency. "Spain and Europe need Chinese brands to accelerate innovation," he said.
Jaume Roura, president of Catalonia's Fecavem vehicle dealers' association, told Xinhua that cooperation should deliver benefits on both sides. "We must make sure everyone benefits and, above all, that industry and jobs are maintained," he said.
