The Future of the Automotive Industry in Spain: Between Electric Transition and Industrial Crisis

The automotive industry is at a delicate moment. Following the pandemic, the semiconductor crisis, three-way trade tensions between Beijing, Washington, and Brussels, and the departure of top executives like Luca de Meo (Renault) and Carlos Tavares (Stellantis), comes China's control over rare earths, threatening to limit electric car production, a key element in Europe's decarbonisation goals.

Spain, as the second-largest producer in the EU market, is naturally at the centre of these tensions. According to Ignacio Rodríguez-Solano, Director of Institutional Relations at Renault's national subsidiary, which manufactures around 300,000 vehicles annually in Spain, "for now, we are competitive, but if we want to receive a family of electric vehicles, an industrial ecosystem covering all spheres is needed."

He refers to auxiliary companies, purchase incentives, tax reform, and ultimately, greater long-term government involvement to transform the country into a zero-emissions car production hub.

The national manufacturers' association, Anfac, is developing a project to highlight the national automotive industry's value, to use as an argument in decision-making and as a guide for policy development around it.

"We are playing for Europe's socio-economic model," stated Rodríguez-Solano, "and therefore, we must thoroughly review everything from energy supply to car taxation." Renault, which holds the presidency of Anfac, is actively participating in this project (Plan Auto) along with other value chain stakeholders.

During the last Paris Motor Show, the still CEO of the French manufacturer, Luca de Meo, pointed out the dissatisfaction of French unions with the allocation of electric cars to the Douai plants in the north of the country. The low demand for this type of propulsion had slowed down factory production and increased the threat of potential job losses.

However, the reality is that in Europe, the only growth vector for the automotive industry is zero emissions. While thermal vehicle sales stagnate, "any brand wishing to participate in the market must focus on this technology. Here, the value comes from the battery and software, and it is essential to attract investment to Spain in these two sectors, promoting initiatives like Perte, for example."

Many manufacturers see electric vehicles as the technology of the future, both environmentally and reliability-wise, but the challenge is aligning development timelines with the population's purchasing ability—measured in both desire and purchasing power. Their goal is to achieve price parity between thermal and zero-emission vehicles, especially in more affordable segments.

In a sector where stability is desired, macro factors threaten to destabilise it. Among them, the tariff war promises the most impact, causing global car and component production to decline by 1.7% this year and 2.1% in 2026.

These figures come from a report published by the insurer Crédito y Caución, which indicates that Germany and Italy will be the hardest hit, as their vehicles are popular in the US. Overall, European factories are expected to produce 3.7% less in 2025. Spain is fortunate not to export vehicles across the Atlantic—94.5% go to the EU market—but its strong auxiliary industry, which supplies Germany, is expected to suffer.

According to the report, another threat to the European market is China, where manufacturers offer cheaper models and tend to adapt more quickly to market conditions.

To protect itself, the European Union has imposed tariffs on Chinese electric vehicle imports. This measure could help curb the momentum of Chinese imports but could also accelerate Chinese manufacturers' plans to move production to Europe.

In this situation, Anfac's General Director, José López-Tafall, noted that "we cannot lose focus on establishing measures that enhance our competitiveness."

Curiously, the automotive industry is possibly one of the few points of consensus across the entire political spectrum.

According to a study conducted by Cluster 17 for Renault, 3 out of 4 Spaniards support the State aiding the automotive sector to ensure its competitiveness, and 73% of Spaniards are in favour of supporting a State Pact for the Automotive Industry.

The survey highlights the widespread concern among the population, with two-thirds considering the current state of the sector in Spain as "bad or very bad."

Voters from almost all parties agree, and those concerned about the impact of a crisis in the automotive sector on employment are in the majority. Leading the ranking are PNV (82%), followed by PP (81%), Junts (79%), Vox (76%), PSOE (74%), Bildu (73%), Sumar (63%), and ERC (50%).

These voters also see it positively for the government to incentivise electric vehicle purchases, with support votes outweighing opposition, especially among young people aged 25 to 34 (61%). By parties, PNV leads this position with 72%, followed by PSOE (69%), Sumar (68%), and Bildu (66%). PP (46%) and Vox (28%) are against it. The survey responses also reveal a reality: those living in autonomous communities with—or historically having had—an automotive industry presence are more favourable to a State Pact ensuring the continuity of manufacturing activity there.

77% of Spaniards favour collaboration between central and regional governments to preserve the future of plants. The acceptance rate is notably high in Cantabria (89%), the Basque Country (87%), Catalonia (85%), Valencia, Andalusia (81%), Galicia, and Aragon (80%).

All these regions have an automotive industry presence. Respectively: Nissan, Mercedes-Benz, Seat, Ford, Santana, and Stellantis. This, according to the report, "reinforces the symbolic value of an institutional agreement around employment." According to Renault's spokesperson at the study's presentation, "this is not about political ideologies, but about industry and economy."