Spain Positioned to Become Europe's Sixth Largest Battery Producer

Spain's battery production projects, if developed as planned, have the potential to achieve an annual capacity of between 42 and 72 GWh of batteries, which would position the country as the sixth largest manufacturer of this crucial technology for electric vehicles.

A new report from the UK consultancy New Automotive, which specialises in electric mobility, has highlighted the current state of the green industry in Andalusia and Extremadura. These regions benefit from the Government's VEC Perte as well as the supply of photovoltaic energy.

However, "the path to achieving this goal is not without obstacles," the report states. "Spain must ensure that its industrial strategy aligns with ambitious policies to promote demand."

"The success of Spanish battery manufacturing relies on a robust market for electric vehicles. A strong market ensures that battery production will have a guaranteed outlet and reduces investment risks, creating a virtuous circle," the report continues.

According to data from Anfac, the penetration of electric vehicles has increased in recent years, reaching 4.7%, but it is still far from the European average. "Spain must accelerate the adoption of these types of engines," the British consultancy states, "whether through a review of CO2 limits or purchase incentives, although these are costly for budgets."

New Automotive focuses on Andalusia and Extremadura for its analysis, highlighting projects such as the Envision AESC gigafactory in Navalmoral de la Mata, which initially had a planned capacity of 30 GWh and could expand to 50 GWh to supply automotive manufacturers in Spain.

However, AESC announced that due to low demand for electric vehicles, its factory would reduce from three lines originally to two. The Extremadura Regional Government is waiting for the company to present its new project, as the environmental impact statement submitted in 2023 is no longer valid. Without the new report, progress on the construction license and environmental processing cannot proceed.

Other strategic battery projects in Extremadura, which are significant due to the peninsula's lithium reserves, include Lithium Iberia and the Phi4Tech cathode plant. The former is a mine that will produce lithium hydroxide for use in batteries, with an expected investment of 1.3 billion euros; the latter will produce around 20,000 tonnes of cathodes, a key component of batteries.

Additionally, parallel projects are emerging in Andalusia that also play a crucial role in batteries, such as the Atalaya copper mine in Huelva, the PMR metal refinery in Las Cruces, and the Málaga Batteries recycling plant.

Ben Nelmes, CEO of New Automotive, states that "The industrial transformation of southern Spain is one of the most exciting stories in the transition to green technologies. What we are witnessing is more than just an investment in batteries; it is an investment in people, skills, and regions that have historically been left behind. With the right policies to boost clean transport demand, Spain can turn this opportunity into a permanent economic change. The foundations are already laid; now what is needed is certainty and ambition."