German carmaker Volkswagen and its partners will invest €10 billion ($10.6 billion) to produce electric cars and batteries in Spain, €3 billion more than previously committed, its CEO said on Thursday. The company also announced a partnership agreement with Spain’s largest power company, Iberdrola, which will build a solar park to provide part of the power to a battery plant to be made in Sagunto, near Valencia. Iberdrola CEO Ignacio Sanchez Galan told reporters that Iberdrola would invest €500 million in electrification plans but no further details.

Volkswagen said in March it would invest €7 billion to build battery plants and make electric vehicles at its two-car plants in Spain, but CEO Herbert Diess said that through new partners, this figure had been raised to €10 billion. “We will electrify Europe’s second-largest car producer (Spain) with the new Gigafactory batteries and the production of electric vehicles in two factories,” Diess said at an event in Sagunto, adding that the plan is to create “a complete supplier ecosystem, from lithium extraction to battery components”.

The German automaker aims to start constructing a 40-gigawatt-hour (GWh) plant in the first quarter of 2023, with mass production beginning in 2026. Volkswagen said the plant will employ more than 3,000 people by 2030.
Spain, Europe’s largest carmaker after Germany, launched a tender process last month for about 3 billion euros in loans and grants to boost electric vehicle (EV) production. Volkswagen and its Spanish subsidiary SEAT have submitted bids.

It is known that the winner of the PERTE fund will be selected this year, as the program consists mainly of the European Union’s pandemic relief fund. The company said it would invest €3 billion in the Sagunto plant, another €3 billion in four Seat plants, including the Martorell plant near Barcelona, and €1 billion in Pamplona.