Volkswagen gives Seat green light to manufacture electric cars in Martorell

German group makes it conditional to public aid for electrification

2 min
Entrance to the Seat plant in Martorell.

Volkswagen Group's small and affordable electric car will be manufactured in Martorell for all the brands of the German automotive consortium. This was decided by Volkswagen's supervisory board at its meeting this Thursday. The German group has decided to accelerate the electrification of its European production plants. The plans include the Seat plant in Martorell and also the Landaben plant in Pamplona. But the plans to convert the Spanish factories are subject to public aid, and there seems to be progress on this front after Brussels gave Spain's recovery plan for the automotive industry the green light.

The president of Seat, Wayne Griffiths, had already announced Seat's intention to convert Martorell into the group's small electric car factory, which would entail an investment of €5bn by 2025 in the Catalan plant. The investment, then, is now closer. However, to electrify the Spanish plants, the Volkswagen group would also require a battery plant. This plant is being promoted by a consortium formed by the Spanish government alongside Seat, the Volkswagen group, electricity company Iberdrola and other Spanish companies and financial institutions.

Volkswagen's decision has been welcomed by the Catalan Government. Business minister Roger Torrent described Volkswagen's decision as "transcendental" and stressed that the manufacture of electric vehicles is "the most important element of the value chain", because it attracts more businesses and "generates an industry around it that will allow Catalonia to lead the transition to sustainable mobility".

Torrent recalled that Seat was the first company he visited after becoming minister because he considers this company "a strategic partner". In this sense, he said that from the beginning this has been a priority investment for the Catalan government. For this reason, he urged the Spanish government to accelerate the recovery plan for the electric car.

The Volkswagen Group's plans for Spain, in addition to manufacturing the affordable electric compact car in Martorell, also include manufacturing the group's electric SUVs at the Landaben plant (Navarra).

€159bn investment

The group's plans for Martorell and Landaben are part of a major electrification offensive by the German group, which wants to ensure that one in four electric cars sold in Europe from 2026 is one of its brands. For this great offensive Volkswagen has planned an investment of €159bn until 2025. Of this amount, €89bn will go towards electrification and €56bn to the digitization of factories.

Volkswagen's supervisory board has decided that, in addition to the German plants in Zwickau and Emden where electric cars are already being produced, other European factories will also be electrified. The Wolfsburg plant, where the group is headquartered, will manufacture the electric hatchback ID.3 from 2023, and the sedan Trinity from 2026.

In addition, the group has confirmed its targets for operating profitability at the top end of the range between 6% and 7.5% by 2021, and deliveries of 9 million vehicles and a net cash flow in the automotive area of €15bn before unforeseen expenses. In addition, the supervisory board confirmed that Herbert Diess will remain CEO of the group and will be responsible for the CARIAD software division as of January 1, 2022. There had been rumours for weeks that Diess might step down because of his clashes with workers' representatives. Ralf Brandstätter, who is the CEO of the Volkswagen brand, will take over responsibility for new Volkswagen Passenger Cars unit as of January 1 and for the Chinese business as of August next year.