Sustaining Momentum: Public Funding and OEM Strategies Secure Spain’s Automotive Future

Spain’s automotive sector has demonstrated remarkable resilience, seamlessly linking robust production volumes with exceptional productivity and export orientation, underpinned by decisive public initiatives and unwavering OEM investment commitments. As the second-largest vehicle producer in Europe, with around 2.38 million vehicles manufactured in 2024, the industry contributes roughly 10% of GDP and nearly 18% of exports. High automation levels enable over 13 vehicles per employee annually, while major OEMs—SEAT in Martorell, Stellantis in Zaragoza and Vigo, Ford in Almussafes, Renault in Palencia and Valladolid, Mercedes-Benz in Vitoria, and Volkswagen in Pamplona—operate highly efficient plants. Despite challenges like semiconductor shortages and energy cost pressures, a robust rebound from pandemic lows and healthy industrial production growth (10.8% in 2022 and 7.5% in 2023 before a moderate 2024 adjustment) confirm a competitive ecosystem adept at absorbing shocks and pivoting toward electrified and connected models.

Spanish authorities reinforce this resilience through sustained support, notably via the Strategic Project for Electric and Connected Vehicles (PERTE VEC). In May 2025, the fourth call (PERTE VEC IV) allocated €1.25 billion—€1.0 billion in low-interest loans and €250 million in grants—with €280 million earmarked for battery production facilities, managed by SEPIDES. Prior rounds mobilized about €2.5 billion, backing gigafactories like Volkswagen’s in Sagunto, Stellantis-CATL in Zaragoza, and Envision in Cáceres, enabling line conversions and capacity expansion for innovative products. Complementary demand-side measures, such as extending EV purchase incentives under the MOVES III programme with an extra €400 million for 2025, enhance market visibility and encourage uptake of electrified models. These policies reduce financial risk for OEMs and signal long-term state resolve to secure Spain’s leadership in sustainable mobility solutions.

Major OEMs in Spain have reaffirmed long-term investment budgets, aligning with public support and strategic imperatives. SEAT’s Martorell plant is investing in battery infrastructure—targeting around 300,000 cells annually—co-financed under PERTE VEC, to establish a local supply chain for future EV models. In Zaragoza, Stellantis and CATL committed to a €4.1 billion gigafactory, reflecting confidence in Spain’s industrial base and government backing. Likewise, the Stellantis-Leapmotor joint venture plans a $200 million investment to produce the B10 EV in Spain from 2026, showcasing Spain’s attractiveness as an EV production hub within a collaborative ecosystem. Ford Almussafes continues adjusting lines for new models like the Bronco, integrating flexibility for ICE and electrified components, with timelines aligned to demand signals and supported by public incentives. Renault’s sites incorporate digitalization and battery assembly capabilities to meet advanced model requirements, leveraging Industry 4.0 investments to minimize downtime during line reconfigurations. Even amid transient EV demand slowdowns in parts of Europe, these OEMs maintain strategic budgets, opting for flexible scheduling rather than project cancellations, reflecting a long-term view driven by electrification and regulatory obligations.

Factories are undergoing significant digitalization to handle multiple vehicle architectures—ICE, hybrid, and BEV—on shared lines, thanks to investments in simulation tools and real-time monitoring systems that facilitate rapid validation of new models and reduce downtime during platform switches. SEAT Martorell’s upgrade of internal charging infrastructure enables efficient testing and assembly of electrified models, while suppliers modernize processes for EV-specific components, often with co-financing support to mitigate financial risk. Public funding mechanisms like PERTE VEC and Next Generation EU cushion these investments, allowing OEMs to adjust deployment based on component availability and evolving demand signals.

Effective adaptation also relies on supply-chain alignment and collaborative frameworks. Authorities coordinate approvals for high-capacity facilities and logistics hubs to support battery module flow and component distribution. Emerging entrants and joint ventures—such as Chinese brands evaluating Spanish plants—and partnerships like Stellantis-Leapmotor underscore Spain’s attractiveness for EV production and export hubs. Continuous EV purchase incentives align demand forecasts with production planning, reinforcing OEM confidence to proceed with strategic investments. Moreover, industry studies highlight Spain as a top destination for greenfield projects in automotive, reflecting foreign investor interest driven by public backing and industrial competitiveness.

Outlook and Conclusion

Spain’s automotive sector demonstrates resilience and strategic foresight by leveraging high productivity, export-driven orientation, and a collaborative model that intertwines public support and private commitment. Sustained funding through PERTE VEC and complementary EV incentive schemes underwrites OEM investment budgets, permitting flexible adaptation timelines aligned with market fluctuations and supply constraints. As global trade uncertainties and technological shifts persist, Spain’s integrated approach—combining government funding, technological upgrades, and market support—fortifies the industry’s strength. Ongoing monitoring of demand trends, supply-chain developments, and regulatory frameworks will guide the phased execution of investment plans, ensuring that Spanish factories remain at the forefront of mobility innovation and maintain their competitive edge in Europe and beyond.

CDI Global is a leading M&A advisory firm focused on middle-market transactions, particularly cross-border deals. We have industry-specialized partners and offices in over 30 countries worldwide.

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By: Eduardo Gonzalez-Gallarza