Seat boss warns future of Spanish car industry at risk without aid

The boss of Seat, Spain’s only major domestic carmaker, has called on EU and national authorities to approve aid for a €3bn to €4bn new battery cell factory by the summer, or risk the future of the country’s auto industry.

Wayne Griffiths, president of the Volkswagen subsidiary, said firm commitments by Spain and the EU were needed if Seat was to go ahead with plans to produce a cheap electric car from 2025 at its base in Martorell, Catalonia.

“We are all in, fighting for this, we know it is make or break: Seat needs an electric car for the future, because it is the future,” the UK-born executive, who took up his post in October, told the Financial Times in an interview.

“We are prepared, we have a €5bn investment plan and now the outstanding issue is the commitment of the Spanish government . . . and the backing of Europe for our project.”

The 55-year-old VW group veteran, who has now obtained a German passport, said the decision on setting up a government-backed factory to manufacture batteries, the key technology for the car, had to be made “this year . . . by summer”. He added: “We have to start developing the car now . . . There is no plan B.”

VW is embarking on one of the most ambitious electrification programmes of any carmaker globally, and plans to source parts for its new vehicles from six battery factories in Europe alone.

At present, VW and its partners are pondering where in southern Europe to locate one of the factories. Portugal and France are possible alternatives to Spain. A key factor will be how much state aid the EU commission permits for such a project.

Unlike traditional engines, which are often shipped across the world to car factories, batteries have to be produced near to their final assembly lines because they are so heavy to transport.

Governments across Europe, including in the UK and Germany, are rushing to attract investment in battery factories as a way of safeguarding their automotive plants in the decades to come.

Seat is hoping the electrification project will be one of the most prominent beneficiaries of the €140bn Spain expects to receive from the EU’s €750bn recovery fund, as the bloc moves ahead with plans for much cleaner uses of energy by the end of this decade.

Although Spain has the EU’s second-biggest car sector after Germany, it lags behind on electrification in terms of both manufacturing and sales. Just 2 per cent of Spanish car sales were of electric vehicles last year, compared with an average of 7 per cent across western Europe.

“It is a vulnerability if things don’t change and a huge opportunity, if we make the right decisions now,” Griffiths said of the country’s trailing status on electrification, as he highlighted Seat and Spain’s traditional focus on making cheaper cars. Seat plans to price its inaugural electric vehicle at €20,000 to €25,000.

The company’s higher-end brand, Cupra, plans to launch its first electric car at the end of this year.

“Up to now the electric cars or the zero-emissions cars have been coming down from luxury brands, or from Tesla, so if we want to make that real big impact [on cutting carbon emissions] we have to democratise electric mobility,” Griffiths said. “If there’s a market and a manufacturer that’s capable of doing that, that is us.”

He warned that, otherwise, fast-moving companies in China and elsewhere could capitalise on the shift in technology to win large chunks of market share.

“I’ve worked in the car industry since I was born, my dad was a car dealer; our industry hasn’t changed that much in the last 55 years,” he said.

“But this thing that is going to happen now is going to take place within 10 years, by 2030; this disruption is going to happen incredibly fast, and the industries and the economies that are able to adapt fast — and the Chinese are very fast — will certainly have an advantage.”

He acknowledged that the Spanish government had met other prerequisites for the project, in particular by committing up to €800m from the recovery fund for subsidies to buy electric vehicles and by promising to spend the money to install 100,000 charging points throughout the country by 2023.

The government is also fast-tracking a partnership between Seat and fellow Spanish blue-chip companies Iberdrola and Telefónica to receive EU recovery funds — the first such designation in the country. The collaboration seeks to supply renewable energy to VW group facilities in Spain and install charging points throughout the country.

But Griffiths emphasised that approval for and the location of the battery cell factory, whose overall cost he put at €3bn to €4bn, still needed to be resolved.

“At the end of the day, the VW group will always take the offer that is most competitive,” he said. “If we are going to build electric cars, we need batteries for those electric cars . . . and the battery has to be at an affordable level.”

He said it was Seat’s understanding that the Spanish government was “interested in taking a share [in a battery factory] as a national interest”, and called for the cells to be assembled into battery packs at a Seat facility in Martorell or Barcelona, adding that electric motors could also be built at one of the company’s plants.

“We need full integration to make this profitable, particularly at this early stage when battery costs are where they are at the moment,” he said. “It is essential that we, our suppliers and everyone is supported in making this happen, and that is why we are asking the Spanish government for support . . . to make Spain competitive.”