Spain Plans $1.5 Billion Incentive to Boost Electric Vehicle Sales

According to foreign media reports, Spanish Prime Minister Pedro Sanchez announced that the country plans to provide nearly 1.3 billion euros (approximately 1.5 billion dollars) next year to support the development of the electric vehicle market and industry, with the goal of increasing the proportion of domestically produced electric vehicles to 95% by 2035.

Image Source: BYD

The plan includes two core funding supports: in 2026, it will provide 400 million euros in direct subsidies for electric vehicles to consumers, while an additional 580 million euros will be invested through the EU-funded industrial investment program. Furthermore, Spain will allocate an additional 300 million euros for the construction of charging stations in areas with insufficient charging infrastructure.

Pedro Sánchez stated that the purpose of the aforementioned incentive plan is to provide employment security for the Spanish domestic automotive industry during the transition to electrification, while consolidating Spain's position as the second-largest car manufacturer in Europe.

Currently, Chinese electric vehicle brands such as BYD are accelerating their expansion, seizing market share in Europe with their price advantages. In this context, the Spanish government is increasing its support for the automotive industry, as there is a lack of competitive local car manufacturers in Spain.

Despite foreign investment projects such as CATL and Stellantis Group's collaboration to invest 4 billion euros in building a battery factory creating job opportunities in Spain, Pedro Sánchez emphasized that without support from domestic industries, Spain risks losing core technologies and shrinking market share. According to Spain's industrial roadmap, by 2035, the sales of electrified vehicle models will account for 100%.

It is worth mentioning that Spain is leveraging its relatively low labor costs and industrial energy prices, which are about 20% lower than the EU average, to fully develop a battery industry hub. It is reported that the country plans to build three more battery factories.

Industry data shows that in the first 10 months of this year, the share of locally produced pure electric and plug-in hybrid vehicles in the Spanish automotive market was approximately 10%, while the market share for full hybrid vehicles was 26.7%. In comparison, the market share for pure electric and plug-in hybrid vehicles across the European Union in 2023 has already approached 20%.