SEAT-VW says to go ahead with Spanish e-car, battery project

MADRID (Reuters) -Volkswagen's Spanish unit SEAT will go ahead with a mega project to make electric vehicles and batteries after overcoming initial reservations about the size of government subsidies for the venture of strategic importance for Spain, it said on Wednesday.

The SEAT-led project, in which 60 other Volkswagen-linked companies will also take part, anticipates an investment of 10 billion euros ($10.06 billion) to electrify Spain's auto industry and turn the country into a European hub for e-vehicle and battery production.

The government said last month VW-SEAT would receive 397.4 million euros of the 877 million total in the first phase of the PERTE electric vehicle financing programme using EU pandemic recovery funds.

Although SEAT received the largest allocation, it initially said the funding was not sufficient. It was not immediately clear if the financing has been increased. Local media have reported regional authorities had offered some additional subsidies and loans.

"The acceptance of the PERTE by the Volkswagen Group and SEAT is a sign of our strong commitment to Spain and to Europe," SEAT chief Wayne Griffiths said in a video, calling it "a historic day for all of us".

The Volkswagen Group will electrify the Martorell and Pamplona factories and Spain will have its first battery plant in Sagunto, he said, adding that the project will create thousands of jobs.

Spain is Europe's second-largest car producing nation behind Germany and is planning to use European Union pandemic relief funds to strengthen its industry.

A further round of subsidies will see another more than 2 billion euros disbursed to provide the continued support the sector needs to successfully tackle electrification, the government has said.

"This is a first step and now we will continue to look for solutions to develop our ambitious electrification plan," said Griffiths.

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(Reporting by Andrei Khalip and Jessica Jones; Editing by Kirsten Donovan)