Global EV Transportation Review

Policy focus has been high towards the automotive industry and its transition to electric mobility. Among other measures, upfront funding support was announced to facilitate the investments in electric vehicle ecosystem. The context of the policy and regulatory measures lies in the country’s commitment to put an end on combustion engine vehicle sales from 2035. The target is five years ahead of the original one, thus adding to the urgency and pressure. A related point is the importance of automotive industry – about 10% of the GDP and second largest in Europe by production volume.

In July 2021, the government approved the third extension of its incentive package christened as MOVES (Efficient and Sustainable Mobility Incentives Program). Within the framework of the Recovery, Transformation and Resilience Plan, there is funding worth €400 million available, which could also be stretched to €800 million if the need so arises. The reform package thus announced is meant to last till the end of 2023. The scheme notably provides for an additional 10% in aid for select categories such as location in municipalities with population below 5,000, fraught with disabilities, or professional use for taxi or VTC.

Under MOVES-III, there is a €7,000 subsidy available for a new passenger electric vehicle. This is however conditional on scrapping an old vehicle (at least seven years) in connection with the purchase of electric vehicle. Without a related scrappage, the subsidy for purchasing the electric vehicle is €4,500. The subsidy available for plug-in hybrid vehicles is up to €7,000, subject to riders involving mileage of the electric part, sticker price of the vehicle and the seating capacity. Also notable is that the subsidy support is available for other transport beyond passenger vehicles. In such cases, the subsidy is up to €9,000 if the old one is scrapped. Additional criteria in this regard involve vehicle categories as well as the sticker prices. The end goal of the subsidy scheme is to get at least 250,000 electric vehicles and 100,000 charging points by 2023.

There is another scheme under which policy funding support is made available for the industry in the form of subsidy or grants. Under the Strategic Project for Economic Recovery and Transformation (abbreviated as PERTE), the planned disbursal is worth €877 million across ten recipients so far. Over €2 billion worth of payouts are to be done in the subsequent PERTE funding rounds that will follow. The goal is to catalyse investments in the electric vehicles and battery space where Spain can exploit significant opportunities. Presently, Volkswagen’s upcoming Gigafactory is the leading example among PERTE funding recipients.

There is active policy support to support electric vehicle investments in the country. Its PERTE scheme has a €3 billion allocation, of which €877 million of disbursal was set aside during 2022. The remaining part is for the ongoing year of 2023. The aim is to facilitate the industrial ecosystem around electric mobility. Till 2022, Volkswagen was the front-runner in availing this subsidy support for its planned battery production and electric vehicle capacity in Spain. Other companies are in similar fray though not in similar scale.

The policy-led push for electric buses is another major demand segment for the major manufacturers. It is evident in the recent key investment announcements. In September 2022, the Chinese manufacturer BYD signed a framework agreement with Castrosua, specializing in bus and coach assembly, for a facility in Spain. The aim is to locally meet the order book running across key cities including Valencia, Saint Cugat, Badalona and Badajoz among others. The city of Madrid, however, leads in its electric bus adoption. The transport operator EMT Madrid has been transitioning its fleet towards zero-emission. Its 2023 budget at about €855 million has a significant thrust on procurement of electric buses.

The energy company Iberdrola has taken a lead in expanding the public charging network across Spain. By September 2022, the company’s installed charging points grew by over 2,500 units across 500 locations. It is in the process of expanding the network to reach 150,000 charging points by 2025. Various tie-ups and joint ventures are thus being concluded in this context. In 2021 there was an agreement with the company Restaurant Brands Iberia for installing charging points at the latter’s Quick Service Restaurant outlets. A fast-charging network is in the works in partnership with BP, which will begin with a 5,000 points network by 2025 before next phase of scaling up. The sub-segment of electric buses is being pursued by partnering transport providers, an example being Irizar-Iberdrola agreement in 2021.

Iberdrola is also working with automakers like Volvo for the fast-charging at the dealership level. There is a partnership with Volkswagen Group for setting up a solar power park to support the battery plant planned in Sagunto municipality. As such, this partnership could be seen as part of the larger investment goal of the Volkswagen Group, which plans to invest €10 billion in Spain for electric vehicles and batteries. The automaker aims to commence work on its 40GWh Gigafactory in 2023, with an aim to reach full-scale by 2026. In April 2022, the Spanish government launched a bidding process for €3 billion worth of loans and grants, as incentive package for electric vehicle production. Presently, the Volkswagen Gigafactory project corners about half of the government subsidy/grant allocation for electric vehicle industry.

As seen with BP, another conventional energy major Shell has been stepping up the investments in its charging network business. In June 2022, Shell acquired Spanish charging developer and operator Cable Energia. The latter had 80 charging points in Spain at the time of the transaction. With this acquisition, Cable Energia became a wholly-owned subsidiary within Shell’s mobility business division. Earlier in 2021, the Spanish oil company had announced expansion of charging network at its oil retail outlets with an investment outlay of €42.5 million. The French company TotalEnergies is another such entity in the same chain, offering charging network services as one of the ways to diversify and foray in the emerging market.