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Global EV Transportation Review

Key Regional Markets


The Spanish automotive market finds significant policy support for transition to an electric mobility model. The funding has helped set the direction for prospective investors, with some of the major investments in electric vehicle and battery manufacturing in pipeline. Yet, more is required for accelerating the growth in electric vehicle market. The country continues to be far behind its leading European counterparts in expanding the charging infrastructure. This may impact the growth momentum in the market, as already evident in some part through the relatively stunted growth in battery electric vis-à-vis plug-in hybrids.

GDP (Current Prices) USD (2021)

1,426.22 bn

GDP Growth Forecast (constant prices) (2021-2025)


EV Penetration

9.6% of total new passenger vehicle registrations by 2022

EV Target

Planned Year of Phasing Out ICE Vehicles

GDP Source: IMF, World Economic Outlook

EV Penetration and Trend

Trend in Passenger Electric Vehicle Registration

Source: European Automobile Manufacturers Association

The sharp rise in penetration of electric vehicles is unmissable from Spanish automotive market trend. It doubled between 2020 and 2022, when the petrol and diesel-based units reported decline in the absolute number of registrations. The electric vehicles business is thus effectively pulling the automotive industry. Battery electric vehicles are however yet to assume a significant role in the Spanish electric vehicle market. A predominant share continues to be of the plug-in hybrid vehicles with a rising trend in the same. While the trend in battery electric has been consistently positive, its lag against the plug-in hybrid indicates the consumer preference and indirectly the challenge of charging network.

Source: European Automobile Manufacturers Association

There is an equally sharp growth in other major sub-segments such as the electric bus. With a low base, the new vehicle registrations indicate a spike. Latest estimates of the European Automobile Association indicate that number of battery electric buses almost tripled between 2020 and 2021. For the year ended 2022 a similar proportion could be expected, considering the rapid procurement across the Spanish cities. Hybrid electric buses too have a significant share in this sub-segment, and had a 53% growth year-on-year in 2021.

Charging Infrastructure

Source: European Alternative Fuels Observatory

The charging network capacity, in terms of the total number of installed charging points, has risen sharply – by Q4 2022 it was double that of the comparable period in previous year. Yet, a faster growth is needed to be prepared to accommodate the emerging demand and, in the process, match the progress of other key European countries. Spain currently lags far behind other European markets in its charging network. An inadequate coverage is compounded by the lack of fast- charging points – at just about one- fifth of the total capacity. Most of the fast-charging capacity is led by the automakers’ proprietary charging points, or other inaccessible points. The publicly accessible charging is thus acutely behind the curve.

Policy Regulation

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.

Market Opportunity

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.


The Spanish government funding is likely to continue extending support for prospective investors in the electric vehicle market. Battery manufacturing is an emerging segment for the industrial ecosystem. Some of the leading automakers such as Tata Motors are reported to be evaluating options for a Spanish facility. If fructified, this could be the next such manufacturing facility after Volkswagen’s ongoing Gigafactory. On an average ballpark, Gigafactory capex could amount to €1-3 billion. Its linkages with auto manufacturing value chain will be part of other positive spillovers.

The auto industry can expect a rebound in the electric vehicle sales, especially upon the low base of 2022. Various industry estimates thus suggest a positive direction. Autovista’s projections suggest a 16% growth in sales in 2023 as demand responds to the purchase incentives available. The same source also points to a lower projection of 5% growth in 2024, due to anticipated pressure on the costs and prices while supply backlogs are cleared. The automobile association and related lobby groups have sought added measures in policy support to help prop-up the sales, due to concerns that the Spanish electric vehicle market could fall far behind the other European markets in electric mobility.

The lack adequate charging infrastructure, especially in fast-charging network, could add to the challenges in the market. Spain ranks among the lowest in the European region for its charging network reach. Most of the upcoming capacity is led by the private investments including OEMs and charging service providers. It remains to be seen how this sub-segment comes up while the vehicle sales pick up. Energy costs could also play the part in the use of charging points for public use. A fragile situation on the energy front could still prolong the ongoing inflationary pressure and complicate the business recovery process.