Spain, Europe’s second-largest automotive producer, intends to take advantage of the European Union’s COVID stimulus funds to encourage automakers to invest in the production of electric vehicles and batteries. With the EU intending to phase out vehicles with traditional combustion engines, Spain sees an opportunity to position itself as a hub for electric vehicle manufacturing. Valencia, in eastern Spain, is already home to an automotive manufacturing plant operated by Ford, which plans to start producing electric vehicles there.
In an unexpected turn of events, Tesla has decided to withdraw from negotiations with the regional government of Valencia, Spain, regarding the development of a Gigafactory. This decision was taken after information about the negotiations was leaked to the media, prompting Tesla to end the discussions.
Earlier this month, a representative of Valencia’s regional government told Reuters that the regional government had held discussions and conversations with an undisclosed company about an “important investment in the automotive sector”, but declined to give further details due to the confidentiality of the discussions. However, the confidentiality of these negotiations was jeopardized when knowledge of these conversations was made public. This breach of confidentiality apparently angered Tesla and caused the discussions to collapse. As a result, Valencia is no longer being considered as a possible site for Tesla’s Gigafactory.
Valencia withdrawn from the list of candidates
Valencia’s dreams of hosting Tesla’s future Gigafactory have been dashed due to the impact of the leaked negotiations. It should be noted that no formal agreement has been reached between Tesla and the Valencia regional administration, despite reports that negotiations were in full swing. Another aspect that may have influenced Tesla’s decision was the apparent lack of involvement of Spanish President Pedro Sánchez, who was unable to intervene due to European Union bans on multilateral meetings in the run-up to Spain’s upcoming general elections.
Global competition for Tesla’s Gigafactory intensifies
Other countries are seizing the opportunity to attract this massive investment, as Valencia’s chances of hosting Tesla’s Gigafactory dwindle. France has jumped into the fray, with President Emmanuel Macron meeting Tesla CEO Elon Musk to discuss a possible collaboration. Musk met Italian Prime Minister Giorgia Meloni during his visit to Europe. In addition, after meeting Prime Minister Narendra Modi, India emerged as a candidate after Musk promised significant investment in the country.
Given the current situation, it seems unlikely that Tesla will resume its interest in setting up a Gigafactory in Valencia. The disclosed negotiations and subsequent breakdown of talks have created considerable obstacles to future collaboration. The regional government of Valencia, led by President Ximo Puig, is stepping up its attempts to attract international investment from other companies. Meanwhile, following Spain’s withdrawal from the list of possibilities ( ), Portugal has emerged as a potential candidate to host Tesla’s second European Gigafactory ( ), with many countries expressing interest.
As Spain prepares for elections, the regional government of Valencia must redouble its efforts to attract foreign investment, while Tesla looks for other sites for its Gigafactory. Tesla’s investment race continues, and the drama surrounding the Gigafactory’s location continues to intrigue.
