The European Commission cleared on Thursday Spain’s €837 million ($913.3m) financial help for investments in the EV battery manufacturing industry, Kallanish reports.

The state aid scheme will provide direct grants and loans to battery makers, as well as components and raw materials suppliers. The approval paves the way for the second call of the so-called PERTE VEC – a funding programme for electric and connected vehicles projects considered strategic for economic recovery and transformation.

Battery makers applying for the funding can get €100-300 million. Companies investing in essential battery components are eligible for up to €100m and related raw materials suppliers can receive up to €25m. The aid must be granted by 31 December 2025.

EU competition chief Margrethe Vestager says the aid to support battery production is an important step in the transition to a net-zero economy, “while protecting the level playing field in the single market and in line with cohesion objectives.” She found the Spanish proposal to be “necessary, appropriate and proportionate.”

Spanish industry minister Héctor Gómez described the approval as “excellent news” as it allows the country to progress with the new call in June. “Spain’s commitment to sustainability is clear and firm, and this is confirmed by the European institutions; the electrification of the automotive industry has no turning back and the paradigm shift is already a reality,” he adds.

The government wants Spain to become “a benchmark country” in the production of EV batteries and in new forms of green and sustainable mobility. Its first gigafactory, currently under development by Volkswagen’s PowerCo, is set to start production in 2026. The initial 40-gigawatt-hour capacity in the Valencia plant could later be expanded to 60 GWh.

According to the minister, several more projects in the pipeline will now be eligible for this new financing round. The first PERTE VEC call granted €525.98m in subsidies and €267.74m in loans to 10 projects. These are part of a €10 billion investment commitment led by Volkswagen Group and partners, which includes the electrification of Seat’s Martorell and Pamplona plants.