Korean Battery Industry Eyes Spain as Center of EV Market in Europe

As Spain has emerged as a new electric vehicle powerhouse in Europe, Korean battery companies are also eyeing the country with more interest than ever.

The share of Spain in electric vehicle production in Europe expanded from 0.6 percent in 2019 to 12 percent in 2022, according to KOTRA on July 10. French auto industry research firm Inovev predicts that Spain will surpass automotive powerhouses such as Germany (1.16 million) and France (830,000) with 1.64 million units per year in 2030.

Spain is rich in lithium, a key material for batteries, and has been actively supporting electric vehicle ecosystems as a key national industry with nine automakers, including Ford, Mercedes-Benz, and Toyota, producing 20 electric vehicle models. Recently, Tesla is also reportedly considering building a large-scale automobile production base in Spain.

Currently, no companies are producing lithium batteries for electric vehicles in Spain. However, China’s Envision, Volkswagen, and local Spanish companies have announced plans to build battery plants in Spain in the future. Volkswagen plans to start operating a battery plant in 2026 to supply batteries to its car plant in Spain. As the proportion of its electric vehicle production in Spain’s car production is on the uptick, the German automaker aims to reduce costs by procuring batteries on its own.

The Korean government has also shown its willingness to expand economic cooperation with Spain as a strategic partner. “I welcome the expansion of mutual investment cooperation between the two countries’ companies in future strategic industries such as electric vehicle batteries,” Korean President Yoon Suk-yeol said at a Korea-Spain summit at the end of in 2022. “The Korean government will continue to provide appropriate supports.”

Korean battery material companies and waste battery companies are also gravitating toward Spain. Iljin Materials (now Lotte Energy Materials) announced in 2022 that it will participate in Volkswagen Group’s electric vehicle project in Spain.

Some Korean companies are preparing for the recycling battery business to target the waste battery market in Spain. Samsung C&T is reportedly working with Sungil High Tech to build a battery recycling plant there too.

However, Korean battery makers have no official plans to invest in Spain yet. Instead of building new plants in Europe, the three battery makers plan to focus on their existing European plants. Their plants are already centered in Eastern Europe like in Poland and Hungary. Since they are making additional investments in Eastern Europe they cannot afford new investments in Spain.

Yet, LG Energy Solution is more likely to make additional investments in Spain as it acquired a special purpose corporation in Spain in 2022. “We took over the corporation in advance with the possibility of expanding it into a sales corporation in Europe in the future,” an LG Energy Solution official said.