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Volkswagen and battery manufacturer PowerCo SE have started construction of their vehicle battery gigafactory in Valencia, Spain.

The plant is the second of Volkswagen Group's cell factories, following from the first in Salzgitter, Germany, and comes ahead of a third which is set to be located on Ontario, Canada. The latter is set to start battery cell production in 2027.

The plant in Spain is expected to start production of battery cells in 2026, and will employ up to 3,000 staff. Annual production capacity at the site will start at 40GWh, but the plant has the potential to be expanded to a capacity of 60GWh in the future.

Volkswagen states that the location in Valenica was selected due to the availability of low-cost green energy, proximity of regional research and innovation clusters, as well as the presence of transport infrastructure and proximity to the Group's Spanish production sites. The Valenica gigafactory is set to supply battery cells to plants in Martorell and Pamplona, among others.

The former currently holds production lines the produce models including the Seat Ibiza and Arona, Seat Leon and the Cupra Formentor.

PowerCo is aiming to supply the new cell factory with completely with green electricity generated by solar and wind power, part of which will come from a new 250-hectare solar farm located close to the site. The new plant will also close its material cycle by recycling its manufacturing materials directly on site.

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