MADRID — Spain will ask for a first loan worth 1.3 billion euros ($1.5 billion) from the European Union’s Recovery and Resilience Facility to finance a plan to build electric cars, according to the draft 2022 budget submitted to the country’s parliament.
“Depending on how interest rates perform in the coming months, it may be in our interest to ask for more loans,” Budget Minister Maria Jesus Montero told a news conference.
Until now, the government had shown interest only in requesting grants from the 750-billion-euro EU recovery scheme, of which Spain is one of the main beneficiaries.
Spain is entitled to around 140 billion euros, half in grants and half in loans, until 2026 to help revive the economy, which has been hit hard by the COVID-19 pandemic.
The government plans to invest 4.3 billion euros to kick-start the production of electric vehicles and batteries. The private sector could contribute a further 19.7 billion euros to the initiative by 2023, according to government estimates.
Volkswagen’s Group’s Spanish Seat brand and utility company Iberdrola have formed an alliance to work on an application for money from the funds. Their involvement would cover all elements of EV production from mining to battery production to the building of a full-electric vehicle at Seat’s Martorell plant outside Barcelona.
Spain expects to receive 19 billion euros in EU grants this year.
In 2022, the draft budget envisages a transfer of 18 billion grants from the recovery facility.