According to Spanish media outlet La Tribuna de Automoción, citing multiple industry sources familiar with the project, Volkswagen’s battery subsidiary PowerCo will not begin mass production at its battery factory near Valencia in Sagunt until July 2027. While this timeline represents a delay from original plans, the group’s small electric vehicle production schedule in Spain is reportedly not at risk.
Production Timeline and Capacity Planning
Under PowerCo’s current operational plan, the Spanish plant in the Valencia region will begin delivering battery cells in July 2027, when two production blocks with a combined annual capacity of 20 GWh are expected to go online. Pilot production is anticipated to start in September or October 2026, marking a delay from the previously planned July 2026 date.
The Sagunt battery factory covers approximately 130 hectares, with an initial annual capacity of 40 GWh and potential to expand to 60 GWh in the future. The facility will directly create over 3,000 jobs and could potentially generate up to 30,000 indirect jobs among suppliers and partners in Spain.
Small EV Production Remains on Schedule
Despite the battery factory delay, Volkswagen Group’s small electric vehicle production plans in Spain continue as originally scheduled. Reports indicate that the Cupra Raval will enter production in June or July 2026 at the Martorell plant, with the VW ID. Polo following approximately one month later at the same location. Two SUV models—the Skoda Epiq and VW ID. Cross—will be assembled at the Navarra plant starting June or July 2026 and November 2026, respectively.
Diversified Supply Strategy to Address Capacity Gap
To ensure 2026 electric vehicle production proceeds unaffected, Volkswagen has developed contingency plans. Initially, battery cells will be supplied from PowerCo’s German plant in Salzgitter, requiring that facility to begin production as scheduled in mid-2026. If the Salzgitter launch is also delayed, Volkswagen is reportedly considering sourcing cells from China.
A PowerCo Germany spokesperson told electrive that the group has pursued a “Make AND Buy” strategy for batteries “from the very beginning,” maintaining multiple suppliers of standard cells, both internal and external. This means that Spanish-produced small electric vehicles initially using cells from other plants or external purchases is part of the plan itself.
Canadian Factory Gains Priority Status
According to industry insiders, further expansion of the two European battery factories will be postponed for the time being, as PowerCo’s plant in St. Thomas, Canada has higher priority. The Canadian factory’s first deliveries are expected at the end of 2027, with a design capacity of up to 90 GWh—significantly larger than the two European sites.
As the Ontario plant is heavily subsidized by public funding, production there is expected to be “highly profitable.” Sources suggest profitability is so high that discussions are underway about further expanding the Canadian site and shipping cells from there to Europe. Despite logistics costs, “profitability would be higher than producing these components in Spain and Germany.”
Capacity Planning and Market Strategy
PowerCo intends to “gradually increase capacity according to demand.” Initially, both the Salzgitter and Sagunt plants will each have two 20 GWh production blocks, but both sites are designed with expansion space for up to 40 GWh each.
Since its establishment in July 2022, PowerCo has identified three battery factory locations: Salzgitter in Germany, Valencia in Spain, and St. Thomas in Ontario, Canada. The Valencia plant will use 100% green electricity from solar and wind power for production, reflecting its sustainable development strategy.
These adjustments reflect the complex challenges facing the global automotive industry during electrification transformation, including balancing capacity planning, supply chain management, and regional policy differences. Through flexible diversified supply strategies, Volkswagen Group aims to ensure production schedules while optimizing global capacity layout and cost-effectiveness.
