Spain’s automotive industry stands at a crossroads: production is declining, while electrification demands huge investments and new strategies. In recent years, the country has lost production volumes equivalent to closing a major plant and now must fight for its place in the future of the European car industry. At the same time, despite growing electric vehicle sales, overall car output has yet to return to pre-pandemic levels. This concerns not only manufacturers but also the government, as hundreds of thousands of jobs and Spain’s standing as an industry leader are at stake.
In 2025, new car sales in Spain grew by 12%, and the share of electrified models reached 20%. However, production fell by 4%, and the country is turning out 400,000 fewer vehicles per year than before the pandemic. This trend is seen across Europe, where car factories have not restored their former output. The reason is not just demand but also technological uncertainty: no one knows how the market will change by 2030, or which solutions will prove successful.
Pressure on Europe
Spanish manufacturers and officials are increasingly calling on the European Union for clear and consistent support measures. Unlike China, where the state actively protects its market, Europe has yet to decide exactly what to safeguard—components, finished cars, or entire fleets. As a result, according to industry players, the region is losing competitiveness and risks ceding leadership to countries with more flexible policies.
Spain’s Minister of Industry and Tourism, Jordi Hereu, emphasizes that it is essential for the country not only to maintain production, but also to build a complete value-added chain. The government is backing programs like Auto+ and Perte VEC, designed to attract investment and speed up the transition to electric vehicles. Just in the past year, more than €2.3 billion have been allocated for these initiatives, with over 300 companies among the beneficiaries, including the largest market players.
Special attention is being given to the development of battery production. For example, €23 million have been allocated for the creation of the Contemporary Star Energy gigafactory (a joint venture of Stellantis and CATL) in Figueruelas (Zaragoza) and the Powerco (Volkswagen) plant in Sagunto (Valencia). Additionally, the Basque company Irizar has received over €18 million to develop new electric buses for urban and intercity transport.
Global competition
The European automotive industry is facing fierce competition not only within the region, but also from China and the United States. According to industry representatives, over the past six years, production and sales in Europe have decreased, and if the situation does not change, millions of jobs could be at risk. At the same time, Mercedes-Benz CEO Ola Källenius believes that protectionism will not solve the problem—innovation and flexibility are needed to stay in the race for the future.
International cooperation also plays a crucial role. For example, reducing tariffs on European cars in India and the possible signing of an agreement with Mercosur could open new markets for Spanish and European manufacturers. However, achieving success requires not only external but also internal reforms: the industry needs stable and transparent rules to avoid repeating past mistakes when consumer interests were neglected in favor of bureaucratic aims.
In this context, China’s experience is particularly illustrative, where electric vehicles have already become a mass phenomenon. As shown by an analysis of record electric vehicle sales in China, it is affordable models and government support that have enabled local companies to take leading positions and begin expanding into Europe.
The Spanish path
Within the country, there is ongoing discussion about how to make the transition to electric vehicles beneficial for all market participants. Representatives of Anfac, Faconauto, and Sernauto agree on one point: there needs to be a unified strategy that brings together manufacturers, dealers, and buyers. Regulation should remain stable, and support measures clear and targeted. Only in this way can the share of electric vehicles be maintained at no less than 20%, avoiding further declines in production.
Particular importance is given to demand-stimulating programs, such as Moves III and income tax reductions. Thanks to these initiatives, it is forecast that 1.2 million new cars will be sold in Spain in 2026. However, exports and production still lag behind: output remains at 2019 levels, and exports have dropped by 170,000 vehicles.
Market participants believe that Europe needs to rethink its electrification policy. Consistency and long-term planning are required to avoid abrupt fluctuations and give businesses confidence in the future. Otherwise, experts warn, Spain risks losing ground and becoming merely an observer in the global race for an electric vehicle future.
The Anfac association (Asociación Española de Fabricantes de Automóviles y Camiones) brings together the leading producers of cars and commercial vehicles in Spain. The organization plays a key role in shaping sector policy, participates in the development of national and European automotive support programs, and actively promotes the interests of Spanish companies on the international stage. Thanks to Anfac’s efforts, Spain remains one of Europe’s largest automotive hubs and aims to become a leader in electric mobility.
