Spain Tesla Gigafactory Plans Scrapped After Internal Document Leaks

This is a stark lesson for other governments that dream of convincing Tesla to invest.

Earlier this month, Spanish media broke the news about alleged Tesla plans to build a gigafactory in Spain, near Valencia. The information was significant, considering this would've been only the second gigafactory in Europe after Giga Berlin. The negotiations were highly confidential, and nobody knew about them until the information leaked in the press.

According to the Spanish newspaper Cinco Dias, Tesla planned a 4.5 billion euros ($4.83 billion) investment for a gigafactory in Valencia. A spokesman for Valencia's regional government confirmed there were talks with an unidentified company about a "large automobile investment." They didn't offer details, citing the confidentiality of the negotiations, but confirmed that the talks were "very advanced."

Despite this part-confirmation, part-denial statement, a new report shows that Tesla management took it personally. Tesla expected the negotiation details to remain confidential and was unpleasantly surprised to read about them in the media. This all but confirms that the previous rumors were true. Sadly, it also means Spain kissed its Tesla investment goodbye, as the American EV maker withdrew from the negotiations.

The information was confirmed for Valencia's Digital Economy newspaper by sources who spoke with Ximo Puig, the president of the Valencian Government. He denied that he leaked the negotiation's details to the press and said the leak made Tesla very angry. Elon Musk was expected to meet Spain's prime minister during his European visit that began on June 15. The meeting didn't occur, although Musk met with Italian prime minister Giorgia Meloni and French President Emanuel Macron.

Both countries courted Musk to invest in a local gigafactory. Judging by the chemistry between Musk and Meloni, I'd say Italy has more chances than France, although I wouldn't bet on that. The only reason Tesla needs another European gigafactory is to produce the Gen-3 affordable EV. Both countries have relatively high wages, making the plan to build affordable EVs less viable. Spain would've been ideal from this standpoint, and also because of its geographical position. Still, Tesla would probably be happier with a Central-European country.

I sincerely doubt that the internal leak was the real reason Tesla scrapped the plans to build a gigafactory in Spain. Rumors about Giga Mexico floated around for months before this became an official announcement. Still, Tesla did not give up on its plans because of that. It's more likely that something else caused Tesla to reconsider, and the leak was used as a pretext. It's more likely that the negotiations did not yield the expected incentives, or the rivalry between the local authorities and the central government was seen as an impediment.