Tesla is rumored to be planning a “more than $4.5 billion factory” around Valencia in Spain, according to a local news report.

Today, the local government confirmed today that it is negotiating with an automaker for a potential large investment in the region, but it did not confirm which company is behind the project.

Local newspaper CincoDias reports that it’s Tesla (translated from Spanish):

Everything indicates that Tesla will manufacture electric vehicles in Spain. The US company is negotiating with the Generalitat Valenciana to build a car assembly plant in the metropolitan area of ​​Valencia, sources familiar with the operation confirm to CincoDías . The Generalitat, which has signed a confidentiality agreement with the company run by Elon Musk, has refused to comment on it.

The publication references an “electric vehicle factory,” but it also compares the project to VW’s recently announced battery factory in Valencia.

CincoDias says that Tesla’s investment in the factory would be greater than VW’s planned $4.5 investment.

Electrek’s Take

Nothing seems to be set in stone here, so I’d take this report with a grain of salt.

That said, we know that Tesla needs to soon announce new factory locations if it wants to stick to its goal to have an annual production capacity of 20 million vehicles.

As we previously reported, a new factory in Europe makes sense after Tesla achieved volume production of the Model Y at Gigafactory Berlin. There’s still room for Tesla to grow at the plant, but the automaker has been in a habit of building multiple factories simultaneously, and it needs about six more factories to ramp up to full production to support its goal.