The Basque Government and Mercedes-Benz launched a 181 million euro initiative (reported as 185 million euros by El Mundo) with 61 million euros dedicated to R&D.
The Vitoria facility begins assembly of the new Mercedes-Benz VLE electric model in 2026, replacing the EQV with 100% redesigned components.
The plant supports 40,000 direct and indirect jobs and sources parts from 800 Basque suppliers out of 1,500 total component providers.
Lehendakari Imanol Pradales urged the European Union to protect manufacturing against Chinese competition ahead of local plant union votes.
The Basque Government and Mercedes-Benz have presented a joint industrial project valued at 181 million euros to increase manufacturing flexibility at the automaker's Vitoria plant. Reported by some Spanish media at 185 million euros, the three-year plan operates under the official title Flexible Manufacturing of the New Automotive Industry. The initiative forms part of the transformative projects within the regional government's industrial strategy, designed to enable assembly lines to alternate between electric and internal combustion vehicles based on market demand. Research and technological development accounts for approximately 61 million euros of the budget. Mercedes-Benz is contributing an initial 20 million euros, with the project incorporating 11 regional companies (nine of which are small and medium-sized enterprises), the Tecnalia technology center, the Acicae automotive cluster, and the BAM research unit.
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The technological overhaul prepares the factory for the introduction of the Mercedes-Benz VLE electric model, which enters production this year to succeed the EQV. The VLE platform incorporates structural modifications, updated electronic architectures, new safety systems, and a 100% redesign of its component parts for the mid-size van segment. Plant managers are deploying artificial intelligence across assembly stages to multiply overall productivity and streamline changeovers between varying vehicle specifications. The Vitoria facility currently finishes one complete vehicle every 110 seconds, and further new vehicle launches are scheduled over the coming years to maintain operational capacity.
The factory serves as a central pillar for regional manufacturing, sustaining 40,000 direct and indirect jobs across northern Spain. Its operations rely on 800 Basque suppliers within a broader global network of 1,500 parts providers. Over the past five years, plant director and German engineer Bernd Krottmayer has overseen 1 billion euros in capital expenditure to modernize assembly lines for dual-propulsion capabilities. During a joint tour of the facilities on Wednesday, 30 September 2026, Krottmayer noted the competitive pressures facing European automotive sites.
“No factory can take its future for granted.”
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Basque President Imanol Pradales commended the facility's operational model, pointing to combined gains in production volumes and hiring alongside reductions in worker absenteeism. Pradales emphasized the need for collective commitment as the site approaches crucial union elections in the coming weeks, which coincide with voting at the neighboring Michelin tire plant. Both election processes will determine upcoming negotiations over collective bargaining agreements. Addressing broader international challenges, Pradales warned European Union authorities to enact protective measures for continental industry, stating that competitive pressure from Chinese manufacturers does not wait.
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A 181 million euro public-private plan will adapt the Vitoria-Gasteiz factory to build electric and combustion vans on flexible lines over the next three years.
AI text based on reports by eldiario.es, EL MUNDO and europa press. Published .