GOS SEEKS TO PROMOTE ELECTRIC VEHICLES, WOULD WELCOME USG

UNCLAS SECTION 01 OF 02 MADRID 000171 SIPDIS SENSITIVE STATE - EUR/WE, EEB/ESC/IEC, OES/PCI DOE - PIA:KBALLOU; EERE:DBIRNS,JTENG; SCIENCE OFFICE DOC - 6110/ITA; MAS/ENERGY; 4212/D.CALVERT; AUTO./A.PARRIS E.O. 12958: N/A TAGS: EFIN ENRG PREL SENV SP SUBJECT: GOS SEEKS TO PROMOTE ELECTRIC VEHICLES, WOULD WELCOME USG COOPERATION REF: (A)MADRID 111, (B)08 MADRID 1309 MADRID 00000171 001.2 OF 002 1.(U) Summary: Industry Minister Sebastian has set a goal of getting a million electric or hybrid vehicles on the road by 2014. A demonstration project will put 2,000 electric vehicles on the road in 2009-10 in city government fleets and corporate fleets. Separately, Sebastian's ministry is talking with Renault about manufacturing tens of thousands of electric vehicles in the company's existing Spanish plants starting in 2011. It also is talking with Nissan, though these conversations are less advanced. The only U.S. companies so far involved in Spain-related electric vehicles discussions are the California firm Better Place and General Motors Europe, which are working on charging infrastructure issues. GOS officials appear to be open to working with the USG or U.S. firms, and there is political-level interest in cooperation with the USG. Minister Sebastian's March 18 visit to Washington provides an excellent opportunity to engage the key GOS player on electric vehicle issues. End Summary. Demonstration Project to Put 2,000 on Road in 2009-10 2.(SBU) Soon after taking office last year, Industry, Tourism, and Commerce Minister Miguel Sebastian established an ambitious goal of having a million electric or hybrid vehicles on the road in Spain by ¶2014. The GOS is moving on two main fronts: a demonstration project to put 2,000 fully electric vehicles on the road in three cities in 2009-10, and ongoing talks with Renault and Nissan to encourage manufacturing of electric vehicles at existing auto plants. The demonstration project ("MOVELE") is being developed by the Ministry's Institute for Energy Diversification and Saving (IDAE). IDAE will spend 8 million euros towards the cost of vehicles for municipal government fleets and corporate fleets in three cities. IDAE is expected to announce sometime in February which municipal governments' proposals have been accepted. (Madrid and Barcelona, the country's two largest cities, appear to be frontrunners.) Another 1.5 million euros will go towards charging infrastructure, and half a million will be used for management, communication, and technical assistance. While one advantage of using fleets is that recharging can be done at a relatively small number of central fleet garages, IDAE plans to have some charging stations on main roads to increase visibility of the project. IDAE is talking with a number of electric vehicle manufacturers, including Mitsubishi and the Norwegian firm Think, and expects to make purchases from more than one. This will be necessary because of the manufacturers' limited production capacity, but it also will provide flexibility to the various vehicle recipients. Aiming for Manufacturing in Existing Plants in 2011 3.(SBU) Collapsing sales and large-scale layoffs in Spain's auto industry, which was the world's eighth largest in 2007, have sparked GOS interest in promoting electric vehicle manufacturing as a way to keep (foreign-owned) plants open. Last year, after Renault announced plans to lay off thousands of workers at its four Spanish plants and said it was considering reducing capacity, the GOS and Renault created working groups to look at three issues related to electric vehicles: manufacturing, charging infrastructure, and promotion of consumer demand. The two sides have discussed significant per-vehicle subsidies and hope Renault would build at its Valladolid plant and possibly elsewhere one or two of the four electric models it envisions. The aim is to begin production of relatively small volumes -- ten to fifty thousand vehicles per year -- in 2011. The two sides also are discussing a possible battery manufacturing plant. Charging infrastructure discussions have included Spanish electricity companies Endesa and Iberdrola and (separately) the California company Better Place, which has a partnership with Renault and Nissan to construct a nationwide recharging infrastructure in Israel. The GOS is talking separately with Nissan, which also has announced large-scale layoffs in its Spanish operation. NEC, which would provide batteries, is also involved in the Nissan talks, which are not as advanced as those with Renault. (Comment: A Ministry official with whom post spoke did not know whether French President Sarkozy's remarks last week critical of French companies' vehicle production outside of France would affect Renault's interest in producing electric vehicles in Spain. End Comment.) 4.(U) In an unrelated effort, Iberdrola and General Motors Europe agreed last December to study the needs for recharging stations for electric vehicles in homes, offices, and parking facilities. The study (see Ref B) is being conducted in Spain and the U.K. MADRID 00000171 002.2 OF 002 Implications for the U.S. 5.(SBU) We see several implications for the U.S. and U.S. companies. The goal of putting a million electric vehicles or hybrids on the road by 2014 may provide opportunities for U.S. manufacturers of autos, batteries, and charging infrastructure. For example, Carlos Redondo, Minister Sebastian's advisor on automotive issues, expressed interest in the Chevrolet Volt project. However, Redondo comes from the automotive/industrial side of the ministry rather than the energy/efficiency side and appears to be interested in electric vehicles mainly as a way to keep open troubled Spanish auto plants. If other Ministry officials share this view, we will need to work with the GOS to ensure that Spanish production and purchase incentives are WTO-consistent and do not place American-produced vehicles at an unfair disadvantage. 6.(SBU) If the USG is interested in cooperating with the GOS on any aspect of electric vehicles, the GOS likely would be receptive at the political level. President Zapatero's chief economic adviser and a staffer told EEB acting A/S Nelson last month (Ref A) that electric vehicles were one of the areas in which the GOS would like to cooperate with the new U.S. Administration. They did not provide details, and we believe even the technical-level experts, while welcoming the idea of cooperation, do not have specific projects in mind. As the new Administration develops its efforts to promote development of electric vehicles, post encourages Washington officials to consider whether cooperation in this area with Spain could advance our interests. Minister Sebastian's Visit to Washington 7.(SBU) Minister Sebastian will visit Washington March 18 after visiting New York March 16-17. He is seeking meetings at USTR, Commerce, and Energy. If there is any USG interest in working with the GOS to promote electric vehicles, these meetings would be an excellent opportunity to engage the most important GOS official on this issue. CHACON