Hyundai Mobis, the auto parts manufacturer under Hyundai Motor Group, said Wednesday it held a ground-breaking ceremony for its first factory in Western Europe, which will manufacture battery systems, particularly focusing on supplying the Volkswagen Group.

The new factory in Navarre, Spain, will cover an area of 150,000 square meters, with a floor space of 50,000 square meters, and it will have the capacity to produce up to 360,000 battery system assemblies annually.

In line with its goal to commence production in 2026, Hyundai Mobis plans to invest a total of 170 billion won ($124 million) in the factory by 2030, developing advanced electrification construction technologies for enhanced efficiency.

Tuesday’s ceremony was attended by Sebastian Marco, mayor of Spain's Noain Municipality; Maria Chivite, governor of Navarre; and officials from both Volkswagen and Hyundai Mobis.

The establishment of this factory aligns with Hyundai Mobis’ business strategies, focusing on electrification and the expansion of global orders.

In 2023, Hyundai Mobis secured a contract with Volkswagen for the large-scale production of battery system assemblies. The exact volume of supply was not disclosed immediately.

The battery system assemblies produced in the Spain factory will be installed in Volkswagen's next-generation electric vehicle platforms, Hyundai Mobis said.

Battery system assembly, also known as BSA, comprises electric components such as battery packs and controllers, designed to ensure sustainable and efficient operation of batteries in electric vehicles.

High-capacity and efficient battery systems are crucial for electric vehicles, as they significantly influence vehicle performance and quality.

“We are committed to being Volkswagen's long-term partner through stable auto component supplies, and we will strive to diversify our supply base in Europe, including supplying upcoming models for our client," said Jung In-bo, head of the Spanish electrification plant.

Currently, Hyundai Mobis operates battery system production facilities in South Korea, China and the Czech Republic, and is also constructing several more in the US and Indonesia.