A report by Reuters on Thursday revealed that US electric car manufacturer Tesla is seeking to make an automotive investment in Spain.

The company reportedly held talks with regional authorities in Valencia where the automotive investment will likely be made, sources close to the discussions told Reuters. Furthermore, Spanish business newspaper Cinco Dias cited sources as saying the investment would involve the construction of a car factory, and that its total size could reach 4.5 billion euros ($4.83 billion).

In a statement, Valencian authorities denied that a deal was reached with Tesla. Tesla, on the other hand, declined to respond for comment.

Being Europe's second-largest car producer, Spain has in recent years attracted considerable investors into its territory as still employs European Union COVID pandemic recovery funds to facilitate business and industrial operations. 

The phaseout of thermal cars is one of the EU's objectives.

Read more: Musk in China, Tesla to continue expanding business with Asian giant

In 2022, German carmaker Volkswagen said it considers investing 10 billion euros to build a 40 GWh battery plant in Sagunto, near Valencia. Production would start by 2026.

Ford, which already has a plant in Valencia, is also planning to start manufacturing electric vehicles there.

As of now, the only Tesla car factory in the EU is located in Brandenburg, Germany. 

It was built in 2022 and by February 2023, the factory was producing 4,000 cars a week, according to the company. Last month, tech mogul Elon Musk said that he would be looking for a new location to build a car factory by the end of this year. 

In April of last year, Musk tweeted that Spain should "build a massive solar array... Could power all of Europe".

Spain should build a massive solar array. Could power all of Europe.

— Elon Musk (@elonmusk) April 4, 2022

On the same day, Spain's Prime Minister Pedro Sanchez responded on Twitter: "Time is now. Let's get it right. Come and see. We welcome investors in Spain."

We’re already implementing most ambitious plan towards efficient & sustainable energy system. All sectors on board. Maximizing opportunities, digitalization and value chain for a long lasting success. Time is now. Let's get it right. Come and see.

We welcome investors in Spain. https://t.co/QVPnxaQHui

— Pedro Sánchez (@sanchezcastejon) April 5, 2022

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