MADRID (Reuters) -U.S. electric car manufacturer Tesla is in talks with the leaders of the regional government of Valencia in Spain to build a car factory, newspaper Cinco Dias reported on Thursday, citing unidentified sources close to the discussions.

The company's total investment in the factory could surpass 4.5 billion euros ($4.83 billion), the newspaper said.

A spokesman for Valencia's regional government told Reuters it had held meetings and conversations with an unidentified company about a "large automobile investment", but declined to give more details, citing the confidentiality of the negotiations.

Tesla did not immediately respond to a request for comment, while Spain's central government declined to comment.

German car maker Volkswagen has already said it plans to invest as much as 3 billion euros in a battery factory in the town of Sagunto in the Valencia area.

Spain is Europe's second-largest car producer, and is using European Union COVID pandemic recovery funds to attract carmakers to invest in the manufacture of both batteries and electric vehicles. The EU plans to phase out thermal cars.

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(Reporting by Inti Landauro, Belen Carreno and Joan Faus, Editing by Aislinn Laing, Jan Harvey and Sharon Singleton)