Volkswagen in negotiation with Czech government on building e-car battery plant

Volkswagen in negotiation with Czech government on building e-car battery plant
VW already owns the Skoda Auto plant in Mlada Boleslav, the largest Czech enterprise.
By bne IntelliNews March 18, 2021

The Czech government is negotiating with the German carmaker Volkswagen on construction of one of its electric car batteries plants in Czechia, said Minister of Industry and Trade Karel Havlicek to Hospodarske Noviny (HN). 

According to Havlicek, the negotiations on the Volkswagen plant are tied to the previously announced project of the semi-state energy group CEZ to build a battery factory in northern Bohemia. Together with investors from the automotive industry, CEZ wants to utilize lithium from the Cinovec area in the Ore Mountains for the production of batteries. 

Volkswagen, a parent company of the biggest Czech carmaker Skoda Auto, presented earlier this week its technology roadmap for batteries and charging up to 2030, and it plans to build six battery factories in Europe, one of them probably in Czechia. 

“E-mobility has become a core business for us. We are now systematically integrating additional stages in the value chain. We secure a long-term pole position in the race for the best battery and best customer experience in the age of zero emission mobility”, said Chairman of the Board of Management of the Volkswagen Group Herbert Diess. 

Cooperation has been agreed in Europe with the energy companies BP (Great Britain), Iberdrola (Spain) and Enel (Italy).

"We are discussing it intensively, it is related to the CEZ gigafactory project, which I consider to be one of the priorities and a key investment in the coming years,” Havlicek said.  

“We must not miss this opportunity, we are also following the connection to lithium mining, although it is not a condition, but it would be an excellent chain. We want to make a decision this year, we are regularly informed by CEZ, and either I or my colleagues from the Ministry of Industry are in negotiations with potential key investors in the emerging consortium," he explained. 

Havlicek also told HN that Czechia can provide direct support and tax benefits for the Volkswagen factory. 

"A partnership with a local manufacturer such as Skoda would be natural, but we cannot comment on such negotiations now," said CEZ's Vice Chairman of the Board of Directors Pavel Cyrani, quoted by the Czech News Agency. 

According to a partner at the consulting company EY Petr Knap, when considering these investments, in addition to tax incentives, labour costs and workforce skills, the investor will also look at the state's support for electromobility. "And here in our country [the investor] will face a very below-average to negligible scale [of state support] in the EU," he stressed.

Carmaker Skoda Auto posted a drop in its operating profit by 54.4% to €765mn in 2020, mainly due to lower sales resulting from the COVID-19 pandemic, exchange rate developments and extraordinary emissions-related expenses. Its revenues fell by 13.8% to €17.1bn. It delivered 1,004,800 cars to its customers worldwide, down by 19.1% year-on-year.