VW may prefer US over Eastern Europe for battery cell factory

Volkswagen may have put plans for a battery cell factory in Eastern Europe on ice. According to a media report, the company is looking to build a plant in North America first since it could receive up to €10 billion in incentives because of the US Inflation Reduction Act.

According to the Financial Times, VW representatives spoke with EU officials last week, mentioning that VW could receive substantial subsidies in the US. However, Volkswagen wants to wait for a reaction from the EU before making a final decision. Only then would it consider moving forward with plans to build a plant in Eastern Europe, a person “with direct knowledge of the decision-making at VW” told the FT. “Plans in North America have progressed faster than expected and have overtaken decision-making in Europe,” the source said.

Volkswagen remains committed to its plan to build more cell factories in Europe. “But for this, we need the right framework conditions. That is why we wait and see what the so-called EU Green Deal will bring,” the company told the FT.

But an increased pace of possible EU countermeasures is not in sight. According to the FT, a senior executive at another European battery manufacturer, who also attended last week’s meeting, said that “it looks pretty bad. There was an absence of concrete measures.”

Northvolt could also prefer the US over Germany for its next battery factory. The company estimates it could receive the equivalent of more than €8 billion in subsidies for a factory in the United States. Last autumn, Northvolt had already warned that high energy prices could delay the construction of its planned battery factory in northern Germany.

VW is building a cell factory in Salzgitter, one in Sagunt near Valencia, and is planning another one together with Northvolt in Sweden. The plot near the Czech city of Pilsen had recently emerged as the favourite site for the fourth of the six planned European cell factories. It remains to be seen whether this factory will be realized in the near future or whether VW will prioritize its US plans for the time being. In December, the company postponed a decision on the location for Eastern Europe, also citing high energy prices. At the same time, VW is looking for possible locations for a battery factory in Canada.

Thomas Schmall, VW’s chief technology officer and head of the components division responsible for battery cell production, had some clear words for the EU. “Volkswagen will build its first two gigafactories in Salzgitter and Valencia. But we also see that we are making much faster progress in other regions, notably in the North American region,” Schmall wrote on LinkedIn. Europe risks losing “the race for billions of investments that will be decided in the coming months and years,” he added, calling for a European state aid program and lower prices for green energy. “Above all, we need speed,” Schmall continued. “The IRA is in force and is already delivering results..”

These latest statements from the industry reinforce a warning from Transport & Environment. The NGO had calculated that more than two-thirds of European battery projects were at risk of being cancelled, delayed or cut because the US offers a more attractive environment for companies than Europe.

ft.com, linkedin.com, transportenvironment.org


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