VW suspends plan for EV gigafactory in CEE

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Volkswagen is putting its plans to construct a new electric vehicle (EV) “gigafactory” in Central and Eastern Europe (CEE) on hold due to a decline in demand EVs, VW Group Chairman Oliver Blume revealed.

The group, which already has three gigafactories, had been considering the construction of a fourth, with Czechia, Poland, Hungary and Slovakia in the running.

In a statement shared by Skoda, Blume attributed the decision to pause VW’s gigafactory expansion plans to the recent sluggish sales of pure electric vehicles in Europe, and stressed that there is not rush to make the decision.

He said on Wednesday, 1 November that “In a very friendly atmosphere, we discussed the current situation in Europe and the slower start of electromobility in the EU, which is contrary to expectations. 

“The Czech government, in cooperation with local partners, has done an excellent job in preparing the potential location of the battery factory. 

“Due to the market situation, including the slower take-up of the electric car market, there are currently no business reasons to decide on additional locations in Europe,” Blume added.

Czechia is negotiating with five other investors about the battery plant, Czech Trade Minister Jozef Sikela said Monday, 30 October.

This decision follows Volkswagen’s 9-month financial report, which revealed a 50% annual drop in orders for BEVs in Europe, from 300,000 to 150,000.

CFO upbeat on current, future trends

However Volkswagen CFO Arno Antlitz noted a slight pickup in orders during Q3 compared to the first half of 2023, a trend expected to continue into the new year.

Despite the challenging order figures, Volkswagen Group’s overall sales showed a positive outlook. In Q3, the group globally sold 209,900 pure electric vehicles, marking a 40.5% year-on-year increase and a new record for the brand. 

BEVs now constitute 9% of Volkswagen Group’s total sales volume, up from 6.8% a year earlier. In the first nine months of 2023, VW sold a total of 531,000 EVs worldwide, up 45% year-on-year.

Volkswagen Group has targets of BEV sales in Europe at 80% and 55% for the US by 2030, increased in March from 70% and 50% respectively.

Ford recently paused one of its major EV factory projects, and car rental firm Hertz is reducing its plans for an EV fleet due to the high repair costs of Tesla vehicles.