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03 November 2023

Daily Newsletter

03 November 2023

Volkswagen delays decision on east Europe gigafactory

Chairman cites slow demand; Czech officials say they cannot wait

Dani Cole November 03 2023

Volkswagen group’s Chairman Oliver Blume has said the German auto group will not make a decision on a fourth battery factory site “for now”, Reuters reports.

Mr Blume cited that demand for EVs in Europe was lagging expectations.  

A decision to put off an additional gigafactory was previously made a year ago, when VW was looking at sites in the Czech Republic, Hungary, Poland and Slovakia.

Whilst VW has said there is “no rush” to decide on a fourth location, Czech officials have said they would begin offering their proposed site for Volkswagen's battery plant to other investors, saying they could not afford to wait any longer for a decision, Reuters reports.

Volkswagen has selected sites for battery cell production in Germany, Spain and Canada, which it said had combined production potential of up to 200 gigawatt-hours (GWh) per year.

The news from VW also follows other reports of OEMs (such as Ford) slowing down on their BEV projects in response to slower than expected growth of BEV sales and cost management.

High upfront costs could be detrimental towards the growth of the off-highway EV market

The global off-highway electric market is expected to grow at a CAGR of 17.4% by 2030, per GlobalData. Despite the strong growth, high upfront costs may pose a challenge. Due to the high capacity of these vehicles, they consume large amounts of power from a number of battery packs installed on the vehicle, whose high cost in turn adds to the cost of the vehicle, thereby increasing the initial cost. However, governments worldwide are offering subsidies and tax exemptions in order to help customers to counter the initial purchase cost.

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