The Czech Gigafatory Shuffling, 2020-2024

The Czech Republic, along with the other V4 countries, has committed to advancing EV mobility, outlining plans for a zero-carbon transition. Despite the challenges posed by the rapid pace of the e-mobility transition, the 4 Visegrad countries remain steadfast in their ambitious goals.

First, let us review the current state of the EV transition in the V4 countries.

HUNGARY

EV Market Share: Although still well below the 2025 target, Hungary has seen a steady increase in the number of EVs, supported by government incentives.  Hungary now has the highest share of electric vehicles in the V4, accounting for 6.5 % of the total volume of new vehicles sold in 2023. As of September 2023, there were 44,558 fully-electric cars, vans, trucks and buses, a 41% (Y2Y) increase. 

Infrastructure: The country has been actively developing its charging infrastructure, with a focus on urban centers and major highways. Its first charging station opened back in 2010, and EV investment has been pouring in (BYD, Amperex Technology, CATL, BMW, EVE Energy, GS Yuasa), aiming to overtake the Americans in lithium-ion global battery manufacturing capacity.

Government Policies: Hungary offers a range of incentives for EV purchasers, including subsidies and tax exemptions. The government is also investing in research and development for EV technology. In Oct 2023, the government announced a 156m EUR scheme to promote electric mobility- to upgrade the network of charging stations (an addition to the approximately 3,200 publicly available charging points) and to provide grants to purchase EV vehicles.

Challenges: Similar to other V4 countries, Hungary faces challenges such as the high initial cost of EVs and the need for more comprehensive charging networks.

POLAND

EV Market Share: Poland’s EV market is growing, but it lags behind other EU countries in terms of market penetration. Poland planned to have one million electric vehicles on its roads by 2025. However, as of the end of February 2024, there are approximately 100,000 fully electric and hybrid (BEV and PHEV) vehicles registered in Poland (a Y2Y increase of over 57%). According to PSPA (Polish Alternative Fuels Association) forecasts, the share of fully electric cars in the Polish market for new passenger vehicles in 2024 is around 7-8%.

According to forecasts of the Polish New Mobility Association (PSNM), the share of pure electric vehicles in the Polish new passenger vehicle market is expected to increase from 3.6% in 2023 to almost 12% in 2025 and to around 30% in 2030.

Infrastructure: Charging infrastructure development is underway, with an increasing number of public charging points, especially in major cities. There are currently more than 6,000 publicly accessible charging points strewn across Poland.

Apart from LG Energy Solution Wroclaw lithium-ion battery plant, Poland is the EU’s largest exporter of electric buses, known under the Solaris brand. Volkswagen’s PowerCo and Umicore plan to construct a cathode active material (CAM) production plant at Nysa under the Ionway brand. In 2021, SK IE Technology opened its first production facility for separators for use in electric car batteries.

In addition, Poland’s ElectroMobility plans a local brand of EVs, the Izera, with the production scheduled to begin at the end of 2025. A joint venture between the Chinese car company, Leapmotor and Stellantis, launched assembly of lower-cost electric vehicles in June this year in Tychy.
Also, in 2022 POSCO Holdings built a rechargeable battery recycling plant to collect 10,000 tons of scrap batteries per year from LG’s Polish factory, and in February this year, POSCO International made a decision to build a motor core manufacturing plant near Brzeg.

Government Policies: The Polish government has introduced various incentives for EV buyers, including subsidies and tax reductions. Poland is preparing a new subsidy program for the purchase of used electric cars, to be launched in the fall. The program will allocate PLN 1.6 bn (approx. €375 bn). There are also plans to further expand the charging infrastructure.

Challenges: The adoption rate is hindered by the high cost of EVs and limited public awareness and acceptance.

SLOVAKIA

EV Market Share: Slovakia has a relatively small but growing EV market. However, it is the world’s largest per capita producer of automobiles, and is the third-largest electric vehicle producer in Europe (VW Slovakia and Stellantis Slovakia models). Furthermore, the automotive industry makes up 13% of GDP and 54% of its industrial production.

Quantitatively, as of December 2023, the country had 10,273 registered passenger and small utility EV cars (3% of the total, EU 22,3%), and there are currently a total of 1,800 charging stations.

Infrastructure: The country is expanding its charging infrastructure, with efforts concentrated in urban areas and along key transit routes.

As for its EV transition, Slovakia is making headlines with the announcement of its future site for gigafactories producing lithium-ion batteries. Volvo is building a new plant that will produce electric vehicles starting in 2026. Another Porsche-owned factory is investing € 1 bn in the production of battery modules. Yet, the industry is facing issues of economic vulnerability, supply chain bottlenecks, workforce challenges, and energy and charging infrastructure shortages.

Government Policies: Incentives such as subsidies and tax benefits are available for EV buyers. Slovakia is also investing in the development of EV technology and infrastructure.

Challenges: High costs and a nascent charging network pose challenges to wider EV adoption.

CZECHIA

EV Market Share: The market share of electric vehicles (EVs) in the Czech Republic has been growing, although it remains relatively modest compared to some Western European countries. Czechia has been one of the region’s favorites for the investments thanks to its developed auto industry and the promising lithium deposits in the country. However, the country remains among the bottom EU countries in the proportion of EV vehicles (together with Croatia and Slovakia). As of April 2024, approximately 25,000 passenger electric vehicles were registered in the country out of a total of 6.4 million registered passenger cars.

Infrastructure: Charging infrastructure is expanding, with a growing number of public charging stations, particularly in urban areas. To date, there are 4,892 charging points across the country. 

It’s worth noting that VW-owned Skoda Automotive and Hyundai’s Czech-based EV production facility both produce EVs and EV batteries. Additionally, there is a plan by the Czech government to attract a gigafactory investor that would complement the local lithium mining industry.

Government Policies: The Czech government has introduced incentives for EV buyers, such as subsidies and tax benefits. There are also initiatives aimed at increasing the number of charging stations. A program to subsidize the purchase of electric cars and accessories

from EU funds was launched in March 2024, aimed solely at commercially registered companies. However, the lag in achieving planned targets demonstrates the adoption challenges that the Czech government faces.

Challenges: The high cost of EVs and general Czech sentiment are significant barriers to wider adoption. According to a recent poll (Dec 2023), only 16% of respondents have at least a somewhat positive attitude towards electromobility, while more than half of the population actively reject it. The findings also showed that 7% of respondents plan to buy their own electric car in the next five years, whereas 83% of respondents have no such plans.

The Czech Experience

There have been several major foreign investments in the Czech Republic over the last three years: the Hyundai Motor Group’s one of €1.2 bn in an EV battery factory, the Amazon’s expansion of logistics and distribution centers, the Volkswagen Group’s investment of over €2 bn in development of the EV infrastructure and production, the Foxcon’s investment of $500 million in the expansion of manufacturing facilities, and the Panattoni’s Investment of €200 m in industrial and logistics parks. The most recent project is the US chip maker Onsemi plan to invest $2 bn in its production facility in Rožnov.In June 2023, the Czech cabinet established the Government Committee for Strategic Investments, in order to facilitate better coordination of preparation and improvement of conditions for faster and more efficient implementation of strategic investments.

Furthermore, in line with the Green Deal commitment, and seeking investment and innovation, the Czech government has been working towards securing investors to fund a gigafactory which will contribute to its electric mobility industry. 

However, this most recent experience in EV investment stands out due to a number of unique political and economic factors that have stalled EV adoption progress in the Czech Republic. In spite of the Czech Republic’s attractiveness as a foreign investment destination, particularly in sectors such as automotive, logistics, and manufacturing, the country seems to be falling behind its V4 neighbors in the capacity to draw significant interest from international investors.

Semantic Visions, a leader in business analytics, has mapped this “Czech Gigafactory” journey and the timeline below presents detailed media coverage for the period between 2020 and 2024.  SV’s latest analysis of the planned Czech Gigafactory highlights the topical media coverage and the economic and political challenges that have derailed this project.

The Gigafactory and the Czech Republic, Sept 2020 – June 2024

• 8 SEP 2020, The Karlovy Vary region expresses interest in the Gigafactory project, stating optimal conditions for such investment
• 6 MAR 2021, Incentives of billion of CZK to attract the Gigafactory investment, says Govt minister Havlicek
• 27 JUL 2021, Memorandum signed between the Czech State and the CEZ on the support of the project
• 13 OCT 2021, The Minister says VW needs more time to reflect on the construction of the Gigafactory
• 12 APR 2022, CEZ counts on the Gigafactory project in the former Prunerov power plant
• 27 JUL 2022, The Govt approves the plan for the Pilsen Gigafactory project location
• 23 OCT 2022, The Govt designates the project as strategic investment
• 8 NOV 2022, The Govt in negotiation with two investors: VW and a Korean investor
• 8 DEC 2022, VW puts off its decision by months
• 4 FEB 2023, The Govt signs a memorandum with VW
• 8 MAR 2023, VW puts off the CZ project
• 12 JUL 2023, The Govt approves an agreement on a smaller Gigafactory project
• 27 JUL 2023, Skoda VW is interested in the Gigafactory project
• 2 AUG 2023, The representatives of the Pilsen Region urge Ministers Síkela and Válek to answer questions on the Gigafactory planned site
• 11 OCT 2023, CZ Premier thinks the time for negotiations with VW is running out
• 29 OCT 2023, Czech PM meets VW boss about the Gigafactory project, the project stalls (1 NOV 2023)
• 15 MAR 2024, A new location for the Gigafactory project is announced, Dolni Lutyne, in the Moravian-Silesian Region
• 27 MAR 2024, The locals feel under pressure by the state, planning a referendum
• 22 APR 2024, The Dolni Lutyne village calls a referendum
• 18 MAY 2024, The Govt returns to the future of the Pilsen location, following the failed VW Gigafactory project, the zone to be removed from the list of strategic buildings
• 8 JUN 2024, the Dolni Lutyne locals vote against the Gigafactory project

Across the V4 countries, common challenges include the high cost of EVs, limited charging infrastructure, and the need for greater public awareness and acceptance.

Despite these challenges, the V4 countries are committed to ambitious goals for the zero-carbon transition. They are investing in infrastructure, providing incentives, and setting targets to increase the adoption of EVs and reduce carbon emissions.

To put the V4 experience into perspective, by the end of 2023, 31 countries worldwide had already succeeded in overcoming the electromobility “tipping point” (when the share of sales of new e-cars in the total volume of sales of newly sold vehicles exceeds five percent). The latest additions to this group are Hungary, Romania, Bulgaria, Slovenia, Estonia, Turkey and Thailand.

Czechia has presented itself as a strategic location with a skilled workforce and favorable business environment, yet, as media and analysts have pointed out lately, strategic foreign investment has been bypassing the country. The rise of wage and energy costs, regulatory and bureaucratic hurdles, and infrastructure limitations can be counted among the contributing factors. Further obstacles to attracting more foreign investment are skill shortages and the competition from neighboring V4 countries who may be providing more attractive tax incentives, subsidies, or support programs to foreign investors.

To address these issues, the Czech Republic should focus on stabilizing its energy market and regulatory framework, invest in infrastructure, and fund innovation and skilled labor development. Semantic Visions has been closely monitoring the EV sector developments and other foreign investments in its previous articles. Stay tuned with Semantic Visions for expert analysis on pivotal shifts in the industry investments.