The Volkswagen Group is considering building one of six gigafactories in Central and Eastern Europe to produce battery cells for battery-electric vehicles (BEV). With its auto industry spearheaded by ŠKODA AUTO, the Czech Republic is among the few sites to be shortlisted. The only location in the Czech Republic that would meet the needs of a gigafactory is the Pilsen–Líně site. The proposed investment project would represent the largest private investment in Czech history and would radically transform the automotive industry in the Czech Republic and beyond. This article highlights the details of the potential gigafactory in the Czech Republic, outlining the current situation in the country, what the Volkswagen Group and PowerCo, the Volkswagen daughter company responsible for batteries, are planning as well as addressing common questions.
The Czech government has unequivocally declared its support for the Volkswagen Group to build one of its six planned battery cell factories – a so-called gigafactory – in the Czech Republic.
“The automotive industry accounts for 10% of GDP and 25% of the Czech Republic’s exports, and hundreds of other companies and tens of thousands of employees are linked to car manufacturers. If we want this sector to play a significant role in the future, we need to adapt to the changes taking place in it. If the Volkswagen Group confirms the project, it will be the largest private investment in the history of the independent Czech Republic.”
Petr Fiala
Prime Minister of the Czech Republic
KEY FACTS
› If the Volkswagen Group chooses the Czech Republic as the location for a gigafactory among several highly engaged competitors, thousands of future-proof jobs would be created in the country along with billions in investments
› The gigafactory would be crucial to transforming the automotive industry and ŠKODA AUTO as a major stakeholder
› The government is prepared to take all steps to ensure that the Volkswagen Group’s strategic gigafactory construction project is implemented in the Czech Republic
› The gigafactory is a prerequisite for industrially transforming and increasing the economic and social attractiveness of the Czech Republic and the Pilsen region
In cooperation with CzechInvest, Plzeň–Líně was chosen as the ideal location after a careful selection process lasting almost 18 months. The other locations discussed do not meet the Volkswagen Group’s needs in terms of size, water resources or essential transport infrastructure.
Creating future-proof jobs and bringing highly qualified experts into the region
Establishing the plant in the Czech Republic would practically create a new sector of the Czech economy and give rise to the production of innovative future technologies. It would also allow for the entire battery production chain – from lithium mining, and the production of BEVs to recycling – to be localised in the Czech Republic and thus bring a key competitive advantage to Central and Eastern Europe. Among other areas, the gigafactory would support the manufacturing industry as well as the development of other commercial services such as insurance, transport and warehousing. Strengthening the construction and energy sectors would add further benefits.
“The gigafactory would be crucial to transforming the Czech automotive industry. It would create up to 4,000 future-proof jobs, bring highly qualified experts into the region and secure the potential to introduce training facilities, secondary school and university courses to support school graduates and the local workforce in obtaining their qualifications.”
Klaus Zellmer
ŠKODA CEO
The influx of qualified employees would boost the housing market and intensify housing construction, as well as providing fresh impetus to the development of transport and social infrastructure, raising living standards across the region. With the agreement of all stakeholders, construction of the gigafactory would commence in the third quarter of 2024, with production possibly ramping up as early as 2027.
Volkswagen Group intends to build six standardised factories in Europe
In collaboration with partners, the Volkswagen Group and PowerCo, the Volkswagen daughter company responsible for batteries, plan to be operating six battery cell factories with a total volume of 240 GWh in Europe by 2030. The Group will be basing these on a standardised factory concept; the Salzgitter headquarters will serve as a blueprint for the plants across Europe and set new standards in terms of sustainability and innovation.
Questions & Answers
Find answers to the most important questions about the gigafactory in the Czech Republic
Can’t the gigafactory be built elsewhere in the Czech Republic?
In cooperation with CzechInvest, the Volkswagen Group looked into other locations in the Czech Republic. None of them met the needs of the project due to their insufficient size or because of other technical issues. The Plzeň–Líně site benefits from good connections to the railway and motorway network. It is the only location in the Czech Republic that meets all the needs for the construction of a Volkswagen Group gigafactory.
Why can’t the airport remain open alongside the gigafactory?
Operating the production facility next to an active airport is not feasible for security and safety reasons. It would not be possible to maintain the minimum safe distance between the airport, factory and built-up areas.
When would construction start?
The first of several construction stages would start in the third quarter of 2024. Production would possibly begin in 2027.
Could the Strategic Business Park not be smaller?
The Strategic Business Park requires a minimum of 250 ha. There are no plans to further expand the area; the VW Group respects the wishes of the surrounding municipalities for the zone not to increase in size. The current area is a proposed compromise that allows sufficient space for the plant in the Park and at the same time maintains an appropriate distance from the surrounding villages and residential areas.
How do you view the municipalities’ concerns?
Intensive negotiations are underway with the municipalities, city, Pilsen Region, CzechInvest and the ministries concerned. We are committed to reaching a technical and social consensus with all stakeholders for the potential construction of the battery cell plant for the Volkswagen Group.
How many people would work in the Strategic Business Park?
If there is an agreement with all stakeholders, up to 4,000 people would be employed at the gigafactory itself when it is fully operational. The number of employees across the entire Strategic Business Park would gradually increase across each construction stage over the years and would not exceed 5,000 based on an agreement with the municipalities and the state.
Would everything be built quickly?
We are actively discussing permit processes with the government. Any special legislation allowing for accelerated permits and the construction of strategically important buildings would make a significant contribution to meeting the objectives and increasing the competitiveness of the Czech Republic.
Would the gigafactory have a negative impact on the environment?
Constructing the gigafactory on the site of the former military airport Plzeň-Líně would allow the remediation of environmental burdens in the area. The Strategic Business Park would go through an EIA process, and the Volkswagen Group is committed to adopting all the measures and recommendations arising from this. Similar plants have been or are being built in Sweden, Germany and other countries that are known for their emphasis on environmental protection.
What would the impact on the region be?
The gigafactory would create up to 4,000 jobs in the region, the potential to introduce secondary school and university courses that can support the factory’s operation, the expansion of housing in the Pilsen Region, the development of transport and social infrastructure, and a substantial increase in purchasing power. The gigafactory would also increase the region’s attractiveness to investors. In cooperation with municipalities and the region, the government has also decided to prepare an impact study for the municipalities, the City of Pilsen and the entire region and to take its recommendations into account in devising compensation measures.
Wouldn’t a gigafactory bring heavy traffic and air pollution?
One of the Volkswagen Group’s fundamental requirements is a rail connection to the Strategic Business Park, so that all materials can be transported in and out by train. At the same time, the Strategic Business Park would allow for the construction of a new motorway exit from the D5 motorway and a road outside the built-up area, thereby minimising the burden on the municipalities. Any potential increase in traffic in the surroundings caused by developing the Strategic Business Park is also included in the EIA process, the conclusions and recommendations of which the Volkswagen Group is committed to enacting.
Where would the batteries from the gigafactory be transported to?
The gigafactory would supply Group factories within a 250 km radius (five Volkswagen Group plants in the CEE region). We expect that most of the battery cells would travel by rail to ŠKODA’s main plant in Mladá Boleslav.