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bne June 2021 Central Europe I 41
The region is being held back by low sales of EVs, partly caused by weak investment in charging networks.
Central Europe joins the EV revolution
passenger car sales down by almost 25% last year, a drop of some 3mn units.
Central Europe will still remain a good place to build cars for the foreseeable future and electric and hybrid vehicles will be one of the few growth segments of the market, so carmakers have invested heavily in converting their plants in the region to produce EVs.
This will protect the industry as the EU moves to phase out new cars based on internal combustion energy technology on the grounds that they contribute to global warming. In 2020, European leg- islation enforced that the average carbon dioxide output of new cars across a manu- facturer’s fleet be reduced to 95 grammes of CO2 per kilometre. This will have to be reduced by another 15% by 2025.
Apart from EVs, the region – particularly Hungary and Poland – is also becoming a new centre for electric battery produc- tion, and is competing for a new VW gigafactory. This fits with European Commission plans to encourage near- shoring of battery production, so that Europe can produce enough batteries by 2025 to power its fast-growing fleet of EVs without relying on imported cells. Czechia also has significant deposits
of lithium, the key metal in the new generation of batteries, which will help
bne IntelliNews
Central Europe has joined the electric vehicle (EV) revolution, brushing aside doubts that it would be left behind. But will this create the new high-tech sector the region so badly needs?
Carmaking is already vital to the region, with Slovakia and Czechia producing 1.22mn and 1.16mn cars respectively, making them the biggest manufacturers per capita in the world, though they rank only 15 and 16 in gross terms. Poland and Hungary are not far behind, producing 451,000 and 406,000 respectively.
Slovakia is the most dependent. A country of only 5.45mn people, it has four major car producers – Volkswagen (VW), Kia, PSA, and Jaguar Land Rover. The whole car industry, including
the network of suppliers, represents
a massive 50% of total industrial production, 47% of exports and 14% of gross domestic product. Some 177,000 people are employed by the four original equipment manufacturers (OEMs) and the Tier 1 suppliers.
There had been fears that the shift towards EVs could threaten the region’s automotive industry because the
exclusively foreign-owned carmakers might focus on EV production in their home markets, leaving their Central European plants to keep turning out petrol and diesel models until they were phased out under national or European Union rules.
This has not happened and Czechia, Slovakia and Hungary now all produce
“There had been fears that the shift towards EVs could threaten the region’s automotive industry"
electric models. Nevertheless, the regional industry still faces a massive long-term challenge because of the much lower interest in owning cars among young people, and because electric cars are much simpler in construction and require less labour. The German Ifo Institute for Economic Research forecast this month that the German auto sector could lose 178,000 jobs by 2025 because of these trends.
In the short term, the industry has also been hard hit by the coronavirus (COVID-19) pandemic, with European
achieve the Commission’s goal of the EU becoming almost entirely self-sufficient in lithium by 2025.
Most excitingly, electromobility offers the possibility of creating a new high- tech regional industry, which could have a series of spin-offs for local economies. Electric mobility is already stimulating innovation and generating start-ups across the region, raising hopes that it will help Central Europe make the shift from assembly line industries to high value-added sectors. Hungary has been most active in pursuing this strategy.
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