German auto giant Volkswagen may stop investing in EU battery factories if the bloc fails to tame energy prices and strengthen its industrial policy. This was stated by a representative of the top management of the company.
“Europe is uncompetitive in many areas, especially when it comes to electricity and gas costs,” Volkswagen’s Thomas Schaefer commented in a social media post criticizing Europe’s industrial policy.
According to him, at this energy price, investments in energy-intensive manufacturing or new battery factories in Germany and throughout the EU will no longer be feasible.
Some time ago, the company announced a major investment program, with the construction of six battery cell plants in Europe. They are expected to generate over €20 billion in annual sales and create up to 20,000 jobs.
“Internationally, Germany and the EU are rapidly losing their attractiveness and competitiveness“, he commented, quoted by Politico.
VW’s CEO said the US Deflation Act is an example of sound industrial policy. The policy aims to attract investment in green technologies by tying up a tax credit for locally produced electric vehicles.
According to Schaefer, European industrial subsidy programs are “outdated” and “bureaucratic” and preliminary plans by French Economy Minister Bruno Le Maire and German Vice-Chancellor Robert Habeck to increase Europe’s support for big industries “will fail”.
Meanwhile, the spiraling energy costs in the German automotive industry are evident.
At its plant in Saarbrücken near the French border, German auto parts maker ZF Friedrichshafen employs around 9,000 people to produce drive systems for automobiles with internal combustion engines. It takes much more work to produce high-end systems for conventional engines, according to company CEO Wolf-Henning Scheider.
On average, 30% of ZF’s production is exported to North American car plants and more than half of Saarbrücken’s production is shipped outside the EU.
So far it makes sense in production from a financial point of view, but given high utility costs, the company may choose to move production outside of Europe where running costs are cheaper.
