VW postpones decision on Eastern European plant

Yet, group announces creation of 3 other factories central for its electric mobility future

The German manufacturer Volkswagen announced this Monday that it has postponed its decision on where to build its new multibrand assembly factory in Eastern Europe, where some of the German group’s car models would be produced. Still, the group, has been given the greenlight by the Board of Supervisors of the project and its management to start final talks with the contenders for the investment, which is being estimated at approximately €1bn.

"It was also decided to begin concrete negotiations on the planned new multibrand plant in Europe with the remaining potential locations," the company stated.

In other words, talks would be focused on the details of the future choice and preferences that the company can obtain from individual countries. The next board meeting will be in October, which means that the earliest decision can be made then.

So far, there has been no official confirmation from the manufacturer which countries are being taken into consideration, but a few months ago it became clear that Serbia, Turkey, Bulgaria, Romania, and North Macedonia are all reportedly vying for Volkswagen’s planned new electric car plant, with Bulgaria, Serbia and Turkey having the best chance to win the investment, as reported by DPA and several other German outlets. The new Eastern European unit would then start production sometime in 2022 with 5,000 employees who would be responsible for the production of SUVs Skoda Karoq and Seat Ateca, which are currently being manufactured in Kvasiny, Czech Republic.

As part of Volkswagen Group's desire to invest over €11bn in electric and autonomous vehicles, digitisation and mobility services on Monday, the group also announced plans to build a €1bn plant in its home state of Lower Saxony in Germany, where it would produce electric vehicle batteries. The unit would be placed in the northern city of Salzgitter, bringing steady, native battery supplies to the German automakers at a moment when battery cells are a key battleground in the automotive industry worldwide as electric mobility is becoming the core of its business going forward.

In another move, aimed at simplifying the group’s structure and focusing more on its future business goals in the electric mobility field, VW Chairman Hans Dieter Potsch, stated that the company will also look to sell some of its non-core brands, including MAN Energy Solutions, which makes large diesel engines for ships and generators .

"Given the ever greater complexity of our industry and the related challenges, it is essential to focus on our core business," Potsch said, confirming earlier reports that Volkswagen might sell off some brands.

In this regard VW made this week yet another big announcement - it would be building two plants in China to produce a total of 600,000 vehicles running on MEB, its modular car platform for electric vehicles. The two factories, one in Shanghai and one in Guangdong, are set to start operating once the facility in Zwickau, Germany, which is going through an upgrade into one for purely electric cars, opens up. If the plan goes well, Volkswagen’s capacity will likely surpass Tesla.

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