GlobalData : Volvo finds low cost route to ramp up EV capacity with new Slovakia plant, says GlobalData

01 Jul 2022
Volvo finds low cost route to ramp up EV capacity with new Slovakia plant, says GlobalData Posted in Automotive

Following the news today that Volvo Cars will build a third European manufacturing plant in Slovakia;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

"This is a smart move for Volvo Cars to add much needed future production capacity in electric vehicles in Europe in a low cost location with a number of natural advantages.

"This new capacity is much needed. Volvo's European manufacturing network has been feeling the strain of operating very close to capacity in recent years. Under parent Geely, a highly successful product refresh for Volvo Cars has seen its global sales figures soar over the last decade, with sales in pre-pandemic 2019 topping 700,000 units - more than double the figure for 2009.

"Volvo has said that it will only produce electric vehicles by the end of this decade.

"A new dedicated electric vehicle plant in Europe therefore makes sense and Slovakia comes with a number of natural advantages for automotive companies. There are three main factors that stand out.

"Firstly, Slovakia is relatively low cost in terms of real estate and labour - with a good range of skill levels.

"Second, geographically Slovakia is well positioned to supply the major markets of Central and Western Europe. A cursory glance at a map shows how close it is to Europe's automotive markets and manufacturing centres.

"Third, Slovakia is already well established in regional automotive supply chains. Stellantis, Volkswagen, Kia and Jaguar Land Rover already have vehicle manufacturing plants in the country. A range of major parts suppliers are also present in Slovakia and the neighbouring Czech Republic."