Czechia’s planning nightmare could dash Volkswagen factory hopes

Plans for a huge new car factory could still be derailed by cumbersome Czech planning processes.

 William Nattrass

Written by William Nattrass Published on 15.04.2022 14:00:00 (updated on 15.04.2022) Reading time: 3 minutes

German car giant Volkswagen is seeking a new European location for a giant new electric car battery factory, and the Czech Republic is one of three countries in the running.

VW is in negotiations with local representatives about the possibility of building the new plant at a former army airport in Líny, near the city of Plzeň.

It’s thought that the new factory would be an investment worth in excess of €4 billion, or between CZK 98 and 122 billion. It would employ up to 4,000 people. It’s no surprise, then, that local representatives are enthused about the potential economic benefits.

“It should be for high-tech production, one of the most modern factories in Central Europe,” said Rudolf Špoták, Plzeň Regional Governor.

“Whoever has this type of production on its territory will also draw the relevant research capacities, and this is the direction we should take today.”

Deputy Plzeň Governor Josef Bernard

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VW’s design team have met with local representatives, and though negotiations are still at a formal stage, excitement is palpable. As the automotive industry transitions towards an electric future, the proposed factory is seen as an opportunity for Czechia to remain at the cutting edge.

Yet a number of hurdles still have to be overcome in order to secure the factory.

Further discussions are expected this spring on the basics, including a prospective staff plan and infrastructure requirements. Of greater import, though, are the cumbersome planning processes which cause frustration for commercial developers throughout the Czech Republic.

As the head of regional development in Plzeň Miloslav Michalec told Czech Television, a major project such as the new electric car battery factory is a nightmare of procedural complexity. “We now have the task of coordinating and preparing the whole process, including the change of the zoning plan, the connection to the D5 motorway; it is a huge amount of data,” he said.

What’s more, the potential convenience of a location so close to Germany is offset by the snail’s pace at which Czech planning proposals tend to be processed. The Czech Republic is often cited as one of the worst countries in Europe for doing business as a developer in terms of the pace of building permitting processes.

“Our biggest enemy is the speed of legislation under the Building Act. Volkswagen wants to start building relatively quickly, i.e. in the coming years, and start producing in 2027. The risk that construction in the Czech Republic would take longer is seen by potential investors as one of our biggest handicaps,” said Špoták.

Economic news portal E15 has for this reason reported that Czechia is VW’s least-favored option for the factory. VW didn’t comment on the speculation, but said around a hundred criteria are being considered.

A complicated current ownership structure for the Líny Airport is another potentially off-putting factor, while ensuring the supply of enough water to the factory would be a “huge problem,” according to Dobřany Mayor Martin Sobotka.

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Still, the obvious geographical advantage of Plzeň, together with VW’s ownership of Škoda, the Czech Republic’s biggest car manufacturer, should all play in Czechia’s favor.

What’s more, the new head of operations at VW is Thomas Schäfer, fresh from a previous role as the head of Škoda. Schäfer said in March that we wanted VW to choose the Czech Republic for its new factory.

For all these reasons, if practical difficulties presented by Czech planning processes mean the country fails to win the new VW factory, it will be seen as a huge missed opportunity.

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