The 'new Detroit'? Bloomberg warns of electric transition's impact on Czech auto industry

Czechia, known for its extremely high production rates of cars per capita and large automotive industry, is facing a potential crisis as the country shifts towards electric cars, U.S. news outlet Bloomberg writes. The transition could lead to the closure of many automotive component suppliers and plants, and has been compared to the downfall of Detroit – once considered the focal point of the American automotive world.

Bloomberg writes that the shift to electric cars poses a threat to suppliers in the Czech Republic due to the significantly lower number of components in electric motors compared to internal combustion engines.

"In the Czech Republic and Slovakia, there are hundreds of companies that produce [parts] for car manufacturers. These companies are now trying to keep orders and jobs," Bloomberg describes. 

The news outlet also points out that Czechia has the second-highest car production rates globally. Car manufacturers and suppliers of car parts in Czechia also employ around half a million people. Bloomberg estimates that up to 85,000 jobs could disappear in Slovakia as a result of the electric-car transition. As Slovakia’s automotive-based workforce is roughly half of Czechia’s, this implies that up to about 250,000 people could lose their jobs in Czechia with the shift to electric cars.

There is also concern that the Czech Republic may fall behind in attracting investors for the construction of factories for the production of batteries for electric cars. Hungary and Poland have already established – or are in the process of building – such factories.

The city of Detroit in the U.S. state of Michigan was a symbol of automobile production in the 20th century, but recently has become viewed as a sign of economic decline as a result of the global financial crisis of 2008 and 2009 and the fall of automobile production there. 

"The collapse of the local car companies General Motors and Chrysler made it a "ghost town,’ full of abandoned, dilapidated factories, in which the unemployment rate rose to 30 percent, according to some estimates it even attacked the 50 percent mark," recalls Trinity Bank chief economist Lukáš Kovanda on social media site X.