ELECTRIC CARS VS. CZECHIA
The automotive industry’s transition to electric cars threatens suppliers of automotive components in the Czech Republic and Slovakia. Agency Bloomberg he also warns beforehand that the Czech Republic may become the “Detroit of Europe” due to impending layoffs and collapse in the automotive industry, which is increasingly moving to electric cars. At the same time, he points out that the production of cars in the Czech Republic and Slovakia is the highest per capita in the world.
According to the agency, suppliers face problems due to the fact that electric motors have far fewer components than internal combustion engines. “In the Czech Republic and Slovakia, there are hundreds of companies that produce for car manufacturers. These companies are now trying to keep orders and jobs,” writes Bloomberg.
The agency also points to the risk that the Czech Republic and Slovakia will fall behind in attracting investors for the construction of factories for the production of batteries for electric cars. He points out that a number of such factories already exist or are under construction in Hungary and Poland. Former Slovakian economy minister Vazil Hudák, who is now vice-chairman of the Bratislava institute GLOBSEC, warned that car companies could locate new production near battery suppliers.
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Car companies around the world are now investing heavily in the transition to electric cars. The German concern Volkswagen intends to start the production of sports utility vehicles (SUVs) with an electric drive in Slovakia after 2025, while the Swedish car manufacturer Volvo Cars is building a factory for the production of electric cars near Košice, which should start operations in 2026.
Last year, Volkswagen started production of the latest versions of the VW Passat and Škoda Superb models at its Bratislava factory, but it is possible that these will be the last models with internal combustion engines produced at this plant. “The problem is what will happen to the vast network of suppliers that form the backbone of the industry and keep the economy going,” writes Bloomberg in connection with the transition of production from combustion engine cars to electric cars in Slovakia.
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According to a study by the GLOBSEC institute, up to 85,000 jobs could disappear in Slovakia as part of the transition to electric cars. “If we don’t manage this transformation, we will have a problem with employment,” said Alexander Matušek, head of the Slovak Association of the Automotive Industry. Car manufacturers and car parts suppliers in Slovakia employ a total of around 260,000 people. In the Czech Republic, the number of workers in this industry is almost double, writes Bloomberg.
For example, the Slovak town of Dolný Kubín, which in recent years has benefited from the development of the automobile industry in Slovakia, now has concerns about the future. “I know from conversations with suppliers that they are ready to adapt, but they are dependent on how their customers handle the transformation,” said Mayor Ján Prílepok. “We consider it a serious threat,” he added.
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For example, the Austrian company Miba operates in the city, which supplies automobile companies with components for internal combustion engines and transmissions. According to Vladimír Toman, the head of Mibo’s plant there, it is not certain whether the company will be able to keep all its 750 employees. “The market situation is changing dramatically,” he said.
“The advent of electric cars may mean enormous layoffs”
The American city of Detroit, Michigan, which was a symbol of automobile production in the 20th century, has also become a symbol of economic devastation and collapse, primarily as a result of the global financial crisis of 2008 and 2009 and the decline 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.
The Czech Republic may become the “Detroit of Europe” due to the advent of electromobility, Bloomberg warns. The Czech Republic is failing to attract foreign investors, lagging significantly behind Hungary and Poland
The American city of Detroit, a symbol of automobile production in the 20th century, is mainly due to the global… pic.twitter.com/S2UtLSL84D
— Lukáš Kovanda (@LukasKovanda)
January 8, 2024
The introduction of electric cars may mean a wave of enormous redundancies for the Czech Republic and Slovakia. “So far, both countries represent the world leader in the volume of car production per capita. But that may change soon. This is because the overwhelming majority are cars with internal combustion engines,” adds Kovanda.
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The analysis of the Slovak think-tank GLOBSEC also states that Volkswagen should produce its electric SUVs in Slovakia from next year. In addition, the Volvo car company is building a large plant near Košice, which will produce electric cars as early as 2026. “The question remains, in particular, about the fate of the extensive subcontractor network, which is dependent on the production of cars with internal combustion engines. These are structurally more complex and contain a larger number of parts than electric cars. After all, the drive system of cars with internal combustion engines consists of some 200 parts, in the case of electric cars it is roughly only a tenth of that number,” writes the economist.
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2024-01-08 13:25:00
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