Volkswagen Group could pick the United States to host one of six giant battery plants planned for Europe by 2030. The move aligns with the Inflation Reduction Act, the US disinflation law, which acts as a major incentive for investment in green industries and decarbonisation efforts.
There is no need for alarm about the factory in Valencia or the eastern European prospects. Valencia’s Sagunt site has been presented and promised by the group, while Eastern Europe has long been in the running. In 2021, reports from EL NEWSPAPER suggested the company aimed to build in an eastern country, with more specifics expected in 2022. Czechia was among the favored locations for Skoda, and Hungary also signalled interest as a competitor alongside GS Yuasa, SK Innovation, and Samsung SDI.
Yet the anticipated news in 2022 never materialised, and the Eastern European project remained uncertain. In this climate of hesitation, North American options gained momentum ahead of the law’s full definition and allocation set for mid March, backed by a substantial push to promote green industrial policy and decarbonisation with an investment of about 369 billion dollars.
A Volkswagen Group statement to European Press emphasised that a final decision had not been reached. The company reaffirmed a plan to establish battery factories with a total capacity near 240 GWh in Europe by 2030. While these statements convey optimism, the group also noted that competitive framework conditions are essential and that the upcoming European Green Deal will influence outcomes.
Europe observes how US policy can become a competitive hazard for the sector. The IRA package includes incentives for electric vehicle purchases that require both vehicles and components to be manufactured in the United States, creating a challenge for European and Asian brands lacking concentration of industrial capacity on American soil. Local firms such as Tesla have raised concerns about sourcing components from abroad when required by the rules.
Since its inception, the European Commission has spent months negotiating with the United States on these requirements. The latest developments in December included extending rules to European electric vehicles registered by companies and professionals while mandating production in North America. The Biden administration aimed to publish the final details by the end of 2022, and the specifics were expected to become clearer in the current month.
According to the Finance Times, a decision to set up a gigafactory in the United States could bring support from both sides of the Atlantic in the range of 9 to 10 billion euros for construction. IRA terms are viewed as highly attractive, raising concerns that Europe could lose billions of dollars in investment if the framework stays uncertain, according to Thomas Schmall, head of technology for the German group, speaking on LinkedIn. He argued that the battery business is increasingly led by Asian players, while the United States is catching up thanks to the IRA. Europe lags behind in this aspect, he added.
Industry watchers at Transport and Environment note that around two thirds of planned European battery plants face medium to high risk of interruption or loss due to US policy. The EU’s policy response is seen as urgent to safeguard investment and accelerate cross-border cooperation that strengthens the European battery supply chain. A coordinated European green industrial policy, backed by consistent EU-wide support, is deemed critical to boosting local production capacity and reducing dependence on external sources.
One striking development illustrates the shifting strategy: Volkswagen recently abandoned a German plant project intended for producing new vehicles in the near term and instead chose to establish a new factory in Blythewood, South Carolina, to manufacture components for a renewed Scout brand for the North American market. The facility is slated to become operational in 2026, with an estimated investment of 2 billion dollars and the creation of about 4,000 jobs. The decision underscores Volkswagen’s readiness to invest decisively in North America while continually reassessing European projects in light of changing incentives and market dynamics.