Volkswagen’s decision to produce its new ID.1 electric vehicle in Portugal instead of Bratislava, Slovakia, has sent a worrying signal to the country’s economy. The Slovakian plant was initially in the running to manufacture the entry-level electric car, but the company ultimately chose Portugal due to decreasing competitiveness in Slovakia and the pursuit of synergic effects. This decision is seen as a warning sign that Slovakia needs to take action to restore its competitiveness in order to attract and retain investments.
The Business Alliance of Slovakia (PAS) views the decision as a “painful but important warning” that the country’s economy is at risk of losing further investments, not just in the automotive sector. The automotive industry is a crucial pillar of Slovakia’s economy, and the loss of this project is a significant blow. Martin Lidaj, executive director of PAS, notes that Slovakia is no longer an automatic choice for established investors, even in the field of electromobility.
The Slovak Electric Vehicle Association (SEVA) attributes the decision partly to the government’s public-finance consolidation package, which was introduced last year and has been implemented this year. Patrik Križanský, director of SEVA, believes that the loss of the ID.1 production is the first major example of the impact of this package. The consolidation package has likely affected the country’s competitiveness, making it less attractive to investors. Križanský’s comments suggest that the government’s policies may have contributed to the decline in Slovakia’s competitiveness, which ultimately led to Volkswagen’s decision to produce the ID.1 elsewhere.
The decision is a wake-up call for Slovakia to reassess its competitiveness and take measures to improve its business environment. If the country fails to restore its competitiveness, it may lose out on future investments, not just in the automotive sector but also in other industries. The Slovak government needs to take action to address the concerns of investors and ensure that the country remains an attractive destination for businesses.