EU Commission approves €267m funding for Volvo EV production plant

The European Commission has announced approval of €267m state aid funding for a Volvo EV production plant in Slovakia.

The new Volvo EV plant will help supplement the EU’s electrification targets and will be situated in Valaliky near Košice, Eastern Slovakia. Alongide the funding, Volvo will also invest €1.2bn in the project.

The sizeable funding will enable Volvo to expand its EV operations and bolster the EU’s objectives of creating skilled jobs, regional development, and supporting the European Green Deal.

Strengthening Volvo EV production

Volvo’s latest EV plant marks the company’s third facility in Europe. The plant is estimated to create around 3,300 direct jobs and additional indirect jobs throughout the EV supply chain.

The Volvo EV plant will initially produce approximately 250,000 electric vehicles annually, with the project expected to provide sustainability benefits through becoming carbon-neutral from the start of production.

Meeting EU criteria

Valaliky is a region eligible for regional aid under Article 107(3)(a) of the Treaty on the Functioning of the EU (TFEU).

The area is also identified as a Just Transition Fund territory, which is an area most negatively impacted by the climate transition.

Following its assessment, the EU Commission concluded that the Volvo EV plant is poised to foster job creation, drive economic development, and enhance competitiveness within a disadvantaged area.

They found that the subsidy acts as an incentive, as the beneficiary would likely opt for an alternative location outside the European Economic Area without public support.

Its impact on competition and trade within the EU is deemed minimal, and establishing Volvo Car Slovakia’s new production plant is considered essential and appropriate, contributing to regional development.

The Commission stated that aid is proportionate and confined to the minimum necessary to stimulate investment in Eastern Slovakia, adhering to the maximum permitted aid amount based on the Slovak regional aid map.

The EU’s support for the Volvo EV plant highlights the initiative’s importance in driving European electrification while bolstering economic growth in Eastern Slovakia, a move that will no doubt accelerate the European EV transition.

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