Volkswagen’s boss Thomas Schafer is very concerned about the EU and Germany losing their industrial attractiveness due to surging energy costs.
“We are treading water,” he wrote in a LinkedIn post on Monday. “I am very concerned about the current development regarding investments in the industry’s transformation.”
According to Schafer – who has been at the helm of the German marque since September – Europe lacks price competitiveness in several areas, but especially when it comes to energy.
Following Russia’s invasion of Ukraine, the EU has been the centre of the worst energy crisis since WW2. Germany has been particularly hit due to its pre-invasion dependence on Russian oil and natural gas.
To help ease the soaring costs of energy, Olaf Scholz’s government has rolled out £177m worth of support packages.
“Unless we manage to reduce energy prices in Germany and Europe quickly and reliably, investments in energy-intensive production or new battery cell factories in Germany and the EU will be practically unviable,” he wrote.
As part of its electrification push, the car maker has planned to build six cell gigafactories by 2030, as it aims to take over Tesla as the world’s largest producer of electric vehicles (EVs).
Nevertheless, sources told Reuters in mid-November that plans for the development of an EV factory in Germany were being reviewed.
The chief executive also criticised the recent deal between France and Germany on industrial policy, saying it fell short in crucial areas.
The French and German governments pushed for greater subsidies within the bloc to counteract President Biden’s Inflation Reduction Act, which provides $369bn worth of funding for investment in clean technologies.
“We have no time to lose,” Schafer said. “The EU urgently needs new instruments to avert insidious de-industrialisation and to maintain Europe’s attractiveness as a location for future technologies and jobs!”
City A.M. has approached the European Commission for comment.