Poland bets on electric car to power auto parts sector

In July, state-owned ElectroMobility Poland unveiled prototypes for the Izera SUV and hatchback, two electric models aimed at the budget market which
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Representational photo of electric vehicles charging
Representational photo of electric vehicles charging

For air filter maker PZL Sedziszow, Poland's ambitious plan to produce an electric car from scratch could be the catalyst that helps the auto parts industry catch up with foreign neighbours.

The company started making battery packs two years ago and believes the government's 5 billion zloty ($1.3 billion) plan to build two electric car models will attract more global automakers to emerging Europe's biggest economy.

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"Only new mobility can really boost car production in Poland," owner and chairman Adam Sikorski told Reuters.

"If the manufacturers see there are sufficient and reliable suppliers of electric car parts in Poland, they will be more willing to place assembly plants in Poland."

Auto parts manufacturing accounts for 11% of industrial production and 4% of gross domestic product in Poland, far less than in Slovakia, Hungary and the Czech Republic, where the sector accounts for more than a third of industrial output.

Also Read : Greek island goes electric with Volkswagen transport deal

But Warsaw believes the switch from combustion engines to battery cars could provide an opportunity to close the gap.

In July, state-owned ElectroMobility Poland unveiled prototypes for the Izera SUV and hatchback, two electric models aimed at the budget market which it plans to launch in 2023.

It's a risky bet.

Government efforts to kick start car industries have a chequered history at best, with Britain's attempts to help DeLorean establish a supercar business in the 1980s proving a costly and embarrassing failure.

File photo used for representational purpose (Bloomberg)
File photo used for representational purpose (Bloomberg)

Global automakers with decades of experience are already churning out electric models, and the pressure on Poland's public finances from the Covid-19 pandemic raises questions over how much money it will be prepared to put behind the plan.

However, advances in computing and software have lowered engineering barriers to entry into the auto sector, allowing Germany's Deutsche Post, for example, to develop its own electric delivery van, the Streetscooter, from scratch.

And to lessen the risk, Poland will license the manufacturing platform from a foreign partner, Piotr Zaremba, head of ElectroMobility Poland, told Reuters.

He declined to name the partner but said it was an automaker that has brought about 20 new vehicles to market in the past five years.

Also Read : GM Plans to hire 3,000 workers to spur electric-car development)

In the electric vehicle sector, Germany's Volkswagen has said it plans to license its manufacturing platform and has already struck a deal with Ford.

Volkswagen declined to comment for this story.

"We are not building the platform from scratch because it is too big a risk, from a technical and business perspective," Zaremba said. "So at every stage we try to reduce the risk by using tested solutions."

Starting at a small scale will allow Polish suppliers to grow alongside the project, building their competitive strength, which will also help them in foreign markets, he added.

NATIONAL CAR

A highly-skilled, but relatively low cost, workforce has helped to turn the Czech Republic, Slovakia and Hungary into investment and production hubs for global car manufacturers such as Volkswagen, Audi, Daimler and Kia , among others.

Poland has lagged behind, but believes the switch to electric mobility has created a new opportunity.

It has already used generous incentives to attract Asian battery firms such as LG Chem and Guotai Huarong to strengthen its position in the industry.

Under pressure to reduce emissions, the government said in 2016 it wanted to have one million electric vehicles on the road by 2025. At around 15,000 currently, that looks a long shot, but officials hope growing interest in electric cars will help fuel demand for the Izera models.

Climate Minister Michal Kurtyka predicted Poles would embrace a national car brand, and its success could raise the international profile of the country's auto parts industry.

"We have a chance to add an additional boost to this ecosystem which already exists," he told Reuters.

Even if project doesn't succeed, it could still provide a boost to the components sector.

"It is difficult to produce a car from scratch and equally difficult to do it in big volumes," said PwC CEE automotive industry leader Jens Horning. "But this will attract innovation and new technology in the supplier space."

First Published Date: 10 Nov 2020, 14:04 PM IST
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