Ministry of Economy: We have several inquiries for the construction of megafactories for electric vehicle battery production

Indian Tata Motors, owner of the Jaguar Land Rover brand, recently selected the British city of Somerset as the location for a large electric vehicle battery factory. British Prime Minister Rishi Sunak rejoiced as he confirmed the arrival of a new investor in Britain, which has been facing a range of economic problems and challenges since Brexit. This will be a grand new investment, not only worth $1.6 billion, but it will also bring new jobs, hundreds of them, and ensure revenues from taxes and exports.

Investment Grab

For the British government, this megafactory is a kind of “consolation” investment, especially since there has been a halt in the construction of such a battery factory, but with a British label. Namely, the British start-up Britishvolt failed to build its own lithium battery factory for electric vehicles within the agreed timeframe, and it remains to be seen what will ultimately happen with that investment.

However, what is comforting for the British in this story is disheartening for the Spaniards. Tata initially planned to build there, everything was agreed upon, but reportedly, Tata received an offer in Great Britain that it could not refuse. The British allegedly offered Indian investors a whole range of incentives and benefits, everything the Spaniards offer and then a little more. And they are not the only ones who have snatched the hottest investment opportunity on the global market in this way.

Electric vehicle battery factories, along with chip factories, are the most expensive investments in the world in manufacturing activities, and besides providing an incredible opportunity for monetizing production, as the number of electric vehicles worldwide is only increasing and will not start to decline anytime soon, such investments are also “green,” which is another argument for shamelessly seizing opportunities.

Recently, Emmanuel Macron, the French president, welcomed investors to the first battery factory in that country with a red carpet. Guests who arrived at the Palace of Versailles were representatives of Taiwanese ProLogium, who decided to build a battery factory in northern France, in Dunkirk, instead of Germany. It was not easy to snatch the investment from the Germans; it required digging deep into the pocket and opening a whole buffet of incentives, subsidies, and tax benefits, but what is that for a country that swears by new and green reindustrialization.

Incentives of half a billion euros

The Germans are not entirely innocent in this story either. They ‘snatched’ the investment from the Americans. Namely, Swedish Northvolt had been considering investing in its own battery factory for EVs in the USA for some time, precisely because of American incentives and the Anti-Inflation Act, but ultimately decided to build a factory in northern Germany. Northvolt is one of only a few European players in the EV battery manufacturing market and will build a factory worth 3.5 billion euros thanks to German, or rather European, incentives. According to initial information, German incentives will amount to around half a billion euros, partially financed from EU funds, which the European Commission still needs to officially approve, but the general impression is that this is a done deal.

Interest in Croatia

And Croatia is currently not even on the radar in this story, at least that is the impression. Rimac Technology is developing battery systems, which should be mentioned, but this is not the battery production we are talking about here nor a megafactory for lithium batteries. Battery factories typically cost several billion dollars, and in that market, despite the fact that investors from all over the world are entering the business, names from the Far East dominate.

We asked the Ministry of Economy and Sustainable Development whether there is interest from investors for the construction of such facilities in Croatia, and here is what they replied:

– Recently, we have noted an increase in interest from foreign investors considering Croatia for opening manufacturing facilities, and among them, a couple of inquiries related to battery production have been recorded – states the Ministry’s response.

In response to our inquiry about whether such investors can expect usual or “designed” support, they say that “in Croatia, the Investment Promotion Act provides for various types of direct incentives (financial support) and indirect incentives (reduction or exemption from corporate income tax) for, among other things, manufacturing-processing activities.”

Incentives and large amounts of energy

– According to the mentioned Act and the applicable map of regional aid, investors in manufacturing-processing activities, assuming they are large enterprises, in Northern or Pannonian Croatia can receive up to 50 percent reimbursement of justified investment costs. Additionally, various local incentives are available to investors, most often in the form of reductions or exemptions from paying utility contributions, which is a significant item in the case of large manufacturing facilities – they replied to us at the Ministry and added that they provide support tailored to the individual needs of each project, which may include compiling an information package, assistance in finding a location, organizing visits, and connecting with local government units, coordinating the implementation of various phases of the project with relevant state institutions, advising on incentives, and more.

And what kind of location would they suggest to such investors? They suggest “one of the business zones that has secured spatial planning prerequisites for opening such a facility, available larger areas that can meet all necessary infrastructure requirements, as well as environmental protection requirements.”

– Battery production facilities require large amounts of electricity, so it would be desirable for the location to be near major transmission lines and hubs. Also, considering the growing problem of labor shortages, proximity to a larger urban center with appropriate educational infrastructure would be desirable. In general, projects of such scale require significant engagement and coordination of all stakeholders at the state and local levels – they concluded at the Ministry.