Economic Superprojects of Czechia

The Czech Republic is currently planning several "super projects." One of them is the Gigafactory near Plzeň. How are the preparations going, and what is the public's general consensus on the projects?

Automation automobile factory concept with robot assembly line with electric car battery cells module on platform.
Photo: iStock.com / PhonlamaiPhoto

Not so far from Plzeň (eng. Pilsen), the fourth largest city in Czechia (181k inhabitants), lies the small-scale Líně Regional Airport near the village of the same name. The airport itself is an international public airport serving the city of Plzeň and the surrounding region. But soon enough, a vast factory complex will completely replace the airport. A factory, or rather a gigafactory, which is to become the key to the Czech electromobility future, will be built where this small but essential airport is located today. And what is the goal? To become a European number one.

A nice airport gives way to an even nicer factory

In 2022, the Government of the Czech Republic, on the Ministry of Industry and Trade proposal, approved a plan to build a strategic business and industrial park in the area of Plzeň-Líně Airport. Its core is to be the so-called gigafactory, a massive factory for producing battery cells for electric vehicles. There were a few rounds of negotiations with numerous companies to build such a factory. In the end, the government made a deal with Volkswagen.

The gigafactory will span an area of 200 hectares. That’s 2,000,000 square meters. That is a lot. Another 80 hectares will be occupied by other smaller logistics halls leased to other companies, service facilities such as railway stations, electricity transformer stations, and a wastewater treatment plant. The planned size of the site is a compromise that resulted from negotiations between the state, the investor, and citizens living in the surrounding villages. The current proposal is roughly one-third of the initially intended area.

The administrative management of the project was entrusted to the Czech Investment Agency CzechInvest, which belongs to the Ministry of Industry and Trade. However, CzechInvest is merely an administrator and intermediary between the Czech government and the strategic investor. The investor will be the Volkswagen Group, which owns, for example, the Czech car brand Škoda. The ultimate goal is to create a model business park 4.0 to house state-of-the-art production lines and research facilities to manufacture energy storage solutions and electric vehicle components.

It’s all about the numbers

The most critical number is, of course, the final price. The price tag for the gigafactory is expected to reach 120 billion Czech crowns (EUR 5 billion). The government is counting on significant benefits deriving from the construction of the gigafactory. A study by the consulting firm Deloitte calculated that in 2024-2033, the construction and operation of the Gigafactory would increase the Czech GDP by CZK 772.4 billion (that’s EUR 32.1 billion).

The Gigafactory itself will create approximately up to 3,400 highly skilled jobs. The industrial zone could create up to 5,000 jobs in total, including contractors. But it is these lucrative numbers that scare locals. The current unemployment rate in the Plzeň region is 3%, so locals fear that the jobs will be filled primarily by agency workers from abroad.

The last but not least important figure is the planned production capacity of the gigafactory. The factory aims to produce up to 1 million electric vehicle batteries a year, making it one of the largest plants of its kind in the world. The first batteries will roll off the assembly line in early 2027.

There is one more significant number we cannot precisely define so far—the future price of electric vehicles. The Plzeň-Líně Gigafactory’s immense production capacity is poised to reshape the electric vehicle market. By significantly reducing battery production costs, the facility has the potential to make electric vehicles more affordable and accessible to a broader range of consumers.

Gigafactory as an accelerator for infrastructure projects

Ultimately, Líně Airport best suited the investor’s requirements, the Volkswagen Group. One of the reasons was its proximity to all essential transport hubs. It is only one kilometer from the critical D5 highway connecting Prague and Germany. The preparation of the new interchange will, therefore, not be complex.

The Gigafactory will also be connected to the railway system. It is planned that 15 newly-constructed kilometers of rail will become an essential artery for receiving and dispatching cargo. Significant improvements are also scheduled for dozens of miles of existing roads surrounding the planned gigafactory.

However, these are not just improvements and construction of transport infrastructure. The construction of a water and sewage network is also planned, which will ensure the functionality of the entire factory and increase the distribution network’s capacity for the surrounding villages.
The construction of a new substation and power lines as part of the project will, in turn, enhance energy security and stability of supply for the surrounding communities. Basic amenities (doctor’s office, restaurants, small services) and a new station for emergency services should be located within the park.

These infrastructure and redevelopment projects will improve transport links to the gigafactory and adjacent villages. But they will also improve the quality of life and increase local residents’ convenience. The final cost of these strategic infrastructure projects is expected to be at most CZK 15 billion, or EUR 623 million.

Electromobility Potential in Europe

The Czech Republic, which produces around 1.3 million cars a year, is deservedly proud of its car industry. It is, after all, home to the world’s second oldest car manufacturer: the Tatra. Moreover, the Czech automotive sector has a robust and influential position within the Czech Republic.

Around 20% of all industrial products are cars, and it is estimated that up to 35% of the total Czech industry is linked to the automotive industry. In terms of its share of GDP, the automotive sector accounts for a respectable 10%. It employs around 150 000 people across the country. Therefore, it is understandable that the Czechs are interested in all new car trends. The ever-growing electromobility trend is no exception and shows that electric cars are here to stay for a long time. The Gigafactory in Líně would thus become an essential center for the Czech automotive industry, which, according to Škoda’s plans, will slowly switch to electric vehicles.

The gigafactory will also become a hub for research and innovation. Volkswagen said they plan to partner with universities, research institutions, and technology companies to push the boundaries of energy storage technologies. This cooperation will undoubtedly foster an environment of creativity and problem-solving, accelerating the pace of breakthroughs in sustainable energy.

Marek Koten

A Ph.D. student in economics, specializing in nuclear energy from the Czech Republic, he also serves as a political consultant to the Czech government and the U.S. Republican Party.

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