Slovakia falls behind in attracting high-quality investments into the sector and in registering new electric vehicles, new study confirms. One of the biggest challenges of greening the automotive sector is the increasing demand for highly skilled employees, which the education system has so far failed to respond to.
By Natália Silenská, Euractiv.sk
The transition of the automotive industry to electromobility is an important step towards reducing dependence on fossil fuels. In Slovakia, in the area regarding road transport greenhouse gas emissions have been rising for a long time and have not been brought under control.
Compared to other sectors, it also produces the most nitrogen oxide emissions. Amongst the vehicles, the passenger cars are the biggest polluters. The V4 countries, whose economies are heavily dependent on the car industry, are approaching its transformation at different pace.
After the negotiations on the future of the Slovak car industry, the Prime Minister Robert Fico pointed at the deepening problem of Slovakia, which is increasingly moving away from the European Union and its neighbours from the Visegrad Four in electromobility.
He even urged that Slovakia ‘can no longer wait a year or two, because in the meantime, the world will pass it by’. Indeed, the Czech Republic, Poland and Hungary started preparing their automotive industry for the future long ago.
While Slovakia, for example, is building its first battery factory, two of its neighbours, Poland and Hungary, have already managed to become ‘battery superpowers’.
This also resonates with a recent study from the non-profit organisations Adapt Institute and The Centre for International Private Enterprise (CIPE). According to them, Slovakia must, among other things, address the labour shortages or a lack of political vision as soon as possible in order to reduce the gap.
According to the authors of the study, the inability of the Central European industry to adapt to new trends, challenges and opportunities could threaten not only the future prosperity of the region but even its stability and the resilience of local democracies.
The pace of transformation is set by the state
As part of their study, researchers from the Adapt Institute and CIPE conducted a series of interviews with experts, politicians and officials, defining what Slovakia needs to do to catch up to the other V4 countries.
Several solutions are primarily in the hands of the state and politicians, the analysts say. This category includes, for example support for education and employment of workers in the sector. Employing people from abroad, expanding dual education or establishing specialized vocational schools would also help.
Monika Martišková, a researcher at the Central European Institute for Labour Research (CELSI), identified the internal restructuring of the labour market as a result of the automation and digitization of production and products as the biggest challenge of 2024.
According to CELSI’s predictions, the number of highly qualified positions in the sector will grow by eight percent by 2030, by up to 31 percent by 2050, and the number of medium and low-skilled will fall.
‘The automotive industry needs more and more highly skilled employees, while the medium-skilled ones are losing their jobs due to digitalisation and automation,’ Martišková told EURACTIV Slovakia.
The Adapt Institute and CIPE study reminds that Slovakia is still interesting for foreign investments, but its neighbours are more successful in attracting higher quality investments.
Lack of subsidies and not enough attention
Investors may be deterred by insufficient energy price subsidies and low innovation support for their businesses. Because of this, operating costs in Slovakia can be much more expensive than in neighbouring countries.
The study also points to the necessity of charging infrastructure, as it is a basic prerequisite for more electric cars on the road. In this case as well, their construction depends on the willingness of politicians, analysts remind.
The significant increase of charging infrastructure is expected as early as 2024, when hundreds of chargers built from two calls of the Recovery and Resilience Plan aimed at companies and municipalities will be put into operation.
A more significant increase in their number is expected as early as 2024. At that time, hundreds of chargers built from two calls of the Recovery and Resilience Plan aimed at companies and municipalities will be put into operation.
Another challenge is to diversify and strengthen the resilience of electric vehicle supply chains, which are currently heavily dependent on China. However, to overcome this threat, individual action by the separate EU countries is no longer sufficient. Instead, a joint action at European level is required.
Ursula von der Leyen, for example, has already announced back in September that she would launch an investigation into possible illegal Chinese subsidies. This may pave the way for the imposition of tariffs on Chinese vehicles, which, according to the President of the European Commission are also distorting the European market.
According to Jaroslav Hercog, the representative of the importer ŠKODA AUTO Slovakia, accelerating the development of infrastructure, conceptually introducing tax breaks, as well as launching medium-term subsidy programs would definitely help to increase the share of electric vehicles in Slovakia.
Yet, he says that the situation will not change as long as ‘the topic of alternative drives and electromobility will remain on the sidelines of society's interest’.
It is also an important topic for Slovakia given that eleven years from now, it will be possible to only sell new passenger cars and vans emitting zero CO2 emissions. Such is the target of the approved EU's Fit for 55 climate package, which is designed to reduce the Union's greenhouse gas emissions by 55 percent by 2030.
Suddenly in the neighbours’ shadow
Compared to its neighbours, Slovakia remains significantly ahead in the total production of cars per capita. It holds the first place worldwide, with the Czech Republic being the second and Hungary on the fourth place.
However, in the registration of new electric vehicles, which according to the European Commission are supposed to represent the automotive industry’s future, Slovakia is at the tail end of the EU countries.
From January to November 2023, the EU average was 14.2 percent of registered vehicles. Slovakia achieved just 2.6 percent, despite registering 87 percent more battery electric passenger cars and small commercial vehicles over the past year than in 2022.
In this regard, however, none of the members of the Visegrad Four meets the European standard. The neighbouring Czechs reached three percent, the Poles 3.6 percent and the Hungarians are the best of the four with 10.6 percent.
Still, the neighbouring countries have not forgotten to transform their industry in other ways, as evidenced by the construction of battery factories for electric cars in the region, which have been lacking in Slovakia so far. This fact will be changed only after the construction of Slovakia’s first gigafactory in Šurany by Gotion Inobat Batteries.
In the meantime, however, investors had been focusing mainly on Poland, the Czech Republic and Hungary. The latter two countries have already succeeded in becoming European leaders in the nascent battery industry.
Poland has the second largest production capacity for electric vehicle batteries even in global terms. In 2022, Warsaw even outdid the United States which descended to the third place, followed by Hungary in the fourth. Meanwhile, both of Slovakia's southern and northern neighbours are working hard to further expand their production.
