Autoeuropa: “You can’t make an investment like this without government support”, says former minister

Autoeuropa has been chosen by Volkswagen to produce its new ID. EVERY1, which is due to be launched in 2027 and will be on the market with a selling price of around 20,000 euros. The Palmela plant beat off competition from Eastern Europe and guaranteed the future of the Portuguese plant for “many years to come”, a victory for which the Executive’s encouragement was decisive. “You can’t make an investment like this without the government’s support”, recognises former minister Mira Amaral.

The official confirmation of Portugal as the location of the new low-cost electric car was made on 10 March, generating reactions from the government and the company located in the district of Setúbal. “We managed to bring the production of a new Volkswagen electric car to Portugal and to Autoeuropa”, said Prime Minister Luís Montenegro on the day of the vote on the motion of confidence.

“We would like to thank the support of the Portuguese government, which has provided us with the best conditions to attract this new project to the country”, said Volkswagen’s CEO, Thomas Hegel Gunther, at the annual results presentation conference, which took place on the same day, 11 March.

The statements made by these officials leave little room for doubt as to whether Volkswagen was given incentives to bring the new model to the country, a support which, combined with the plant’s good performance and productivity levels, was decisive in choosing the Palmela plant, where 236,100 cars were produced last year, representing 4% of national exports and 1.3% of the 2023 GDP.

“Autoeuropa is always competing with the group’s other plants. Autoeuropa has shown excellent performance and is producing the T-Roc, which has excellent performance”, said Mira Amaral, former Minister of Industry and one of those responsible for Autoeuropa’s entry into the country, in statements to ECO.

According to the former minister, “the very high levels of productivity and competitiveness”, combined with the quality of the labour force, “are all attributes that could attract the new model”.

Amaral recognises that “they also had the government’s support — and rightly so — in providing incentives to build this model”. “The government, through AICEP, provided a series of incentives for investment in Autoeuropa”, he emphasised.

“The government’s support was important. You can’t make an investment like this without the government’s support, because all governments in other countries do the same”, he explains, adding that, “it’s usually financial and tax incentives and then support for professional training”.

Factory strengthens commitment to electrification

With the construction of the group’s new electric car, the German multinational’s Portuguese factory “will ensure the future of the Setúbal plant as a new generation Volkswagen factory, and of a huge value chain of national suppliers, for many years to come”, as emphasised by the Ministry of Economy. As well as guaranteeing the continuity of the company, the new model will also allow Autoeuropa to strengthen its commitment to electrification.

“Autoeuropa had also already announced that it was going to produce the new T-Roc hybrid model, which for me was a sign that it was going to electrify production”, emphasised Mira Amaral.

The Palmela plant, which closed last year with a turnover of around 3.8 billion euros and 4,842 employees, will have to invest in the sector’s energy transition, establishing itself as a plant of the future.

According to the Ministry of Economy, this new investment will enable the plant to become a “new generation electrified factory and the adoption of production and logistics processes, as well as the robotised assembly of battery systems”.

“The Palmela plant will become more efficient and able to compete with global manufacturers, aligning the company, and Portugal, with the European climate goals of carbon neutrality, in a scenario in which the European Union is limiting the production of combustion and hybrid cars”, also points out Pedro Reis’ office, which speaks of an investment “in the order of several hundred million” euros, without revealing an exact figure.

Palmela beats factories to the east

Autoeuropa competed for the new model with other Volkswagen plants located in Eastern Europe, and the final decision was between the Portuguese plant and the Slovak plant in Bratislava, which produced almost 329,000 cars in 2023 and is the only unit in the group that produces four brands.

While Autoeuropa is home to the T-Roc, one of the German group’s most popular models, the Bratislava plant, which was set up in the same year as Autoeuropa – 1991 – produces the Volkswagen Touareg; Volkswagen Passat; Audi Q7; Audi Q8; Porsche Cayenne; Porsche Cayenne Coupé; Škoda Superb. Around 99% of production [the same percentage as Autoeuropa] is for export.

Like the Portuguese plant, the Slovakian plant will also produce an electric model: the future Porsche Cayenne SUV. Counting the Martin plant, where components are produced, Volkswagen employs more than 11,000 people in Slovakia.

While some of the German car manufacturer’s plants are facing difficulties in Germany, with the company preparing to close production units in the country for the first time in its history, Volkswagen’s Bratislava plant has managed to maintain a positive trend. It closed 2023 (the latest results presented by the company on its website) with a record turnover of 11.76 billion euros, three times more than the revenue generated in Portugal.

In addition to the year of creation, the two plants share good performance – with growing revenues and production – and a commitment to electrification. Despite the larger size of the Slovakian plant, Portugal won the arm wrestle to build Volkswagen’s new car.