Volvo Cars Stock Up As EU Approves EUR 267 Mln Slovak State Aid Measure For New EV Plant

(RTTNews) - Shares of Volvo Cars AB (VLVOF) were gaining more than 3 percent in Stockholm trading after the Swedish luxury auto major's 267 million euros Slovak State aid measure has received approval from the European Commission.

In a statement, the Commission said it has found that Slovakia's measure to support Volvo Cars' new electric vehicle plant is in line with EU State aid rules.

The investment aid would support the establishment of a new electric passenger vehicles production plant in Valaliky near Kosice in Eastern Slovakia. Valaliky is an area eligible for regional aid. The area is also identified as a Just Transition Fund territory, that is areas most negatively impacted by the transition towards climate-neutrality.

The Commission said it assessed the measure under EU State aid rules, which allows Member States to promote the economic development of the most disadvantaged areas of the EU, and the 2021 Regional Aid Guidelines.

According to the Commission, the measure will contribute to the EU's strategic objectives relating to job creation, regional development and the European Green Deal.

Slovakia notified the Commission of its plan to grant 267 million euros to support Volvo Cars in the establishment of a new electric passenger vehicles production plant. The plant will be the third production facility of Volvo Cars in Europe.

Under the measure, the company will receive direct grants totalling approximately 267 million euros. Volvo Cars plans to invest 1.2 billion euros in the project.

The plant is expected to have an initial capacity of around 250,000 electric vehicles per year. The project will create at least 3,300 direct jobs, as well as further indirect jobs.

It is also expected that the project would bring sustainability benefits by aiming to be climate neutral from start of production and by offering only electric vehicles.

In Stockholm, Volvo Car shares were trading at 42.79 Swedish kronor, up 3.23%.