The European Commission has opened an investigation to assess whether €95mn of public support granted by Poland to chemical company LG Chem Group for investing in the expansion of its battery cell production facility for electric cars in Poland is in line with EU regional state aid rules, the Commission said on August 11.

LG Chem decided in 2017 to invest over €1bn in the expansion of its production capacity of lithium-ion cells and battery modules and packs for electric vehicles in its existing plant in Biskupice Podgorne, in the Wroclaw region in southwest Poland.

Poland notified the Commission of its plans to grant €95 million of public support for the expansion in 2019. Poland hopes to become the EU's powerhouse of producing parts of electric cars. Warsaw also has ambitious plans of launching its own electric car by 2023.

“The Commission has doubts that the planned public support … for the expansion of the Biskupice Podgórne plant complies with all relevant criteria of the regional aid guidelines,” the EU executive said in a statement.

The Commission said it had doubts whether the support had any incentive effect on LG Chem. 

“… whether the decision by LG Chem to expand its battery production capacity in Poland was directly triggered by the Polish public support or whether the investment would have been carried out … even absent the public support,” the Commission said.

The Commission also questioned the public support's contribution to regional development as well as its appropriateness and proportionality. It also said it could not rule out that the value of support exceeded the maximum aid for a project.