The European Commission has launched an in-depth investigation to assess if the €95 million (£85m) of public support granted by Poland to LG Chem Group for the expansion of its electric vehicle (EV) battery production facility is in line with state aid rules.

In 2017, the company decided to invest more than €1 billion (£90m) in the production capacity of lithium-ion cells and battery modules and packs for EVs at its existing plant in the Dolnoślaskie region of Poland.

In 2019, the Polish Government notified the Commission of its plans to grant €95 million (£85m) of public support for the expansion..

The Commission said it currently has doubts about whether the measure has an “incentive effect”, i.e. whether LG Chem’s decision for the expansion was triggered directly by the Polish public support or whether the investment would have been carried out in Biskupice Podgórne, even without the state aid.

It also has doubts about the public support’s contribution to regional development and added it cannot exclude, at this stage, that the state aid “exceeds the maximum permissible aid intensity for the project”.

Commissioner Margrethe Vestager, in charge of competition policy said: “EU State aid rules enable Member States to foster economic growth in disadvantaged regions in Europe. At the same time, we need to ensure that the aid is really needed to attract private investments to the region concerned and avoid that the recipient of the aid gains an unfair advantage over its competitors at the expense of taxpayers.

“We will carefully investigate whether Poland’s support was necessary to trigger LG Chem’s decision to expand its existing cell production facility in Poland, is kept to the minimum necessary and does not distort competition or harm cohesion in the EU.”

The opening of the investigation provides Poland and interested third parties with an opportunity to comment.