Panasonic Holdings completed a ¥45 billion ($306 million) expansion of its Czech Republic heat pump factory on Friday, boosting annual production capacity to 700,000 units — a 4.7-fold increase from previous levels. The timing appears optimistic given European heat pump sales dropped 21% last year.
The Japanese conglomerate’s Pilsen facility, which previously manufactured televisions, now represents one of Europe’s largest heat pump production sites at 140,000 square meters. The expansion coincides with Panasonic’s strategic shift to relocate manufacturing and research operations from Southeast Asia to Europe, targeting proximity to customers and regulatory compliance.
However, market conditions present challenges. European heat pump sales fell to 2.2 million units in 2024 across 14 major markets, down from 2.8 million in 2023, according to the European Heat Pump Association. The decline has triggered job cuts across the sector and left manufacturing capacity underutilized after billions in investments during 2022-2023.
Panasonic began heat pump production in Pilsen in 2018, initially focusing on indoor units before adding outdoor units using R290 natural refrigerant in 2023. The company faces intensifying competition from European rivals including Bosch, Vaillant, and Viessmann, as well as Chinese manufacturers expanding their presence.
The Czech plant employs 80 robots and targets carbon neutrality by 2025 through solar power and energy efficiency measures. Whether Panasonic’s capacity bet pays off depends on a market recovery that remains uncertain.
