An Asian battery supplier and a German automaker are joining forces in a multi-billion dollar marriage of convenience to advance their electric ambitions in Hungary.
Businesses flock to the Central European country, where Viktor Orban’s government ignores Western wariness of China, hosts foreign businesses and stakes Hungary’s claim as a global center for electric vehicles (EVs). We offer generous benefits for
Investments in the Hungarian automotive industry are dominated by three countries: Germany, the champion car manufacturer, and China and South Korea, leaders in EV batteries.
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According to an analysis of government data showing the scale of convergence in Germany, China and South Korea, out of 31 cash subsidies distributed by Hungary for large investments in the automotive and battery sectors over the past decade, these three The country’s companies account for 29. there.
Dirk Woelfer of the German-Hungarian Chamber of Commerce in Budapest said: “This is the door leg to Europe.”
Recipients of such subsidies include automakers such as German automakers BMW and Mercedes-Benz, BYD in China and Korean rival Samsung SDI. The median subsidy level is 15% of the investment.
According to government figures, Hungary has received a total of over €14 billion ($15 billion) of foreign direct investment in the battery sector alone over the past six years.
According to some 20 industry insiders and consultants from Germany, Hungary, China and South Korea, state incentives and the opportunity for automakers and battery suppliers to work side by side have proven to be a big force. I’m here.
China’s CATL, the world’s No. 1 EV battery maker, and South Korea’s battery giants SK Innovation and Samsung SDI, were both key factors in their investment decisions in Hungary due to their partnership with German automakers. It’s a planned proximity and has separators and other components.
CATL invests $7.6 billion to build Europe’s largest battery factory in Hungary. Both this factory and his $2.1 billion BMW factory will be located in the city of Debrecen, which has attracted an ecosystem of suppliers ranging from manufacturers of brakes and batteries to his cathodes to industrial machinery.
But Hungary’s welcome to Asian battery makers is a sign Brussels and Berlin have voiced the dangers of Europe becoming overly dependent on China and other foreign powers, especially in technologies central to its green transition. This may be inconsistent with your concerns.
Concern about EU’s dependence on technology in Asia
Still, for now, the need to ramp up EV production leaves the European auto industry little choice but to source from Asian players, said Csaba Kilian of the Hungarian Automobile Association.
Benchmark Mineral Intelligence (BMI) estimates that if current plans come to fruition, Europe will have 1,200 gigawatt hours (GWh) of EV battery manufacturing capacity by 2031, exceeding projected demand of 875 GWh.
But Reuters calculations based on BMI data show that 44% of that 1,200 GWh will be provided by Asian companies with factories in Europe, ahead of domestic companies (43%) and US pioneer Tesla (13%). .
Asked about concerns about relying on Asia for technology, EU officials said the EU needs to approve subsidies to investors in member states. He said a system is in place to cooperate and exchange information on investments from countries.
European Commission Hungary is currently negotiating the amount of subsidies Hungary will provide to CATL for the construction of the Debrecen plant, the official added.
On the battery side, CATL told Reuters it was considering developing solar power with local partners in Hungary.
- Reuters with additional editing by Sean O’Meara
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