Hungary says another Chinese battery investment is coming

Hungary says another Chinese battery investment is coming
Chineses EV battery maker Sunwoda is rumoured to be coming to Hungary. / bne IntelliNews
By Tamas Csonka in Budapest June 12, 2023

Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto has hailed Chinese investments to Hungary in battery production and announced that another major investment by a top 10 electric battery maker is coming, without naming the company.

Chinese Xinhua agency recalled a Hungarian media report from May, which speculated that Sunwoda is planning to build a battery factory in Hungary targeting the European market. The reports came after Szijjarto’s visit to Beijing on May 15.

Hungary was the guest of honour of the World Power Battery Conference held in Yibin, in China's Sichuan province, over the weekend. After meeting with Chinese leaders and executives of major EV battery makers, Szijjarto said that €3bn of investments are underway by Chinese automotive companies.

At the Yibin conference, Hungary’s top diplomat highlighted that Hungary ranks fourth globally in electric vehicle battery production, and with the completion of these investments, the country will move up to second place.

Electric vehicle batteries have become Hungary's number one export product over the past 1-1.5 years, he noted.

Chinese CATL, the world's leading battery maker is building a 100 GWh plant in the eastern Hungary city of Debrecen from a €7.34bn investment, one of the largest greenfield investments in Europe and the largest in Hungary’s history, apart from the ongoing expansion of the Paks nuclear power plant. Hungary offered €800mn in grants, tax breaks, and infrastructural support for the project.

Debrecen will also be the home of a €1bn battery plant by China's Eve Power, the ninth-biggest battery maker in the world. The company signed a non-binding letter of intent with the local municipality to acquire 45 hectares in an industrial area last year. The company will supply batteries to BMW, which is building a €1bn electric car plant also in Debrecen, near the Romanian border.

Hungary is one of three countries in the world, besides China and Germany, to host the factories of the three premium German car-making companies (Mercedes, BMW, Audi), according to Szijjarto.

Critics say the government’s strategy of making Hungary a global powerhouse in EV battery production is not without risks. EV battery production will induce a surge in electricity demand that the country’s ageing electricity network may not cope with.

There are also major environmental risks and huge question marks on providing water supply to the plants. Experts fear that the investment of water-intensive industrial units will tap scarce water supplies in an area increasingly hit by severe droughts.

There are also concerns that the production of lithium-ion batteries could release harmful chemicals and pollutants into the air and water. CATL’s factory will be built on fertile land on the outskirts of Debrecen, a city of 200,000, whereas environmental groups want the government to consider rust zones for such projects. The lack of available workforce could also hinder the investments.

The government has eased rules of letting people from non-EU countries to take up jobs in Hungary. According to local media, thousands of foreign workers will work at the factories. 

The government seems undeterred despite criticism, and local authorities have thwarted the holding of referendums on these projects.