Chinese investment boosts Hungary's EV battery sector

A Chinese company's plan to build a battery production plant in Hungary is set to make the central European country a leading hub in the sector, with experts saying it will help ease demand from the region's automakers as they accelerate the transition to electric vehicles, or EVs.

Contemporary Amperex Technology Co Ltd, also known as CATL, the world's biggest lithium-ion battery manufacturer for EVs, recently announced it would invest 7.34 billion euros ($7.28 billion) to build a 100 GWh battery plant in Debrecen, in eastern Hungary, which would be the biggest greenfield investment in the country's history.

Christopher Bovis, a professor of international business law at the University of Hull in the United Kingdom, said: "Strategically, the investment represents one of the most timely and geopolitically sensitive interventions in a market which will dominate this decade.

"The Chinese investment in Hungary will go a long way to consolidate the position of the country as a research and development hub in the EU." Bovis said. "The selection of Hungry has important dimensions as the place of investment is close to Germany, a leading manufacturer of automotive solutions."

In addition to the proximity of the production infrastructure, he pointed out that the selection of Hungary as a recipient of one of the EU's most critical investments of the decade reflects the view China holds toward Hungary as a stable and mature market that can handle advanced challenges.

Trading relationships between China and Hungary are growing stronger. Last year alone, total trade in goods between the two nations amounted to $279.79 billion, an increase of 19.9 percent compared with the year before, according to data from the Hungarian Central Bureau of Statistics.

The new battery plant is set to become Europe's largest battery gigafactory, and is CATL's second standalone facility in the region, following its Thuringia plant in Germany, which will have an annual production capacity of 14 GWh and which is scheduled to begin mass production later this year.

Once approved, construction in Debrecen, located in the heart of Europe, will start later this year. The plant will be in close proximity to its key customers including Mercedes-Benz, BMW, and Volkswagen, enabling it to better cope with the battery demands from the European market, and help accelerate e-mobility and energy transition in Europe.

Zeng Yuqun, founder and chairman of CATL, said: "The greenfield project in Hungary will be a giant leap in CATL's global expansion, and also an important step in our efforts to make an outstanding contribution to the green energy drive for humankind."

Peter Szijjarto, Hungarian minister of foreign affairs and trade, said: "We are proud that CATL decided to execute the biggest ever greenfield investment in the history of Hungary. We have recently become one of the leading battery production sites of the world and with this huge investment we further strengthen our position."

The new project was well received by CATL's European customers. Markus Schafer, member of the board of management of Mercedes-Benz Group AG, said: "This new state-of-the-art European CATL plant in Hungary is another milestone for the scale-up of our EV production together with our key partners.

"With CATL we have a technology-leader as our partner to provide us－as the first and biggest customer of the new plant's initial capacity－with top-notch CO2 neutral battery cells for our next generation EVs in Europe, hence following our local-to-local approach in procurement."

With a pledge to become a climate-neutral continent by 2050, the EU aims to ensure that 100 percent of new vehicles sold are fully electric by 2035. The investment bank Goldman Sachs estimates EU battery demand is expected to reach around 1,000 GWh by 2035.

Bovis said: "The Chinese investment will accelerate the standardization of EVs to a point of reaching critical mass for introducing propulsion solutions away from fossil fuel and the internal combustion engine."

Contact the writers at wangmingjie@mail.chinadailyuk.com