German automakers, Asian battery suppliers unite in Hungary

BERLIN — A German automaker and an Asian battery supplier are forming a multibillion-dollar alliance in Hungary to advance their electric ambitions.

Businesses are flocking to Central Europe, with the Viktor Orban government ignoring Western wariness of China, embracing overseas operations and offering generous profits to assert Hungary’s claim as a global hub for electric vehicles. is doing.

Investments in Hungary’s auto industry are dominated by three countries, China and South Korea, in addition to champion automaker Germany, making the EV battery leader far ahead of its European rivals.

Companies from these three countries accounted for 29 of the 31 cash subsidies Hungary has given to large investments in the automotive and battery sectors over the past decade, according to a Reuters analysis of government data. and the convergence of Germany, China, and South Korea 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 companies such as BMW and Mercedes-Benz, and battery makers such as China’s BYD and South 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.

Major investments are broadly categorized as those worth between €5 million and over €10 million, depending on factors such as the jobs created.

Interviews with around 20 industry insiders and consultants from Germany, Hungary, China and South Korea show that state incentives and opportunities for automakers and battery suppliers to work side by side are a big force. is proven.

China’s CATL, the world’s number one EV battery maker, South Korea’s battery giants SK Innovation and Samsung SDI told Reuters that planned proximity to German automakers was a key factor in their investment decision in Hungary. I said yes. That’s where the source separator and other components are.

CATL is investing $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.

Mercedes-Benz has converted its plant in Kecskemet to produce electric vehicles, while Volkswagen Group’s Audi builds cars and electric motors in Joule.

With inflation above 20%, the economy slowing and EU money running out, such big companies could be a boon to Prime Minister Orban’s government.

But Hungarian EV projects are also facing severe obstacles, according to many industry insiders.

One of the key concerns is the enormous demand that large battery factories place on the power grid, necessitating a shift from fossil fuels to renewable energy to meet many of the automotive industry’s net-zero emissions targets. Yes, the official said.

A shortage of specialized workers for battery cell manufacturing in Hungary could also reduce production capacity, they added.

HIPA, the agency of the Hungarian Ministry of Foreign Affairs responsible for attracting investment in sectors ranging from batteries and cars to logistics, did not respond to Reuters inquiries about the EV industry.

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