German media: China has helped Hungary catch up with Germany and become Europe's leading producer of electric vehicles

Aoki in Germany

2024-05-11 22:41Published in Germany, Global Times correspondent in Germany, creator in the international field

Advanced and cheap electric cars from China are making their way to Europe, and European Commission President Ursula von der Leyen has said that the EU is ready to impose punitive tariffs on Chinese car imports. Germany's "Frankfurter Allgemeine Zeitung" said on the 11th that Chinese automakers are formulating plans to solve the tariff problem - to set up factories in Europe. At present, countries including France, Germany, Italy, Spain, Poland and Hungary are all launching a charm offensive against Chinese automakers, and Hungary is becoming the biggest beneficiary. China is helping Hungary overtake Germany as Europe's leading producer of electric vehicles.

Chinese cars in Budapest

The world's largest electric vehicle manufacturer builds its first plant

Almost every month in this small Central European country, investments from the world's second-largest economy are announced, especially in the automotive sector. Hungarian Foreign Minister Peter Szijjártó said that the electric vehicle plant of Chinese electric vehicle specialist BYD has been approved, construction and infrastructure work is underway in Szeged, southern Hungary, and the first BYD models will roll off the assembly line next year. It is crucial, he said, that all aspects of the automotive industry, from production to research to service, are present in Hungary.

BYD announced the construction of a factory in December last year, becoming one of the first major Chinese EV manufacturers to have their own production facilities in Europe to produce EVs for the European market. Initially, 150,000 vehicles will be produced annually, which will later increase to 300,000.

reported by the German "Wirtschaftscomotica".

BYD's second factory in Europe could also follow. France, Italy and Germany are vying for BYD to settle down. Michael Shu, president of BYD Europe, said in London on Thursday that this will be next year's theme. At the same time, he announced that he would introduce the Seagull model to the European market. The European version of the car should cost less than 20,000 euros, which is almost 10,000 euros cheaper than similar cars of European brands.

Hungarian Prime Minister Viktor Orban said that Hungary's trade with China has quadrupled in two decades to $12 billion, and seven Chinese city destinations are accessible by plane from Budapest. Twenty years ago, there was little Chinese investment in Hungary, but last year three-quarters of that investment came from China, "providing a secure and predictable livelihood for tens of thousands of people".

Orban builds the Hungarian automotive industry

Hungary wants to become a leading producer of electric vehicles

According to the German "Economic Weekly", Andrea Eltayto, research director of the Institute of the World Economy in Budapest, revealed that Great Wall Motors is also planning to build an automobile factory in Hungary. The company's first European plant will be built in Bised, near the city of Pec. Great Wall Motors apparently wants to produce the mid-range Ora model and the high-end model called Wey on a 600-hectare site with a reserved production plant. In fact, the Great Wall plant is another cornerstone of Hungary's strategy to become the dominant player in the Chinese automotive industry in Europe.

The Hungarian Mobile Development Authority, a European subsidiary of Chinese electric vehicle pioneer NIO and István University of Széchenyi University, also held a meeting at the Hungarian Ministry of Economy to discuss the signing of a statement of intent for cooperation. Hungary is now preparing to become a bridgehead for Chinese automakers to conquer the European market.

A factory of a Chinese automaker

Similar investments may follow. Analyst Merricks said, "Chinese investment in Europe is increasingly concentrated in Hungary. The location is attracting more and more Chinese investment in Europe. According to an analysis by the American Enterprise Institute, Hungary attracted $4.34 billion in Chinese investment, well ahead of Sweden (1.28 billion) and Spain (910 million) in second place. Germany attracted only $150 million.

Hungary is already a leading automotive manufacturing base in Central and Eastern Europe. Suzuki has been producing in Esztergom since 1992, Mercedes-Benz has been in Kecskemét since 2012, and Audi has been producing in Győr for more than two decades. BMW is currently building a new plant in Debrecen and plans to start mass production of the so-called New Class models from 2025. With the arrival of Chinese automakers, Hungary is overtaking Germany as the leading producer of electric vehicles.

CATL at the auto show

Europe's leading battery production base

Hungary also wants to become Europe's leading producer of drive batteries and components in the future – and China will also help with this. Chinese battery company CATL is building a 221-hectare battery plant in Debrecen. The plant will create 9,000 jobs.

When the company announced its plans in December, it said it wanted to make Hungary a "European production hub." The company's efforts to sell its popular models in China, Europe and the United States have made established manufacturers in these markets nervous.

In addition, Eve Energy, Huayou Cobalt and Ningbo Zhenyu Technology have also announced or have already built factories in Hungary. In the future, the plants will supply car manufacturers across Europe, including German manufacturers already producing in Hungary, such as Volkswagen (Audi) and BMW. In addition, South Korean companies are already producing batteries in Hungary.

Hungary attracts the most Chinese direct investment

Hungary relies on affordable energy

Hungary also has an energy price advantage that Western European countries such as Germany and France do not have. The Hungarian government set up its own energy sector in December 2022 in response to the European energy crisis amid the Russia-Ukraine conflict. Hungary has the lowest average electricity price in the EU, with a maximum of €0.10 per kWh last year (EU average: €0.28). Germany, on the other hand, pays an average of 0.34 euros per kilowatt hour. The price of electricity in Germany is actually more than three times that.

The fact that Hungarian energy prices are so cheap is related to the fact that Russia maintains trade relations. To date, Hungary has been one of Russia's most important energy trading partners in Europe, including gas and oil, as well as the construction of new nuclear power plants with the help of Moscow's state-owned nuclear energy company Rosatom. None of the EU's sanctions package against Russia include restrictions on nuclear energy, largely due to Hungary's boycott.

At the same time, Hungary is already planning nuclear cooperation with China. "We have now agreed with China on a draft cooperation agreement that covers all areas of the nuclear industry to ensure that both countries have access to the cheapest, safest and most efficient way to generate electricity," Hungarian Foreign Minister Szijjártó said this week. "This will keep electricity prices in Hungary at a low level.

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