German automakers and Asian battery manufacturers are partnering in Hungary in a multibillion-dollar marriage of convenience to further their electric goals. The businesses are swarming to central Europe, where Viktor Orban’s administration is challenging Western concerns about China by providing hefty subsidies to host international operations and stake Hungary’s claim as a major hub for electric vehicles (EVs).
Germany, China, and South Korea are the top three nations investing in the Hungarian car sector. In the last six years, Hungary has attracted almost 14 billion euros ($15 billion) in foreign direct investment into only the battery industry. State incentives and the chance for automakers and battery providers to operate side by side are proving to be powerful draws. In order to construct the largest battery facility in Europe, CATL is investing $7.6 billion in Hungary. Capacity may also be hampered by a shortage of skilled personnel in Hungary for the manufacture of battery cells.
By 2031, assuming current plans come to pass, Europe should be able to produce 1,200 gigawatt hours (GWh) of electric vehicle batteries. However, Asian businesses with factories in Europe will supply 44%, ahead of domestic businesses with 43%. Germany’s high energy consumption has hindered efforts to create a battery industry there. With significant subsidies and corporate tax rates, Hungary offers a rather stable energy system supported by nuclear energy. Because of Hungary’s incentives, Schaeffler claimed it was about to establish its main electric motor facility there rather than in Germany.