China scouts Hungary to power EV battery production and sell to wider, warier EU

Chinese producers are seeing Hungary as a useful staging ground for the production of lithium batteries, and a sales platform for the rest of the EU

With EU trade investigations looming, eastern European country would bypass dumping and overcapacity concerns, simplify shipping

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China’s battery producers are eyeing Hungary as a prime destination to bypass EU overcapacity concerns and market their products to the rest of the bloc. Photo: AP

Published: 10:00pm, 10 May 2024Updated: 10:37am, 27 Sep 2024

Chinese lithium battery producers are scoping out Hungary as a place to make electric vehicles (EVs) and their batteries to sell in the surrounding European Union – a potential workaround for the Asian manufacturing giant, which seeks to avoid accusations of dumping those goods to ease overcapacity pressures at home.

During President Xi Jinping’s visit to the European country on Thursday, he and Hungarian Prime Minister Viktor Orban agreed to “actively expand cooperation in emerging areas such as clean energy”, China’s official Xinhua News Agency reported. The term “clean energy” usually covers EVs and their components.

Chinese battery manufacturer Contemporary Amperex Technology is already building a €7.3 billion (US$7.9 billion) plant in the central European nation with plans to launch production next year, according to a paper by the think tank Centre for European Policy Analysis.

Xinwanda Electronics, also of China, is investing about 1.9 billion yuan (US$262.9 million) in Hungary for an EV battery factory.

Hungary does offer advantages as an EU member … but with potentially lower associated costs

Charlene Wang

Hungary has access to lithium mines and warm political ties with China, and its location makes shipping to the entire European continent a simple matter.

“We believe Chinese battery manufacturers are actively seeking opportunities to go overseas, and the EU is a huge market where leading auto manufacturers are located,” said Charlene Wang, associate director for Asia-Pacific companies with Fitch Ratings.

“Hungary does offer advantages as an EU member, allowing free trade with other member countries, but with potentially lower associated costs than western Europe.”