Electric transition: Hungary is doing particularly well

As incredible as it may sound, the electric transition will certainly not depend on Hungary, in our country today, approximately HUF 8,000 billion worth of working capital investments are being implemented, almost all of which are related to electric cars and come from the Far East – read the Mandiner article.

All this is important so that there is no doubt that

The reason for the hesitation is none other than the fact that Europe has meanwhile fallen behind in the fight for the most advanced technologies against its main rivals, America and China. While the former worked out a complete package of industrial policy and protectionist measures under the guise, the latter brought its industry into position with state subsidies, in many cases displacing even German suppliers, which we are seeing more and more signs of recently.

All of this is a huge problem for Europe, because it is happening just when the process of industrial transition should be accelerated, because the date 2035 is approaching, when internal combustion engines must be phased out. The fact that Europe maneuvered itself into such a situation is also infuriating, because around 2018-2019, when the political decisions were made, there was reason to trust that

Compared to this, European politicians have been making more incomprehensible decisions ever since, such as the German government’s decision last December, during which the state support for electric cars was terminated in the name of austerity measures.

With the decision, the traffic light coalition immediately hit out at German industry, which is still moaning about the consequences of the war. Of course, Olaf Scholz may still be right, who also mentioned it during his visit to China: the state subsidy of the Chinese is a serious competitive disadvantage for the European car industry, which regularly leads to the imposition of EU punitive duties against the Far Eastern country.

It refers to the dependence of the two countries, and this may be the decisive factor in the process, that Berlin wants to avoid at all costs that relations between the EU and China degenerate into a trade war. German companies are not at all fans of such a scenario, especially since they have suffered a huge competitive disadvantage since the outbreak of the Russian-Ukrainian war. The critical situation of the automotive industry is indicated by the fact that at the same time as Scholz’s visit to China, the Hungarian Minister of National Economy, Márton Nagy, and representatives of a leading German concern held talks in Germany

Hungary has already started towards the electric transition

However, this kind of uncertainty is not reflected at all in the field of ongoing investments, since without exception all of them are related to the electric transition of the automotive industry, and almost all of them come from the Far East, China and South Korea. We have collected only the investments of the last two or three years, in which the dominance of the East is clear:

• the Chinese CATL’s investment in Debrecen will be realized from HUF 2,900 billion,
• production can start at the beginning of 2025, the also Chinese BYD announced last December that it will build its first European car factory in Szeged (its bus factory already operates in Komárom), the total value of the investment can be estimated at HUF 2,000 billion,
• China’s Sunwoda also announced last year that it would spend 580 billion to build a facility in Nyíregyháza, where it will manufacture batteries,
• the cathode factory of the Chinese Hayaou Cobault carpentry is also the product of the year 2023, the value of the investment is HUF 520 billion,
• China’s Eve Power, the ninth largest battery manufacturer in the world, is building its first European plant in Debrecen with 482 billion,
• The foundation stone of the South Korean W-Scope investment in Nyíregyháza was laid in October 2022, the value of the investment is HUF 290 billion
• South Korean Eco Pro’s cathode factory in Debrecen is being built at a cost of HUF 280 billion.

The large western car factories that have been present in our country for a long time are also not lagging behind with developments:

• Mercedes is converting its production lines in Kecskemét to the production of electric cars with HUF 400 billion,
• Audi invests HUF 120 billion in Győr to produce electric motors from 2025.

The battery factory is only a component

Battery factories are one of the components of car production, the fact that there are as many of these plants as possible in Hungary ensures that the entire vertical of production is present in Hungary. This is justified on the one hand by the disruption of supply chains after the epidemic, which forced the market mechanics to rethink the production process, and by a physical factor, which is none other than the fact that batteries are heavy.

SK Innovation, for example, will have a production capacity of 30 gigawatt-hours, which CATL far exceeds: it will be able to produce more than three times that, 100 gigawatt-hours. After that, there is a good chance that our country will have the third or fourth largest capacity in the world in 2025. But as we pointed out earlier, batteries are by no means a game for the poor.

Since the majority of the above-mentioned investments will be realized this year and next year, the new capacities are expected to enter production from 2025. The first swallow could be BMW, which will already be operating in trial operation from the end of 2024, just as CATL promised to start at the beginning of next year.

Based on the plans known so far, BYD and BMW can produce approximately 150,000 cars each year, but production can ramp up slowly, so that the figure of 750,000 can be reached gradually from 2026. Moreover, it cannot be ruled out that we will take another step towards the magical limit of one million.