Gigantic automotive industry investment lands in Hungary

CATL, the world's largest electric car battery manufacturer, supplies batteries to companies like Tesla. In its filing to the Shenzhen stock exchange, the company did not elaborate on the details of the project. It only said that "covering an area of 221 hectares in the Southern Industrial Park of Debrecen, the project will supply both cells and modules to European automakers."

Levente Magyar, Parliamentary State Secretary at the Ministry of Foreign Affairs and Trade, said on Friday that a series of negotiations lasting more than two years had been concluded, and that CATL will create some 9,000 new jobs in Hungary.

This is the second major automotive investment in Hungary in a short period of time, as Mercedes-Benz announced at the end of last month that it would add new production lines worth HUF 400 billion to its Hungarian assembly and bodywork plant in Kecskemét. The government is supporting the investment, which wil require significant infrastructure developments and create new jobs, with a HUF 14 billion grant, and will also contribute to a training programme.

According to Mercedes-Benz’s e-mobility strategy, the company aims to make every model available with electric drive from 2025 on, and by that time the share of plug-in hybrids and BEVs (battery electric vehicles) should make up 50% of its total product portfolio. As of 2030, Mercedes-Benz intends to produce only electric vehicles.

The Hungarian plant of the company plays a key role in this transformation process. For that matter, Hungary’s first fully electric vehicle, the EQB Compact SUV rolled off the production line in Kecskemét in 2021. Now more development is to follow on the electrification front as a result of which two new platforms will allow the company to prepare for the future.

CATL pointed out that Debrecen is located "at the heart of Europe", and that with close proximity to some auto plants of its customers such as Mercedes-Benz, BMW, Stellantis and Volkswagen, CATL’s Debrecen plant will enable it to "better cope with the battery demands of the European market, improve its global production network development, and help accelerate e-mobility and energy transition in Europe."

The Hungarian investment, for which there is no timetable yet, follows a series of other announcements of new battery plants by the company, including a 14 billion yuan investment in Shandong province in eastern China and a 13 billion yuan battery project in Fujian province, where CATL is headquartered, Bloomberg recalled.

CATL was also considering an investment of up to $5 billion in Mexico or the United States, although no announcement was made after US House of Representatives Speaker Nancy Pelosi travelled to Taiwan, according to people familiar with the matter.

The company also has a production line in Germany, which will start operations at the end of the year and will be the first production line outside China.

CATL said that in a bid to build a sustainable and circular battery value chain, it is also examining the possibility of joining forces with local partners to establish facilities for battery materials in Europe.

As part of its commitment to reducing the carbon footprint in battery manufacturing, CATL will use electricity from renewable energies, and is considering developing solar power with local partners in the country, it added. 

There is no doubt that our plant in Debrecen will enable us to further sharpen our competitive edge, better respond to our European customers, and accelerate the transition to e-mobility in Europe,

said Robin Zeng, founder and Chairman of CATL.

“The greenfield project in Hungary will be a giant leap in CATL’s global expansion, and also an important step in our efforts to make an outstanding contribution to the green energy drive for humankind," he added, making a reference to American astronaut Neil Armstrong's famous line when first setting (his left) foot on the surface of the moon.

The new project was well received from CATL’s European customers. Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG, CTO responsible for development and procurement, said:

This new state-of-the art European CATL plant in Hungary is another milestone for the scale-up of our EV production together with our key partners. With CATL we have a technology-leader as our partner to provide us - as the first and biggest customer of the new plant’s initial capacity - with top-notch CO2 neutral battery cells for our next generation EVs in Europe, hence following our local-to-local approach in procurement.

Cover photo: Zhu Difeng/VCG via Getty Images