Financial Times: Giant Chinese carmaker may build factory in Szeged

"Both Makó and Szeged could make a huge leap in 2024 and the years after, the two settlements are facing serious development, gigantic investments are coming to the two cities" - János Lázár spoke about this, among other things, in the programme entitled Közös Nevező (Common Denominator) on Thursday on Radio 7 in Hódmezővásárhely (the city where he once was a mayor), which was reviewed by Promenad24.

According to the Construction Minister, the big winners from the concentration of resources in rural areas could be "even opposition-led municipalities that are willing and able to cooperate". Szeged, for example, could receive "one of the biggest investments in the history of the Hungarian economy," the minister said. According to press reports, the minister already claimed that this investment was to be made by the Chinese electric car manufacturer BYD - however, this information later proved to be false, the minister said nothing about the investor. (Portfolio's Hungarian Pulse Newsletter also included the false information, for which we apologise to our readers - ed.)

A few hours later, the Financial Times published an article stating that China's leading electric vehicle manufacturer, BYD, is about to finalise a multi-billion euro deal with the Hungarian government to build a new electric vehicle factory. The major investment could be announced as early as Friday, the paper says, adding that it could further strengthen BYD's presence in Hungary, where it already has a bus factory.

The planned factory will be located in Szeged, in the south of Hungary. According to sources familiar with the matter, the new site would also produce electric cars and batteries. This move is in line with BYD's ambition to dominate the European EV market by 2030.

Michael Shu, CEO of BYD in Europe, has previously stated that the company's goal is to become the largest electric car seller in Europe by 2030, with one in every ten battery-powered cars sold in the region. Talks between BYD and Hungary were still ongoing on Thursday, the British business portal said.

While neither BYD nor the Hungarian government has officially commented on the latest developments, Prime Minister Viktor Orbán hinted that the significant investments made by the company will soon increase employment opportunities in Southern Hungary.

FT also points out that Hungary is a favourite destination for Chinese investors, especially those involved in the automotive battery industry. But Orbán expects this new venture to attract hundreds of thousands of potential workers from the Szeged area. It is worth recalling that during his visit to China in October, Orbán also met the head of BYD.

The Prime Minister also spoke about potential major investments at a press conference on Thursday. "Hungary still has significant labour reserves, and they expect to be able to mobilise them for the investments in Szeged and Békés County, so there is no need for a large-scale influx of guest workers", Orbán said.

After all this, the government announced in Thursday evening's Hungarian Official Gazette a number of new infrastructure investments in the Szeged region worth more than HUF 46 billion. According to the document, among other things, the industrial park and the associated road network will be expanded. In the plans are railway overpasses, road widenings and even some new road constructions, all in the industrial park area.

Rail development is also included in the package, with a siding probably branching off the Cegléd railway line to the future factory, independently of the planned container terminals. According to the Gazette, a rail loading facility is also planned for the industrial park area. In this case, only a pre-feasibility study is being carried out, which means that the siding can only be built at a much later stage, probably together with the factory planned for the industrial park.

There are also plans to build and upgrade the compulsory electricity, water and natural gas networks to serve the industrial park. The government will provide nearly HUF 46.3 billion for all this, with HUF 15.2 billion for roads and railways, HUF 433 million for the electricity company, HUF 292 million for the gas company and HUF 30.2 billion for the National Water Directorate.

If successful, this would be BYD's first large-scale car plant in Europe under its own brand. Other Chinese brands, such as Nio and Great Wall Motor, are also eyeing Europe, but have not yet announced plans for local production.

BYD is now China's largest EV manufacturer, and earlier this year overtook Tesla as the world's biggest seller of electric cars. The company is developing its own batteries and counts Warren Buffett's Berkshire Hathaway among its investors.

Already two months ago, Szeged was mentioned in contact with the possible BYD factory project, but so far there has not been any official confirmation.

Hungary's participation in China's Belt and Road initiative has made the country an attractive destination for new car or battery factories. China is the largest investor in European battery factories, with plants using Chinese technology being built in the UK, France, Poland and Hungary. The planned site in Szeged is also well located, close to the Belgrade-Budapest railway line, which is currently being built jointly by Chinese and local companies, the Financial Times recalls.

Cover photo: MTI Photo/EPA/Teresa Suarez