BYD Chooses Hungary As The Site Of Its First Electric Car Factory In Europe
BYD announced this week it will build an electric car manufacturing facility in Szeged, a city in southern Hungary. Foreign minister Péter Szijjártó said in a statement posted on his Facebook page that the BYD factory “will be one of the largest investments in Hungarian economic history” and will “further strengthen the position of the Hungarian economy, further strengthen the foundations of long term economic growth, and further strengthen Hungary’s position in the global electric automotive transition. This investment underlines the fact that Hungary is a leader in the technological revolution.”
The foreign minister added that the government would provide financial incentives to BYD for building the plant, although the details of those arrangements will not be released until later. He said the decision came after 224 negotiating sessions between the government and the company. In October, Hungarian prime minister Viktor Orban visited Shenzhen, the home of BYD. According to the city’s website, he said, “Hungary welcomes Chinese-funded enterprises and has a strong willingness to cooperate with you,” while visiting BYD headquarters, according to a report by the New York Times.
Szeged mayor Laszlo Botka said the city’s “geographical location and logistical development” helped make it a winning candidate for hosting the factory and that site work at the 300 hectare (740 acre) location where the factory will be built has already begun. Szeged is situated near Hungary’s border with Serbia and a rail corridor that Hungary’s government has developed jointly with Beijing as part of China’s Belt and Road program.
BYD already has an electric bus manufacturing plant in the northwestern Hungarian city of Komarom, but the planned Szeged factory would be the first major consumer EV production facility in Europe for a Chinese electric car manufacturer.
The Electric Car And Politics
Many European countries are concerned about the rising number of electric car models from Chinese manufacturers being imported into the European Union. In her State of the EU address in September, European Commission President Ursula von der Leyen suggested that Chinese manufacturers are dumping boatloads of Chinese EVs on EU customers that are priced below what domestic manufacturers charge. “Europe is open for competition, not for a race to the bottom. We must defend ourselves against unfair practices,” she said. She went on to say the EU sees the electric vehicle sector as “a crucial industry for the clean economy, with huge potential for Europe, but global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies.”
There is some truth to her argument. A BYD Dolphin sells for €28,990 in France but only €15,200 (116,800 yuan) in China. An MG ZS sells for €31,310 in Germany but only €15,600 (119,800 yuan) in China. The Zeekr X sells for €44,990 in Germany but only €24,700 (189,800 yuan) in China. Those numbers seem to support von der Leyen’s statement but a BMW iX3 that sells for €67,300 in Germany costs €51,800 (405,000 yuan) in China, a difference that can be largely attributed to the cost of shipping between the two countries.
The argument is as old as international trade. Fifty years ago, the United States worried its domestic auto industry was imperiled by competition from Japanese manufacturers. At that time, Japan was ascendant largely due to substantial support from the central government that led many to refer to the close relationship between Japanese business corporations and the government as “Japan, Inc.” Now the wheel has turned and nations are worried about the relationship between Chinese companies and the Chinese government, which many believe gives those companies an unfair advantage.
There is also a growing fear of the electric car movement, which many worry it is going too far, too fast as more nations announce policies that would ban the sale of conventional vehicles by 2035 or earlier. In the US, a disgraced former president says he will repeal the Inflation Reduction Act and end all support for electric car growth, including improvements in EV charging infrastructure.
He is a close friend of Viktor Orban, who in turn is a close friend of Vladimir Putin. Hungary recently torpedoed a plan by the EU to send more military aid to Ukraine, a move that angered most other EU nations. That raises a question about how excited those countries will be to see a new electric car supply chain develop in Hungary.
Orban is a fierce critic of immigration, which he says makes countries weak, and yet he is welcoming Chinese companies like BYD and CATL. Both will no doubt hire local workers but they will also bring plenty of Chinese executives and technicians with them as well. CATL is in the process of constructing a $7.8 billion 100 GWh battery factory in the Hungarian city of Debrecen, which is expect to employ 9,000 workers.
The New York Times reports that residents of Debrecen are not entirely happy with the CATL factory, which is supposed to make batteries for Audi, BMW, and Mercedes. They are worried about pollution, a drain on water supplies, and an influx of Chinese and other foreign workers. Their concerns have led to angry public hearings. Orban wants to have it both ways — rail against immigrants while wooing foreign investment. It’s a delicate dance.
BYD Turning Its Attention To More Than Europe
BYD’s decision to locate in Hungary gives it a head start on cracking the European market, but it is not confining its export plans to the Continent. As we reported just last week, BYD is now importing its Seal electric sedan — which many see as a direct competitor to the Tesla Model 3 — into Mexico. In fact, Chinese made cars are flooding into Mexico and now account for about 20% of that country’s new car market.
There are rumors, as yet unconfirmed, that BYD is considering a manufacturing facility in Mexico in the near future. Such a factory would give it access to all of Central and South America, as well as Mexico’s neighbor to the North. If BYD could source its battery materials and components in a way that meets the latest Treasury regulations, Mexican built BYD cars could be eligible to be imported duty free in the US and qualify for the full $7,500 federal electric car rebate provided by the Inflation Reduction Act. Wouldn’t that be a find kettle of fish, as my old Irish grandmother liked to say.
There are those who say politics should never be mentioned here at CleanTechnica, but the truth is politics is part and parcel of all international commerce. If we left out that component, our readers would not be getting the whole story and so we persist in including news about the political ramifications of the EV revolution in our coverage. You’re welcome!
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