Chinese EV automaker BYD to build car factory in Hungary

A worker cleans the company logo of Chinese carmaker BYD at their booth before the official launch of the International Motor Show (IAA) in the center of Munich, southern Germany, on September 4, 2023 – Copyright AFP Tobias SCHWARZ

China’s top electric automaker BYD will build a car factory in Hungary, the company said Friday, as it pushes forward with plans for expansion into Europe despite growing concerns around fair competition.

BYD Europe said the factory in the southern city of Szeged would mark “a significant step toward green mobility in Europe” as it made the announcement on X, formerly Twitter.

Earlier this year, the firm became the first global manufacturer to pass the five million milestone in electric vehicle (EV) production, crowning itself “the world’s leading manufacturer of new energy vehicles and power batteries”.

The growing success of Chinese EV firms in foreign markets has started to draw scrutiny, however. 

In China, the EV sector has benefited from decades of subsidies issued by Beijing in related tech fields.

The European Union this year announced an investigation into these subsidies, citing unfair competition.

But Hungarian Prime Minister Viktor Orban’s longstanding policy to “look East” has seen Asian businesses offered lucrative tax breaks, infrastructure and job creation subsidies to lure them to his country.

The factory “will be one of the largest investments in the history of the Hungarian economy”, Foreign Minister Peter Szijjarto said in a statement, without giving a specific figure. 

BYD already has operations in Hungary, including an electric bus factory. 

With the new car factory, the company “hopes to accelerate the entry of new energy passenger vehicles into the European market, further deepen (the firm’s) global layout, and actively promote the green transformation of the global energy structure”, it said on Chinese social media. 

The plant will be constructed in phases and is expected to create thousands of local jobs, BYD said. 

Hungary is set to become a major producer of EV batteries — second in Europe after Germany — with a huge factory also planned by Chinese group CATL.

Originally specialising in battery production, BYD moved into the automotive sector in 2003 and has since become a heavyweight in EV production.

It still faces stiff competition from several local brands — including XPeng, Nio and Geely — but still announced a record quarterly profit in October.

Foreign automotive leaders like Tesla, BMW, Mercedes and Audi depend on BYD for their batteries.

The company ceased production of gasoline-powered cars last year, and is now focusing exclusively on hybrid and electric models.

BYD launched its European offensive in 2022 at the Paris Motor Show, and targets growing sales with its Atto 3 small SUV and its Dolphin hatchback.