There is a city in Southern Hungary whose echo reaches as far as China. Szeged, a city center with a population of over 160 thousand, will host the giant factory of Chinese electric car manufacturer BYD. The Chinese company’s press release stated that the production facility would create “thousands of jobs” and promote “technological exchanges and innovations between China and Hungary”, but did not provide detailed information about the size of the giant factory or the start of construction, neither the work nor its final cost. One thing is certain: The automaker will carry out its entire production process in Szeged, except for battery production and chemical activities.
Why did BYD choose Hungary?
BYD’s decision to open its first European production center in Szeged is a victory for Hungary, which already hosts electric vehicle production facilities for South Korean and German automakers such as Mercedes-Benz, Audi and BMW. Analysts Bernstein They estimate that it will take two to three years for the Chinese factory to produce and produce about 200 thousand cars a year, thus affecting the reduction of costs and tariffs. It’s an advantage the Shenzhen company doesn’t want to give up: Tariffs being reviewed by the European Commission could actually fall on BYD and other Chinese manufacturers.
The Shenzhen company, which promotes green vehicles that fall under Xi Jinping’s eco-sustainable goals, has benefited from a series of government incentives that have worried Brussels. Thanks to state subsidies – this is the thesis of the European Commission – companies can significantly reduce production and assembly costs and offer cars to the market at lower prices than competing manufacturers. Beijing’s measures have alarmed the European Commission, which has launched an anti-subsidy investigation into electric vehicles from China and is considering the introduction of tariffs to limit damage to European industry (results due next November). What worries the community manager is the constant granting of Chinese government subsidies, which has led to an average price difference of 20 percent between electric cars made in China and those produced by other brands in China.
After expanding to 19 countries around the world (there is also a factory producing electric buses in Komarom, Hungary), BYD aims to enter European territory in order to bypass the measures Brussels is currently working on. So how did Hungary manage to gain favor with the Chinese giant? The Hungarian country’s geographical location is not the only explanation; so much so that it took 224 meetings between the Chinese company and the Hungarian government to reach an agreement. What probably maintains the balance is the relationship between Budapest and Beijing: China has been the main foreign investor in Hungary since 2020, and the Hungarian government wants to intensify economic ties with the Asian giant.
Another goal of the Budapest administration is the reopening of the Budapest-Belgrade high-speed railway, which is one of the symbolic projects of the partnership reinforced by the Belt and Road (New Silk Road) and is expected to connect the capitals of Hungary. and Serbia, if the work had not been blocked for months. But there is no shortage of personal relationships. Prime Minister Viktor Orban, the most pro-sovereignty and anti-European of the Europeans, who is also a friend of Giorgia Meloni, was the defender of some deadlock moments in European institutions with the announcement of official accusations against China, and was the only friend in China. The Europe of Russian Vladimir Putin, who has a strong bond with Chinese leader Xi Jinping (Orban was the only European leader to attend the Forum). Belt and Road last October).
3 billion euros attracting Budapest
The automotive sector is a sector that Hungary has been focusing on for a while. The automotive sector represents approximately 6 percent of Hungary’s GDP, with external suppliers contributing another 8-9 percent. It is clear that China represents a major player in the production of electric-powered vehicles. Hungarian Foreign Minister Peter Szijjarto said this clearly during his visit to Beijing last year: “Hungary has provided three billion euros for Chinese automotive investments, further strengthening its position as the main destination for investments in Central Europe.”
The reference is the investment of Eve Power, one of the Chinese battery giants, which will establish a factory in Debrecen, the European hub of the electric car supply chain. The Eve Power factory is another Chinese company making batteries for electric vehicles, Contemporary Amperex Technology Co., Europe’s largest gigafactory, promoted by 7.3 billion euros of Hungarian public money. It will be built together with Limited (Catl).
Using European funds to produce Chinese cars
Leader Orban’s dream is now well known: Battery production in Debrecen will be globally competitive by 2030. Now the Hungarian government is considering proposing the same scenario for BYD, taking advantage of the influx of community money coming into the public coffers. Hungary. After the first tranche of 779.5 million euros arrived in Budapest at the end of December 2023, the European Commission gave the green light to pay the remaining 140.1 million euros of pre-financing of the 4.6 billion euro Repower EU chapter on National Recovery and National Recovery. The Resilience Plan, approved by the community administration on 23 November 2023, remained frozen due to non-compliance with the rule of law. It is understood that Orban wants to use approximately 240 million euros of Repower EU funds to support the electric car sector and the installation of charging stations for the new generation of cars. Second The indiscretion of Hungarian investigative journalist Szabolcs PanyiThe Hungarian prime minister wants to make this 240 million euros of funds from the Commission funds and therefore from all European taxpayers available for the opening of the BYD factory in Szeged. The agreement was to be determined during Orban’s visit to Beijing last November 2023, when the Hungarian prime minister met with leader Xi.
The alarm immediately began to sound in Brussels. “It is the responsibility of Member States to ensure the correct implementation of recovery and resilience plans in line with Community and national rules,” warned European Commission spokesperson Nuyts Veerle, regarding the Hungarian Pnrr and especially the Reconsolidation chapter. He then assured that checks will be made on the stages and targets achieved by the Hungarian country.
European Commission spokesperson responded @panyiszabolcs‘ Discovery that Hungary wants to spend 240 million on EV measures that will benefit Chinese manufacturer BYD: Member states choose buyers. https://t.co/RzozF6hKh0 pic.twitter.com/evBOP6Ezks
— Peter Teffer (@peterteffer) January 15, 2024
Meanwhile, Budapest is in no rush and says it will publish the subsidy amount for the BYD plant only after receiving approval from the European Commission. One point needs to be clarified: European grants will help initiate the implementation of investment and reform measures outlined in each chapter of Repower Eu to achieve the goals of energy saving, clean energy production and diversification of energy sources. The tool is designed to make Europe independent from Russia, China and other external powers, especially regarding technologies that are key to the green transition. The idea is currently ignored by Hungary, which has chosen to use funds from European taxpayers to support China’s BYD, the main rival of European electric vehicle manufacturers.
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
