BERLIN/BUDAPEST : German automakers and Asian battery suppliers are getting together in Hungary in a multi-billion-dollar marriage of convenience to drive their electric ambitions.
"Cathodes, anodes, separators, assembly lines, the full battery supply chain is here," said Dirk Woelfer of the German-Hungarian Chamber of Commerce in Budapest."This is a foot in the door to Europe." State incentives and the opportunity for automakers and battery suppliers to work next door to each other is proving a strong pull, according to interviews with about 20 industry players and consultants in Germany, Hungary, China and South Korea.
Such big business could present a boon for Prime Minister Orban's government as the country faces its toughest economic environment in more than a decade, with inflation running above 20 per cent, the economy slowing and EU funds in limbo. HIPA, the Hungarian Foreign Ministry agency responsible for attracting investments in areas ranging from batteries and cars to logistics, did not respond to Reuters queries about the EV industry.Hungary's welcome to Asian battery makers might jar with concerns expressed by Brussels and Berlin about the perils of Europe becoming too dependent on China and other foreign powers, particularly in technologies central to the green transition.
The prospects for developing a battery sector in Germany have been set back by record energy there as a result of the loss of Russian gas, according to autos consultants at Boston Consulting Group and Berylls Strategy Advisors. The European Commission is currently in talks with Hungary over the size of the subsidy the country will offer to CATL for building the Debrecen plant, the official added.For some Western companies, setting up shop in Hungary is a tough decision.
Hungary's sources of energy in 2021 comprised 80 per cent fossil fuels, 14.5 per cent nuclear and 3.6 per cent solar, according to a Reuters calculation of data from the BP Statistical Review of World Energy.