Korean mega-investment announced in Hungary

The electric battery plant will represent the single biggest greenfield investment in Hungarian history

editor: REMIX NEWS
author: Daniel Deme

In a sign that its highly skilled workforce and relatively low wages are still attracting major international investors to the Visegrád Four region, the Hungarian government has announced the signing of a major international electric battery factory in Hungary.

Hungarian foreign secretary Péter Szijjártó has announced that SK Innovation, a Korean manufacturer of car parts, will expand from their existing two plants in Komárom county to another major manufacturing facility in Inváncsa, about 30 kilometers south of Budapest.

The investment, reported to be worth approximately the $2.3 billion, will see the largest ever single greenfield development in Hungarian history. The electric battery plant will create 2,500 new jobs in a period of exceptional fragility for the country’s economy, which has already experienced a double-digit recession due to the coronavirus crisis. The extent to which the government is planning to incentivize the mega-project financially has not been announced, but according to the foreign minister, SK Innovation, the plant’s owners, will receive the largest Hungarian state subsidies to date.

The project is expected to start in the second half of 2021, and the construction will expand on 700.000 square meters of land. Once the plant is up and running, it ls expected to have a 30 gigawatts per hour (GWh) annual output that will rival the largest electric battery producing plant in the world at the Tesla Gigafactory in Nevada, which features 35 GWh annual output. Along with the two existing such factories owned by the Korean company, the new facility may put Hungary at the top spot among European vehicle battery producing countries.

The new facility will annually produce enough batteries to power roughly 600.000 cars, which offers a clear idea about just how rapidly the global electric car market is projected to expand. Yet, SK Innovation is not the only car battery producing company in Hungary. In recent years, other Asian producers, such as Samsung, Inzi Controls and GS Yuasa, have all opened their manufacturing plants in the country.

The particular success that the Hungarian government has achieved among Asian investors can largely be attributed to their policy of “Eastern opening” that had seen a frantic effort from the part of Hungarian diplomacy in attracting businesses from countries like Japan, Korea and China on the one had, and from the government’s part in incentivizing investment with attractive land-lease schemes or tax-breaks on the other.

The European Union’s drive to replace fossil fuel-powered vehicles with electric cars in the coming decades is expected to translate to skyrocketing demand for electric power cells. However, at present there is no clear roadmap for producing enough green electricity to meet these ambitious carbon-neutral goals, especially if the trend of moving away from nuclear continues in the future.

Yet, in its “Fundamental Transport Transformation” document, the European Commission outlined its plans for at least 30 million zero-emission cars on European roads by 2030 to make zero-emission large aircraft market-ready by 2035, and by 2050, nearly all cars, vans, buses as well as new heavy-duty vehicles should be zero-emission. For this, they are planning to install 3 million public charging points by 2030. In 2020 there were over 500.000 electric cars sold in Europe, thus Europe is overtaking China as the largest market for electric vehicles in the world.

As Remix News reported earlier, there are other large-scale electric battery related business initiatives in the Central Eastern European region, such as the Artificial Intelligence designed battery plant planned to open in 2022 in neighboring Slovakia.

It is not by chance though that major car component manufacturing facilities are being built in the region. The Visegrád Four countries are a major hub for mainly German and Japanese car manufacturers such as Audi, WV, Mercedes, BMW, and Suzuki. Hungary, Slovakia and the Czech Republic are all within the top 20 of the world’s largest car manufacturers, jointly producing some 3.4 million cars annually (2019). Their factories are expected to be the main clients for the locally produced car batteries.

 


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