Hungary has potential to become major battery exporter
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At the moment, Hungary is the 10th largest exporter of electric batteries in the world, but breaking into the top five is not unrealistic if foreign investment projects from the Far East continue, according to research by Óbuda Group.
Among the Central and Eastern European countries, Slovakia, Hungary, the Czech Republic, and Romania have a significant share of their GDP linked to the automotive sector. After the fall of communism, large car manufacturers (Opel, Suzuki, Audi) and their associated supplier networks emerged in the early 1990s, but they have also been important players in the boom in industrial investment in the last decade (Mercedes, BMW).
"The presence of a car manufacturer in Hungary is a major asset in itself, but the investments of the supply network linked to the factories are just as important for the country's economy," says Géza Germán, managing director of the Óbuda Group's planning branch.
Tightening emission standards in the EU are also having a significant impact on the automotive industry. Manufacturers have been turning to new technologies in recent years, and the market for semi-electric and fully electric cars is growing rapidly, but they lack battery production capacity.
Battery production is traditionally dominated by Asian companies. The world's five largest manufacturers are based in the Far East and, in response to changes in the market environment, plan to increase their production capacity several-fold by 2025, Óbuda Group says.
Japan was the first of the Far Eastern countries to establish a significant presence in Hungary in the second half of the 1990s. In 2020, China was the largest foreign investor in Hungary by volume (with over USD 5 billion worth of investment), but the leaders in the battery industry remain the traditionally strong South Korean firms.
"Unlike in the past, when it took years to prepare a project, companies now want to get new production lines up and running as quickly as possible. This has led to a significant increase in the value of well-prepared development sites, including those with utilities and road connections, where investments can be started almost immediately and lead times are optimized. Hungary is in a good position in this respect, which gives it a significant competitive advantage compared to other countries in the region. These companies typically carry out highly skilled, high-technology, and value-added investments, which require strong engineering skills. Fortunately, we can compete in this respect, too, as we have a large number of experienced and professional engineers," said Géza Germán.
Óbuda Group has been an engineering partner for a number of electric car projects in recent years, including projects by SEMCORP, Doosan, Toray, Soulbrain and Mektec/enmech.
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