BYD builds first Europe EV plant in Hungary
Starting as a small battery company, China's BYD has grown into one of the world's largest car manufacturers. Last year, it overtook Tesla in electric car sales and is now preparing to open its first European car manufacturing plant in Szeged, southern Hungary.
BYD builds first Europe EV plant in Hungary
The Economics of Geography

BYD builds first Europe EV plant in Hungary

Photo: AFP/Xinhua/Wang Feng
Dániel Kovács 19/02/2024 20:44

Starting as a small battery company, China's BYD has grown into one of the world's largest car manufacturers. Last year, it overtook Tesla in electric car sales and is now preparing to open its first European car manufacturing plant in Szeged, southern Hungary.

Probably the biggest economic news of the end of last year was that the world's largest electric car manufacturer, China's BYD, is to build its first European car plant in Szeged. Interestingly, the German government has also applied for the BYD factory, which would have given a new boost to the shrinking industry in the Saar region, but Hungary has emerged victorious, and will build its electric car factory on the outskirts of Szeged, next to the ELI-ALPS laser research institute and the Science Park, from where it will serve the European market and create thousands of new jobs.

BYD's is a remarkable success story in itself. Behind the name Build Your Dreams is a Chinese company founded in 1995, which for a long time was not involved in cars at all, the mainstay of its diversified business being the manufacture of batteries for mobile phones. They only entered the automotive industry in 2003 with BYD Auto, and although their first model left a lot to be desired, they quickly moved on to more sophisticated electric vehicles and are now a major player in a wide range of genres, from high-speed trains to buses. Above all, it is the largest EV manufacturer in China, and has already overtaken Volkswagen in its home market, although the German manufacturer does not only sell electric vehicles in China. And on a global level, it is a huge achievement that it overtook Tesla, the all-time record holder in the electric switchover, in last year's fourth quarter EV sales statistics, and BYD played a lion's share in making China the world's largest car exporter by unit sales by 2023, overtaking Japan and Germany.

BYD owes its spectacular success primarily to its strong R&D competence, diversified product portfolio, strong financial performance, strategic partnerships and focus on innovation. The company is, among other things, one of the world's leading manufacturers of energy storage systems, and the fact that it controls the entire manufacturing vertical - i.e. it produces its own batteries and BYD Electric supplies the components and chips - enables it to keep prices in check even in difficult times for the global economy.

It is clear what the giga-investment will bring to Hungary. The new car plant fits in with the government's plans to make Hungary one of the most important bases for the electric car industry, preparing for the years after the internal combustion engines are phased out. But it is also beneficial for BYD, as Europe is traditionally a strong car market, and this is particularly true for electric vehicles. A good example is France, which has recently tightened up its public support for the purchase of electric cars by excluding Chinese-made cars from the list of beneficiaries and only granting subsidies for cars from European countries or countries that meet European environmental standards. With similar moves likely to be made by other EU countries in the near future, BYD will benefit from the fact that production is literally 'in-house', as customers will naturally be looking for subsidised models.

The Chinese manufacturer has not been unknown in Hungary so far, in 2017 it opened its first European factory in Komárom, where, among other things, electric buses are produced, and last October it started selling its passenger cars in Budapest, the first in the Central and Eastern European region. 

"From the very first moment, there has been a strong interest in the brand and its models, much more than we had previously expected," Miklós Békés, commercial director of Wallis Motor Duna, one of the Hungarian distributors of BYD vehicles, told Eurasia. He added that the press response has also been very positive, and potential Hungarian customers have a huge amount of confidence in BYD. The company has launched three models in Hungary for the first time, the smaller Dolphin, the Atto 3 SUV and the Seal, which is intended to compete with the Tesla Model 3. In the latter case, Miklós Békés pointed out that the Seal accounted for around 30 per cent of the BYD models purchased by Wallis Motor so far, while the most popular model so far is the Atto 3.

"The Chinese manufacturer's products include a lot of extras as standard equipment that are available as optional extras from other brands, so based on customer feedback, BYD has entered the pure electric car market with a very good value for money car," said Miklós Békés.

Sales are also going well for the Komárom plant, with the Belgian transport company De Lijn ordering nearly 100 pure electric buses from BYD, instead of the previously preferred Belgian and Dutch manufacturers, this time worth more than €43 million, which will come off the production line in Komárom.

The author is an economic journalist

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