China’s CATL cements car battery dominance with €7bn Hungary plant

The manufacturer will start construction on the second European factory in Debrecen this year

China’s CATL will build a €7.3bn battery plant in Hungary, increasing its foothold in Europe and cementing its status as the world’s largest car battery manufacturer. Construction on the factory in the eastern city of Debrecen will start later in 2022, CATL said on Friday. It has a planned capacity of 100GWh a year, which would make it the largest “gigafactory” in Europe. CATL, which supplies batteries to Tesla and Volkswagen among others, did not specify when that target would be reached, but a company filing posted on the Shenzhen Stock Exchange showed that it expected to complete the Hungary factory within five-and-a-half years. Supplies from the 221-hectare site — CATL’s second in Europe — will be delivered to European carmakers, almost all of which have existing supply deals with the company.

Mercedes will initially be the largest single customer. “The greenfield project in Hungary will be a giant leap in CATL’s global expansion,” said founder and chair Robin Zeng. “There is no doubt that our plant in Debrecen will enable us to further sharpen our competitive edge, better respond to our European customers, and accelerate the transition to e-mobility in Europe.” Hungarian foreign affairs and trade minister Péter Szijjártó welcomed the development and said it would be “the biggest-ever greenfield investment in the history of Hungary”.

It is also Hungary’s largest-ever single foreign investment and will create 9,000 jobs. Thanks to hundreds of millions of euros in subsidies, Hungary has already attracted investment from Korea’s SK, which is building two vehicle battery plants in the country, and Samsung’s SDI. Japan’s GS Yuasa also produces batteries in Hungary. BMW is building a factory in Debrecen that will produce mainly electric vehicles. CATL, which is already building a European site in Erfurt, Germany, is by far the largest car battery producer, with a 35 percent market share in the first six months of this year, according to SNE Research. The top 10 manufacturers worldwide are all in Asia.

However, European companies have plans to catch up, most notably Volkswagen, which wants to build six car battery plants in Europe, starting with sites in Germany, Sweden, and Spain. Mercedes also has a deal with Stellantis and energy company Total to build factories that will provide 120GWh of battery capacity by the end of the decade. Later entrants also face a battle to secure raw materials such as lithium, which have soared in cost over the past year.

Source: Financial Times