Hungary EV Green Revolution Reshaping Country's Automotive Industry
Short Overview of the Automotive industry
The Automotive industry is one of the main contributors to Hungary’s GDP. The country is highly integrated with European supply chains, particularly in the fields of automotive. Vehicle production is well established, and automakers continue to invest in their Hungarian operations. Hungarian auto production is presently dominated by four manufacturers: Magyar Suzuki, Mercedes-Benz, Audi Hungaria and Opel Magyarorszag. BMW set to open an Electric Vehicle (EV) factory in Debrecen in 2025. Nearly 20 billion Euros worth of automotive investment is underway in the country, and more than 750 thousand passenger cars will roll off the conveyor belts in the upcoming years.
Potential in the Electric Vehicle (EV) market
Opportunities exist for project management and industrial engineering solutions in the EV market, and Hungary is poised to experience strong growth. Mercedes-Benz commenced the production of its first fully electric car in Hungary. Audi’s Hungarian plant is playing a leading role in the production of electric drive systems. LG Magna e-Powertrain plans to build a new facility in Miskolc, Hungary, where they will produce e-motors and eventually provide a range of electrified powertrain solutions, including inverters and on-board chargers for the expanding electric vehicle industry. LG Magna’s facility is slated to be completed in 2025 and is due to start operations in 2026.
Increase of the battery industry
It is the Hungarian government’s aim to position the country to be a critical production hub for EV battery and component manufacturing and there is strong support for foreign investment in EV battery manufacturing in Hungary. Foreign direct investment inflows originate primarily from Asia as battery manufacturers LG Chem, Samsung and SK Innovation ramp up production. However, the presence of these large corporations has already begun to attract smaller battery component producers such as South Korea’s Toray and Iljin Materials in Hungary. CATL’s electric battery assembly facility will be built near BMW’s vehicle manufacturing base which is expected to start operations by 2025. China-based Contemporary Amperex Technology also plans to build a battery manufacturing facility in the city of Debrecen. BYD, another Chinese battery manufacturers is planning to start production in a couple years in the city of Szeged and they will specially produce for the European market.
Strong demand for other industries connected to EV market
The bulk of construction activity will be in the transport sector, where there is strong demand for road and rail projects. In the short term, strong growth is expected in the large non-residential building segment. The withholding by the European Commission (EC) of Recovery and Resiliency Facility (RRF) funding for Hungary will weigh on fixed investment, though other structural funding will be unaffected. Hungary’s non-residential buildings sector will see strong growth over the next decade as it emerges as a regional hub for industrial processes, particularly in relation to
Europe’s electric vehicle supply chain.
Hungary’s well-developed transport network, strategic location and regionally competitive trade procedures will boost the country’s position as a trading hub in CEE for the foreseeable future. Internal supply chains in Hungary benefit from mainly road and rail transport options, with inland waterways and air freight remaining underdeveloped. While some areas of the state’s transport network are of poor quality, particularly rail, expansion projects and plans to improve cross-border connectivity with neighboring markets will diversify logistics options. The dominant form of transport for freight traffic is the road network, which has a radial structure and provides links to all neighbors and major trade partners, such as Austria and Germany. The location of major German car-making plants in Hungary creates demand for transporting raw materials, auto components and finished vehicles.
Recommended business services
Initial Market Checks followed by a Gold Key Service would help for American companies to identify best partners for the Hungarian market. In the Automotive industry, specifically in the EV sector, increased production will continue in Hungary for several years. U.S. firms have a strong reputation for innovative technologies and after sale service, making them well positioned to compete in Hungary ‘s growing EV market. There are potential business opportunities for automotive component manufacturers, technology, transportation, and construction related businesses. It is suggested that new to the market companies initiate cooperation with local partners in order to achieve success.
For more information, please contact Annamaria Demko: annamaria.demko@trade.gov.