Chinese EV battery manufacturing in Hungary:
helping or hindering the green transition
Ágnes Szunomár
As the automotive industry slowly transitions towards EVs, accompanied by a technological transformation, supply chains are also affected. Countries like Hungary, where low-skill assembly of imported components constitutes the majority of local value added, are bound to face the adverse effects of this transition. To avoid being left behind economically and technologically, CEE countries do not really have a choice when it comes to whether or not to get involved in EV manufacturing processes. However, they do have a certain degree of choice as to how they get involved and with whom they cooperate. In contrast other CEE country strategies, Hungary relies almost only on external investors and labour-intensive, low value-added activities. In this study we zoom in on the numerous arguments that have been put forward for and against Chinese battery investments.
Made-in-Hungary Chinese batteries: Arguments for and against
First, although Chinese EV battery investments might reinforce Hungary’s role in the EV value chain in the short and medium run, they have controversial effects in the long run. The EU’s priority is to develop European batteries and create an indigenous European value chain, whereas the Hungarian strategy is based mainly on East Asian companies’ investments. In the short and medium term, Chinese batteries will certainly be needed to meet European climate targets. On the longer term, however, as European innovation advances and local content policies grow more strict, Chinese-owned or invested factories in Europe may become a liability.
Second, Chinese batteries seem to be well positioned to support the EU’s climate objectives, but they may threaten local the environment by polluting water, air and soil. Since the majority of Chinese battery factories have yet to commence operations in Hungary, there is limited tangible experience to analyse. However, several regulatory, transparency and accountability issues exist with the South Korean EV battery companies currently operating in Hungary, indicating possible future complications with Chinese companies’ environmentally harmful operations. That is, the real problem lies not only in the potentially polluting actions of the EV battery companies, but in the weakness of accountability from the host country.
Third, Chinese investments in the EV industry may create jobs in Hungary, but this also contributes to labour shortages and encourages the inflow of guest workers. In Hungary, the automotive sector employs over 150,000 people; these jobs could be at risk as ICEV production is phased out. On the flip side, however, unemployment in Hungary has nearly vanished in recent years, and companies are currently seeking to fill approximately 100,000 positions. To this end, the Hungarian authorities have eased the work permit procedure for foreign workers, leading to a rise in the number of foreign (predominantly Asian) guest workers in Hungary. However, this process is not free of tensions: the first inflows of temporary guest workers has been a source of concern for the Hungarian public.
Conclusion
As we have shown in this article, Chinese EV-related investments into Hungary generate both opportunities and challenges at transnational, national and local levels. While locally-produced Chinese batteries may significantly contribute to the EU’s climate goals and Hungary’s economic growth through job creation and automotive transformation in the short run, they also risk imposing environmental burdens, social tensions and even economic challenges in the longer run. Although the future of the fast-evolving EV industry remains unpredictable, a diversified development strategy grounded in indigenous R&D outcomes might significantly enhance the supply chain position of a small yet crucial participant in the European automotive sector. This is not only in Hungary’s long-term interest but is also crucial for a genuinely European transition to electromobility.
Ágnes Szunomar (2025): Chinese EV battery manufacturing in Hungary: helping or hindering the green transition? pp. 51-54. In: Oxford Energy Forum, April 2025: Issue 144. Oxford: Oxford Institute for Energy Studies
