Chinese electric vehicle (EV) giant BYD is reportedly on the brink of unveiling the location of its first European EV factory, with insider information indicating that Hungary is a top contender for the strategic investment. While the news has not been officially confirmed, “unnamed sources close to BYD” have hinted that the decision has already been internally made, according to German newspaper The Frankfurter Allgemeine Sonntagszeitung (FAS), via Reuters.
The proximity of the European plant to Hungary would not come as a surprise, given that BYD already boasts an electric bus manufacturing facility in the country. This move aligns with BYD's global expansion strategy, as it looks to extend its reach into overseas markets.
Furthermore, Hungary's position within the European Union holds strategic importance, allowing for the local production and distribution of EVs throughout the entire EU region. Such a move positions BYD to navigate potential challenges, as the European Union has initiated an anti-subsidy investigation into Chinese EVs sold within the region, which could potentially lead to import tariffs aimed at supporting the local automotive industry.
This inclination toward Hungary mirrors a broader trend of increased Chinese investments in the country. Chinese giant CATL, the world's largest lithium-ion EV battery manufacturer, is already in the process of constructing a massive 100-gigawatt-hour battery factory in Hungary.
BYD, known for its prominent position as the world's largest plug-in electric car manufacturer, is set to enter the European market at a pivotal time when EV adoption is gaining momentum. In the third quarter, BYD's all-electric car sales volume nearly matched that of Tesla, with only a slight difference of 3,456 units.
This significant growth, coupled with a record-breaking 300,000+ sales in October and a surge in exports of over 30,000 units in the previous month, indicates that BYD is primed to explore overseas markets. The rising demand and the potential for increased exports make a compelling case for local production in international markets.
In addition to Europe, the United States is another territory under consideration for BYD's expansion plans. The company initiated its U.S. journey with an electric bus factory in California. The recent introduction of the Inflation Reduction Act of 2022 (IRA) in the U.S., aimed at encouraging local production of EVs and batteries, has sparked discussions about the possibility of BYD entering the American automotive sector. This raises questions about the potential location for a U.S.-based factory, with Mexico emerging as a viable contender, given BYD's existing offerings of imported electric cars from China in the region.