BEIJING, December 26 (TMTPost)—China's largest electric vehicle manufacturer BYD Co. Ltd confirmed it plans to build an EV plant in Hungary.

Credit：BYD

BYD will build a new energy vehicle (NEV) production base in Szeged, the third largest city in Hungary, and the base, which will be constructed in phases, is expected to create thousands of local jobs, according to a statement of the Chinese automaker. It said that the new facility plans to leverage advanced process equipment and highly automated production processes to build the world's leading manufacturing base for NEVs, including including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). The construction of this production base will actively promote the development of the local economy, push forward technological exchanges and innovations between China and Hungary, and help Hungary build a green "ecosystem" with BYD's own advantages in the entire industry chain, the statement said.

BYD didn’t disclose how much it will invest in the new plant, which is set to be its first plant to produce electric passenger vehicles in Europe, or any timetable about the project, neither did Hungary. Foreign Minister Peter Szijjarto said Hungary will provide subsidies for the BYD plant, but it will only publish the amount after receiving the European Commission’s approval. "This is set to be one of the biggest investments in Hungarian economic history," Szijjarto said.

The Financial Times reported last Thursday that BYD was in final talks to with the Hungarian government over a multi-billion-euro investment in a new EV factory,  which is part of BYD’s efforts to dominate the European EV industry by end of the decade. The same day saw Hungarian Prime Minister Viktor Orban said he expects employment of the southern Hungarian region near Szeged will rise following big corporate investments. Orban that day assigned 46.3 billion forint (US$133 million) in financing from the budget to upgrade road, rail, power, gas and water infrastructure around an industrial park in Szeged, without naming BYD in the document.

The new facility in Hungary underscores BYD is seeking to accelerate overseas expansion to offset slowdown in domestic market. At the beginning of this month, BYD said it sold 301,903 NEVs in November, breaking sales record for seven straight months. While sales rose about 31% year-over-year (YoY) in November, the volume nearly flat from the previous month. The company maintained robust overseas expansion. Sales in markets beyond China first exceeded 30,000 units in November.

Global BEVs unit sales increased 29% YoY in the third quarter of 2023, and sales in China, as the No.1 market for BEVs, only grew 11%, below the average, according to data from Counterpoint Research earlier this month. However, the international market research firm estimated Chinese brands sold over 0.13 million BEVs abroad that quarter, marking a fourfold increase from a year earlier. BYD’s sales has caught up with Tesla as their sales share of 17% ranked the first place that quarter. Counterpoint expected BYD will surpass Tesla by BEV sales in the fourth quarter.

The Hungarian factory may help BYD avoid possible tariffs imposed by the European Union. The European Commission officially launched an anti-subsidy investigation into EVs from China in October will decide whether to impose tariffs more than the current 10% standard rate for cars in the coming 13 months. The possible tariff will affect not just Chinese automakers but also foreign brands that produce vehicles there such as Tesla, Renault and BMW. The move may result in tariffs close to the 27.5% level already imposed by the U.S. on Chinese EVs, Bloomberg cited people familiar with the matter following European Commission President Ursula von der Leyen’s announcing EU will take action. Caixin learned last month that BYD, SAIC Group and Geely were among automakers being investigated.