The megatrend of the global vehicle industry today is the rise of the electric drive chain, one of the most important elements of which is the battery. According to McKsey’s forecast, battery production in the world will increase tenfold by 2030, and the annual turnover will reach 400 billion dollars, ninety percent of which is related to mobility. According to the consulting company, the supply cannot keep up with the increase in demand, so they expect a situation similar to the chip shortage. This means that battery production is increasingly becoming a strategic area.

The sector is dominated by companies from the Far East: the ten largest manufacturers of lithium-ion batteries are Asian.

Korean companies cover 6 percent of the market for batteries manufactured in electric vehicles, Korean companies cover 26 percent, and Japanese companies cover 10 percent. The largest player, China’s CATL (Contemporary Amperex Technology), single-handedly carves out the world market, serving Tesla, Peugeot, Hyundai, Honda, BMW, Toyota, Volkswagen and Volvo, as well as Chinese car manufacturers.

The development of Chinese dominance is also maintained by the policy of the Beijing government. Over the past decade, they have provided almost $15 billion in direct support to the sector, in addition to tax breaks.

The great advantage of the value chains built by Chinese companies is that they provide an abundant production system for the metals essential to the battery. Chinese mining companies have timely invested in companies that have concessions in South America, Africa and Australia. For example, Chinese companies supply 85 percent of the refined cobalt required for lithium-ion batteries. In addition to the acquisition of mining rights, the technological competition is also high, and CATL is one of the leaders in this.

Chinese settlement in Hungary began at every meeting of the value chain

Since the Hungarian industry is closely linked to car production, especially to the German one, it is a logical direction and also the government’s intention that with the rise of electromobility, Hungary will also become a significant player in battery production. The National Battery Industry Strategy until 2030 announced this year aims to make Hungary one of the centers of the European battery value chain, not only in the field of production, but also in the field of research, development and innovation. For this, it is necessary to start investments at all levels of the battery production value chain.

The first level of the value chain is the acquisition and processing of raw materials. The raw materials required for battery production are not mined in Hungary, although according to Mol’s research, there may be deposits rich in lithium. Manufacturers who have settled in from abroad are currently still sticking to their own sources of supply. This may change as demand increases, the first company dealing with the refining of raw materials has already appeared: in June of this year, the government signed a memorandum of understanding with the Chinese Huayou Cobalt on the establishment of a factory producing cathode raw materials.

The second element of the value chain, the production of battery cell components, is currently dominated by South Korean companies in Hungary. However, it works with CATL’s factory investment in Debrecen. The Chinese giant is in contact with Chinese suppliers, two of which are already established. Semcorp, the world’s largest separator film manufacturer, is building a factory in Debrecen, which is scheduled to start production in 2023, and they have already started recruiting. The plant’s four production lines will produce four hundred million separator films per year. And Shenzen Kedali is building a factory in Gödöllő, where battery components will be made.

The third round of the value chain is the production of the final product, the battery packs used in vehicles. This year’s announcement of CATL’s EUR 7.34 billion investment in Debrecen is a big deal even in European terms. According to the plans, the Debrecen factory, which received its construction permit a few days ago, will start production as early as 2025 and will employ nine thousand people. Another dominant Chinese company in battery production, BYD, is also present in Hungary, but only with another segment, the production of electric buses.

The battery value chains are still being developed, the players are assessing which company activities should be included in their sphere of interest in the given situation, and what should be accessed through suppliers. Hungarian companies are significant subcontractors of the car factories established here, but battery production is a new industry, so the rapid development of the Hungarian supplier background is not obvious. It is also not worth expecting that research, development and innovation activities will settle in Hungary within a short period of time, which could also be delayed by the lack of engineers. Not only Semcorp, but mainly CATL’s factory itself requires the work of a significant number of highly qualified professionals, says Wu Wanliang, owner of Capital Bridge.

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