Hungary becoming a battery superpower: is it a good idea?

Source: catl.com

Hungarian politicians have repeatedly expressed their desire to turn Hungary into a major battery manufacturing power recently. To this end, several multinational companies have already started production and are planning to make further mega-investments in the future. One such example is the one in Debrecen (for which the Hungarian government is providing HUF 320 billion [EUR 826 million] in funding, Márton Tompos, spokesman of the Momentum Movement, shared). There is growing resistance from society, mainly because of environmental problems. Is it really a good idea to try and make Hungary a battery manufacturing empire? And how likely it is that the country will become one in the near future?

Hungary is specialised in the production of batteries

Foreign capital-led economic growth has been a key element of Hungarian economic policy over the past three decades, Portfolio writes. As the automotive industry shifts more and more to hybrid and electric vehicles, battery production is becoming increasingly important. Ramping this up in Hungary could make the country a factor in the global economy.

Hungary has specialised in the production of automotive and electronics products over the past decades. Thus, the country has the capabilities and skills needed to manufacture batteries. But where does Hungary stand right now on the world’s battery production ladder? Portfolio has examined it.

Read also: Chaos around battery plants in Hungary

Hungary’s past in battery production

At the beginning of the period under review (around 1995-’96), Hungarian exports were around USD 5.7 million. This sum represented only 0.07 percent of global battery exports. Hungary then increased its battery exports more than twenty-fold by 2004. The situation started to change significantly in 2015. Then, the value of Hungarian battery exports started to rise sharply. In 2021, domestic exports exceeded USD 4.1 billion, accounting for approximately 4.38 percent of global exports in the sector.

Hungary’s role has increased dramatically and by 2020, it was the world’s 6th largest exporter of batteries for electric vehicles.

Read also: Battery plant construction to be banned in Budapest forever?

Problems of becoming a battery superpower

Portfolio reminds us that both batteries and their production are highly polluting and require a lot of energy to produce. This goes against the very things that are the most important in our life right now: sustainability and the energy crisis. This raises questions about the extent to which sustainable development can be achieved.

On the other hand, Hungary’s becoming a major power could mean that battery production will have an increasingly significant share of the export structure, the economic news portal concludes. However, the question is: to what extent will this excessive growth make the Hungarian economy vulnerable?