Hungary and Germany Can Save EU Electric Battery Industry

The European Union is lagging behind, China is unrivaled, and the US is pushing ahead in the production of batteries for electric cars. In Europe, Germany and Hungary are virtually the only hope for the sector – reported Világgazdaság on Tuesday.

The European Union is not doing well in the production of batteries for electric cars, despite the significant sums of money allocated for it in the budget, according to the latest report by the European Court of Auditors. The potential risks include failing to meet long-term green targets, not being able to switch to e-cars by 2035, and the EU falling behind China and the US.

The EU’s hope lies in Germany and Hungary.

In 2018, the European Commission set out its Action Plan for Batteries with the stated aim of making the European Union a global leader in production and use. However, we are far from that goal – if we consider the region at the level of its 27 members. Some Member States are doing quite well for themselves, including Germany, France, Italy, and Sweden, as well as Hungary.

At the announcement of the new capacity expansion investment by Denso in Japan, Minister of Foreign Affairs and Trade Péter Szijjártó said that the production value of the Hungarian automotive industry broke a record last year with HUF 12,000 billion, and that the investments currently underway will put Hungary on top of the European leaderboard in the production of electric batteries.

According to the European Court of Auditors’ forecast, from the current low-data starting point we will be in fourth place behind Germany, Sweden, and Italy by 2025, but

could be in first place by 2030.

Only Germany is in danger of losing this position, according to the analysis. The question is how their capacity additions will develop, because there is almost a threefold difference between the minimum and maximum planned there. So if the final figure is closer to the 151 GWh annual minimum, Hungary could really come out on top in Europe with its 178-188 GWh annual forecast (battery production capacity is compared in GWh per Member State).

In fact, in a meeting with South Korean business leaders a week ago, Minister of Economic Development Márton Nagy said the target was even higher, totaling at 250 gigawatt-hours. He noted that

battery production could bring more than 6,300 billion forints (approx. EUR 17 B) of development in the coming years

and create 20,000 new jobs as a new breakthrough for the Hungarian economy.

Szijjártó and Nagy agreed that in the global competition, Hungary will be in the top four with China, the world leader, with an annual output of more than 655 gigawatt-hours, and the aforementioned Germany and the United States, but the competition will not stop. This was echoed by the findings of the European Court of Auditors.

Although we did not look at Member States but at the EU as a whole, we found that some countries are very supportive of the sector and that the scores in the table show that there are high ambitions,”

Annemie Turtelboom, the member of the Court of Auditors who led the audit, replied to a question from Világgazdaság concerning Hungary.

The report pointed out that China, which accounts for 76% of global production capacity, has a seemingly insurmountable lead, and that the US is providing a number of incentives to stimulate the sector’s recovery, so there is no guarantee that the more optimistic versions of the European forecasts will materialize. These could be jeopardized by geopolitical and economic factors, for example if battery producers do not come to the EU but leave because of more favorable conditions in other regions.

The dangers include, for example, sourcing raw materials, as most of these are sourced from outside the EU.

On top of all this, there are not only raw material costs, but also energy costs, as the survey showed that at the end of 2020, the cost of a battery pack was more than double the planned cost of €200 per kilowatt-hour, and in the last two years, the price of nickel has risen by more than 70 percent, and lithium by 870 percent.

The battery is one of the most significant items in the price of electric cars, making the end product expensive, which could again put them at a competitive disadvantage compared to cheaper operations in other regions.

An internal price competition between Member States might also emerge, which is unlikely to help achieve EU-wide objectives.

According to an analysis by the National Audit Office, in order to achieve a zero-emission fleet by 2035, the

EU may be forced to rely heavily on imported batteries and electric vehicles,

which would be very damaging for the European car industry and workforce.

At worst, the EU could be forced to postpone the ban on internal combustion engine vehicles until after 2035, thus failing to meet its carbon neutrality targets.

“The EU must not be allowed to become as dependent on batteries as it was on natural gas, as this would jeopardize its economic independence,” added Turtelboom.

Via Világgazdaság; Featured image: Pixabay