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Tesla’s European “Gigafactory” Might be Built in Hungary

Tom Szigeti 2017.03.13.

According to Hungarian business news site Portfolio.hu, it would appear that Hungary is now among those European countries fighting to become the home for US-based electric car manufacturer Tesla’s newest “gigafactory.”

The proposed factory is set to cost 5 billion euros, and will employ roughly 17,000 people. It will produce both car battery cells and electric cars. Naturally, several European countries are lining up for the opportunity for their country to host such a project, and it appears that Hungary is now among them.

Tesla’s first “gigafactory” is located in Nevada; construction began in 2014, and according to the company, by the time the plant reaches full capacity in 2018, it will be capable of producing 500,000 cars per year, and “more lithium ion batteries annually than were produced worldwide in 2013.”

As for the term itself,

the name Gigafactory comes from the factory’s planned annual battery production capacity of 35 gigawatt-hours (GWh). “Giga” is a unit of measurement that represents “billions”. One GWh is the equivalent of generating (or consuming) one billion watts for one hour—one million times that of one kWh.

Since Tesla founder and CEO Elon Musk’s announcement last year that such a production facility would be coming to Europe, multiple countries have made efforts to court the South African-born billionaire. These include Lithuania, Sweden, Poland, Romania, the Czech Republic, France, and, apparently, Hungary as well.

When Portfolio asked the Hungarian Ministry of Foreign Affairs and Trade about whether the Hungarian government had also been in discussions regarding the possibility of Tesla’s “gigafactory” coming to Hungary, the ministry would only respond that

we cannot comment on ongoing investment discussions.

And while such an answer does not mean that Hungarian government leaders have already held discussions with Tesla, the lack of an outright denial strongly implies that discussions may be underway.

When asked about what advantages Hungary might present to Tesla, the ministry responded by mentioning the well-developed manufacturing infrastructure of the country, as well as the numerous multinational companies who have factories in the country.

In addition, the ministry discussed the ways in which Hungary could make investment more enticing for a company like Tesla; under EU law, the Hungarian government can provide financial support up to 50% of a project’s value. The Hungarian government generally provides such financial assistance in one of two ways: “through direct cash incentives or through tax reductions.”

The fact that so many European countries are crawling over each other to make attractive offers to Tesla is no doubt a deliberate goal of Musk’s; as Portfolio points out, Tesla’s CEO employed a similar tactic when searching for a location for the company’s first “gigafactory.” At the time, Musk simply announced plans for the factory, and waited for ever-more attractive offers to come in. And come they did, as Nevada ultimately offered Tesla a series of incentives worth $1.3 billion USD, chiefly in the form of tax reductions.

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