China-based CATL plans to invest €7.34bn ($7.48bn) to establish its second European battery plant in Hungary as it moves closer to its European customers and tries to secure its position as the world’s largest battery manufacturer. 

The project is the largest ever greenfield foreign direct investment in Hungary’s history, with construction set to begin later this year, according to a statement released on August 12. 


CATL plans to build a 100 gigawatt-hour (GWh) plant on a 221-hectare site in the eastern city of Debrecen, which would make it Europe’s largest gigafactory. The project overtakes South Korea’s LG Energy Solution plant in Wrocław, Poland, which is set for 68GWh of battery cell production in 2022, according to S&P Global.

Robin Zeng, the founder and chairman of CATL, said that the greenfield project will be “a giant leap” in the battery maker’s global expansion. The project is expected to create 9000 jobs. 

Once operational, the factory will supply both cells and modules to European automakers for their electric vehicle (EV) portfolios. The Debrecen facility is located near the auto plants of CATL customers such as Mercedes-Benz, BMW, Stellantis and Volkswagen.

“[CATL’s] move will see Europe secure much needed Tier 1 cell production capacity to develop its regional supply chain, as European carmakers are in need of high-quality local cells,” said Evan Hartley, an analyst at Benchmark Mineral Intelligence, a specialist information provider on the EV supply chain. 

The company’s first overseas plant in the German city of Erfurt is scheduled to start cell production by the end of 2022. A CATL spokesperson tells fDi that the new Hungarian plant’s proximity to its customers' auto plants will enable CATL “to better cope with the battery demands of the European market”.

Hungarian battery ecosystem


CATL’s $7.48bn investment is more than three times the size of Hungary’s previous largest investment. This was South Korean battery maker SK On’s plans to invest $2.29bn into a 30GWh factory in Iváncsa, located to the south of the capital Budapest. 

Prior to CATL’s investment, Hungary was Europe’s second most popular destination for foreign battery makers behind Germany, attracting $5.4bn worth of projects since 2016, according to fDi Markets.

Mr Hartley said that Hungary has become the location of choice for foreign battery makers as the country provides “cheaper labour and land when compared with Western Europe”, and generous subsidies to battery cell producers. 

In March 2022, the Hungarian government’s €209m incentive package for SK On’s 30GWh plant in Iváncsa was approved by the European Commission. 

The CATL spokesperson said that Hungary was the “perfect choice” due to its “sound business environment, well-developed infrastructure and logistics connections” as well as its long-established automotive industry and abundant competitive workforce.

“Hungary and Eastern Europe is now emerging as a regional hub,” said Mr Hartley, noting the entry of upstream cathode producers and downstream EV automakers. “Growing Eastern Europe cell capacity is a trend that is likely to continue”.

Bandwagon effect

Other Chinese battery makers have chosen Hungary too. Nio, a Shanghai-based automobile manufacturer, is building its first overseas manufacturing plant in Hungary. The new facility will produce products for the Norwegian market, as well as for its official launch in other European countries such as Germany and the Netherlands.

EVE Energy, a Chinese battery manufacturer, signed a letter of intent in April 2022 with an affiliate of the Debrecen local government, to buy property to build a new cylindrical battery plant.

Mr Hartley noted that CATL’s investment into Debrecen would be the result of a “small bandwagon effect”, where cell and cathode producers moved to make the most of existing supply chains and serve the EV assembly plants of automakers such as Mercedes-Benz.

A spokesperson for Mercedes-Benz said CATL’s facility will supply battery cells for the company’s production sites in Hungary and Germany. A planned BMW facility in Debrecen will also launch a series of production of full electric lines in 2025.

Mr Hartley says the CATL project is a “positive sign for Europe’s lithium-ion battery supply chain”, but stressed that there needs to be more upstream commitments to ensure an independent supply chain within the region.

“Currently a lot of European gigafactories rely on Asian, primarily Chinese, cathode imports,” he added.

China continues to be dominant in the EV supply chain. The country produces three-quarters of all lithium-ion batteries and is home to 70% of cathode production capacity and 85% of anode capacity, according to the International Energy Agency.