On 15 May, top executives of China’s largest car manufacturer visited Hungary, accompanied by the number two leader of Guangdong province, home to 127 million people. BYD is relocating its European headquarters from the Netherlands to Hungary and opening a development centre in Budapest, creating around 2,000 high value-added jobs. This is an important milestone and fundamental for the Hungarian automotive industry to move up the global value chains. Will Tesla’s main challenger conquer Europe from Hungary? How is BYD affecting the European car market? Will the Hungarians’ favourite, Suzuki or BYD lead the Hungarian electric car transition? Is the decision to set up a factory in Hungary really based on ChatGPT’s answer?
The BYD delegation in Hungary
The announcements mark another milestone for the Hungarian car industry, given that although there is one electric car model made in Hungary by Mercedes, the German company only carries out assembly activities, not research. As BYD is the first automotive company – what’s more, in the electric segment, in which Western and Japanese companies are struggling – to bring higher value-added development to Hungary, the Hungarian government had good reason to sign a strategic cooperation agreement with the Chinese company. The importance of the event is reflected by the fact that the founder himself, Wang Chuanfu also visited Hungary. He was accompanied by the unofficial number two of BYD. Executive Vice President Stella Li, who has been with the company since 1996, was appointed last year to head up the European section to improve the company’s operations, which had been weak on the continent. They were accompanied by a senior political leader: Wang Weizhong, who has a background in engineering, is the governor of Guangdong and also the deputy party secretary of the province. With a GDP comparable to that of Brazil or Russia, Guangdong is a major driver of the world economy.
In 2024, the electric car industry was the engine of economic growth in Guangdong: while the IT sector and electrical machinery manufacturing grew by 3.6% and 8.8% respectively, the electric car industry increased by 11.2%. Within this, the production of new energy storage capacity jumped by 44%. The weakness, here and there, of the automotive industry and, more specifically, battery production therefore shows temporary, ad hoc fluctuations and is highly dependent on the current, mostly artificially shaped, conditions in the absorbing market. However, the big trend is electromobility. Guangdong is the only Chinese province with two cities directly connected to Hungary by air: since June 2024, Guangzhou and since August 2024, Shenzhen have been accessible from Budapest with direct flights.
What is BYD?
The company was founded in 1995 by a young battery engineer in Shenzhen, Guangdong. They bought a bankrupt car factory in 2003 and launched their first purely electric car in 2009. Success, however, had to wait more than a decade, but the company, which received continuous government support, persevered with the development required by the cut-throat competition, as a result of which it now has world-class battery technology. Finally, 2020 brought breakthrough success, and since then BYD sales have grown exponentially. Today, the company can offer a competitive proposition against any car manufacturer, thanks to many hours of work invested and decades of government commitment to electromobility. The demand for the company’s products is shown by the fact that between August and October 2024, it hired 200,000 workers, bringing the total workforce to 900,000, exceeding that of Volkswagen. In 2023, it was announced that a factory will be established in Hungary.
There are currently 7 BYD models available in Hungary, some of which will soon be made here. This is good news for Hungarian motorists, 61% of whom are open to the idea of their next car being electric. The percentage of those who categorically reject electric cars is only 12%, significantly lower than the European average (21%). In Europe, Hungarians are the most open to Chinese brands: 69% of respondents would consider buying a Chinese car, compared to the European average of 50%. The overwhelming majority of these people are interested in BYD, while they are mostly not even familiar with the other brands.
As BYD initially produced batteries for mobile phones, it became an important supplier to Nokia, which has had a research and development unit in Hungary since 1997. The Chinese company therefore gained experience in Hungary before the turn of the millennium. And once they started to put their batteries into electric cars, during the selection of the location of BYD factories outside China they saw that Hungary currently offers very favourable conditions for the manufacturing process. When asked about this, the BYD management replied that, according to ChatGPT, Hungary is the most suitable location in Europe. Could it be that even billion-dollar business decisions in China are now being made with artificial intelligence?
Tesla’s main challenger
Demand for the Chinese company’s products is growing worldwide, with 417,000 cars sold outside China in 2024, an increase of 72%, and even more optimistic figures are expected for 2025, with a sales target of 800,000. By comparison, Tesla’s Berlin factory produces 375,000 cars a year. The boycott against Elon Musk’s political involvement has caused Tesla’s global sales to plummet. The change of hegemony seems to have been finalised in the first quarter of 2025. While Tesla delivered 337,000 cars, down 13% year-on-year, BYD delivered 416,000 purely electric vehicles alone. What’s more, this 39% increase was further boosted by sales of its hybrids, of which 570,000 were sold, a 76% jump. BYD has thus proven that it is competitive on a global scale. It therefore cannot be stressed enough why BYD’s development centre in Hungary is so essential for our country. The Chinese take care of know-how, but it is China’s four decades of development that show what the infiltration of foreign technology can do.
Increasing the presence in Hungary serves the strengthening of the regional position
In addition to the USD 4.5 billion investment in Szeged, the strengthening of the Chinese brand’s presence in Hungary has now reached another milestone. As expected, the Chinese electric car giant is relocating its European headquarters, established in 1999, from the Netherlands to Hungary, where it will be responsible for the administrative functions, including sales and customer service, for the company’s cars produced in Hungary, as well as those produced in other countries and delivered to the EU. Moreover, this is a long-term decision for the company. Although BYD is currently building a factory near Izmir in Turkey, which can reach the single market (although Brussels’ regulatory powers there are limited), strictly speaking it has so far only set up a production unit in Hungary within the EU. In mid-2026, after the first comprehensive experiences following the start of production in Hungary, BYD’s management will decide on the location of the next European factory, with Germany (considered Europe’s economic powerhouse) being a possible candidate, although the decision is being held off due to the problems the country is experiencing. The regional headquarters will thus definitely remain in Hungary until the third site is physically built. Friendly Hungarian-Chinese relations play an important role in the East Asian business culture, which prizes predictability.
This regional hub role, which also entails testing and qualifying cars, is not only good for Hungary in terms of tax revenues. In addition to the creation of 2,000 new jobs, 90% of which will require tertiary education, the development of models tailored to the European market in Hungary will significantly increase the competitiveness of Hungarian industry. The Chinese company has signed contracts with three universities, which will help to train and supply a high value-added workforce, as Hungarian professionals have not yet been involved in the mass and full production of electric vehicles. As this could mean jobs for up to 10,000 people, in order to ensure a greater reach, vocational training for electric car production will be available in 5 Hungarian cities in addition to Szeged. To motivate scientific efforts, BYD is launching two large-scale programmes, the size of which has set a record among R&D projects managed by HIPA.
- One is the development of a driving technology system based on artificial intelligence,
- The other focuses on further developing drivetrain technology.
BYD has committed to register at least 50% of the patents developed in Hungary locally. Therefore, the research and development centre in Újbuda will greatly help Hungarian car manufacturing to move up the global value chains.
What is there to know currently about BYD car production in Hungary? The first purely electric and plug-in hybrid BYD cars are expected to roll off the production lines in Hungary in October 2025. The initial capacity will be 200,000 cars more than the factory in Turkey. This figure could be further increased with an expansion similar to the Mercedes plant in Kecskemét. Given that BYD aims to generate half of its revenues from sales outside China by the end of 2030 and it expects Europe to play a major role in this, there is a strong possibility of even a doubling in the medium term.
In our narrower region, BYD entered the Romanian, Czech, Slovak and Croatian markets in April. The company plans to provide a significant part of its supply to the surrounding countries from its factories in Hungary. This is good news, because almost all of the well-established brands that have been producing in Hungary went into a downturn in the first quarter of 2025. Global sales of Suzuki, the Hungarians’ favourite, fell 0.9% and Mercedes 4%. BYD will not be operating at a fraction of its capacity like many car makers in Europe. And if BYD manages to get favourable pricing for its locally produced cars, domestic electrification will be carried out not by the Hungarian darling, Suzuki, but by BYD. Suzuki is launching its first electric car this year, and its performance is mixed based on tests. The electric Vitara, which, by the way, is made in India, may no longer be able to offer the value for money that is important to the Hungarian public.
BYD and supply chains
Factory construction has started all over the world to circumvent import duties and strengthen market presence. The international expansion is geographically diversified, with production units being built in Brazil, Thailand, Indonesia, Uzbekistan and Cambodia, in addition to Hungary. The planned plant in Mexico has been postponed due to Trump’s spring moves and may form part of some form of a detailed agreement between the US and China, which is still under negotiation.
Critics often point out that this makes the Hungarian economy vulnerable not only to the West, but also to the East. It is important to note that Western car manufacturers rely on independent suppliers, which is a vulnerable situation in the event of a pandemic, a war in Ukraine, a shortage of chips and a conflict in the Suez Canal. In contrast, BYD’s vertical integration is very high, with more than 70% of the components for its final products being sourced in-house, making it much less likely to face a supply problem, which is also mitigated by the fact that it has its own fleet of suppliers. The latter have increased due to one or the other of the episodes of the crisis series that started with the Covid pandemic: for example, Tesla and Audi units in Germany, but also Suzuki in Esztergom, have been shut down due to a supply shortage.
BYD’s effect is already being felt
The emergence of more and more Chinese car brands has become a global trend. This is further sharpening competition, to the benefit of consumers. The EU’s tariffs (17% for BYD) have also led some European brands to relocate their Asian production back to the old continent. Volvo, for example, moved production of one of its most popular electric car models, the EX30, from China to Belgium in spring this year. However, unlike the BYD plant in Hungary, production is not state-of-the-art, as the otherwise Chinese-owned Swedish car brand has also been using older, refurbished production robots, not just new ones. The rapid increase in market share by Chinese competitors is forcing well-known Western car brands to cut prices. Volkswagen, for example, has launched a lower-priced version of its existing electric car models, but has also cut its starting prices while increasing equipment.
In fact, the real competition in the electric car segment will not be between BYD and Western, Japanese or South Korean cars, but between Chinese brands. Leapmotor entered the Hungarian (and Central European) market in May. Production of the Stellantis Group brand’s low-end T03 model was stopped in Poland in March, and it has been indicated that the car will probably be exported to the EU from a third country. The decision may have been partly prompted by the Eastern European country’s support for punitive EU tariffs against Chinese electric cars, and in retaliation, the party ordered manufacturers to stop production in such countries. As Hungary did not support the imposition of these tariffs, it is possible that Chinese car brands will increase their activities here in the future. In fact, since only Germany, Slovakia and Slovenia opposed the EU’s imposition of tariffs, Hungary technically stands a good chance if a Chinese car maker wants to build a car plant in the EU. For example, the Chinese-owned MG plans to build two production units in Europe, and no decision has yet been taken on the locations. MG, clearly a competitor to BYD, also offers a number of models in Hungary. However, BYD has a much stronger European position than its competitors by establishing production and a development centre in Hungary.
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International relations expert, East and Southeast Asia Researcher of the Oeconomus Economic Research Foundation.
He completed his undergraduate and master's studies at the Pázmány Péter Catholic University and the Corvinus University of Budapest, and part-time training at Hangzhou Normal University in China, Soochow University in Taipei and Ming Chuan University.
Keywords: arms race between the USA and China, electric car industry, semiconductor industry, digital economy.
