Challenges Facing Battery Manufacturers in Hungary Amidst Declining Demand
Major Korean battery plants in Hungary report significant financial losses as demand for electric vehicles slows down.
Hungary's battery manufacturing sector, particularly involving three operational Korean factories, is experiencing substantial financial difficulties, with losses exceeding 44 billion HUF forecasted for 2024. The financial statements reflect a notable decline in demand for electric vehicles (EVs), prompting concerns among manufacturers about the sustainability of this rapid growth.
Samsung SDI Zrt., a prominent player in the market, acknowledged this trend in its financial report, projecting that while the EV market is expected to grow in the medium to long term, recent months have demonstrated a slowdown.
The Hungarian government had anticipated that the ramp-up in battery production would significantly contribute to GDP growth; however, these expectations have yet to be realized.
In Debrecen, two additional Chinese-owned factories, Eve Power and CATL, are currently under construction.
However, the timeline for their operational launch remains uncertain.
CATL has indicated plans to initiate testing operations later this autumn, although reports suggest that this could be delayed by up to a year, with potential for trial production to be postponed until autumn 2026.
Samsung SDI revealed a financial loss of 23.4 billion HUF for 2024, indicating a downturn in demand as revenues fell by about 25% from the previous year's 2.31 trillion HUF to under 1.8 trillion HUF.
It was noted that the majority of production output is absorbed by the parent company in South Korea, with only a fraction of exports reaching the European Union and the United Kingdom.
Domestic revenue, recorded at 6.3 billion HUF, is derived solely from waste sales, with a total waste generation of 44.5 million kilograms, of which a significant portion, 31.9 million kilograms, is classified as hazardous.
Despite the challenging market conditions, Samsung SDI's manufacturing capacity is reportedly expanding, with the workforce in 2024 increasing by over 500 to a total of 3,866 employees.
Personnel-related expenditures also rose by approximately 10 billion HUF to 76.4 billion HUF.
Conversely, spending on labor leasing decreased notably, dropping to 34 billion HUF from 47 billion HUF in 2023.
Financial support from the government has been substantial.
Between 2022 and 2024, Samsung SDI accessed a total of 140 million euros (approximately 56 billion HUF) in state subsidies, outlined in the Ministry of Foreign Affairs and Trade's database.
Specific support instances include grants for electric vehicle battery production expansion and investments in solar systems for the Göd facility.
SK On Hungary Kft.
also reported a sharp financial reversal, shifting from a profit of 13 billion HUF in 2023 to a loss of nearly 10 billion HUF in the subsequent year.
Revenue fell by around 14%, with sales approximating 345 billion HUF.
Established in 2020, SK On operates a 430,000 square meter facility capable of producing 7.5 GWh of batteries annually.
A larger plant, planned in Iváncsa with a capacity of 30 GWh, faced challenges amid declining EV demand, leading to layoffs and labor disputes within the company.
Despite losses, SK On has increased its workforce to 2,700, which marks an addition of 390 employees compared to 2023. Associated wage costs amounted to approximately 35 billion HUF, while the company manages significant long-term debts totaling 1.56 billion and short-term debts of 1 billion dollars.
Another entity, SK Battery Manufacturing Kft., located in Komárom, recorded a loss exceeding 11 billion HUF, doubling its previous year's deficit.
This company’s revenue fell short of the previous year's figure, coming in at about 257 billion HUF compared to 450 billion HUF in 2023. The average workforce diminished to 1,012, a reduction of 131 jobs.
The company also referenced conditional governmental support, citing a contract with the Ministry of Foreign Affairs and Trade for a 199 billion HUF investment, qualifying for up to 28.494 billion HUF in budgetary support, contingent upon fulfilling certain obligations between 2023 and 2028. These commitments include maintaining the investment's assets, sustaining employment levels, and achieving specified revenue and wage targets.
Samsung SDI Zrt., a prominent player in the market, acknowledged this trend in its financial report, projecting that while the EV market is expected to grow in the medium to long term, recent months have demonstrated a slowdown.
The Hungarian government had anticipated that the ramp-up in battery production would significantly contribute to GDP growth; however, these expectations have yet to be realized.
In Debrecen, two additional Chinese-owned factories, Eve Power and CATL, are currently under construction.
However, the timeline for their operational launch remains uncertain.
CATL has indicated plans to initiate testing operations later this autumn, although reports suggest that this could be delayed by up to a year, with potential for trial production to be postponed until autumn 2026.
Samsung SDI revealed a financial loss of 23.4 billion HUF for 2024, indicating a downturn in demand as revenues fell by about 25% from the previous year's 2.31 trillion HUF to under 1.8 trillion HUF.
It was noted that the majority of production output is absorbed by the parent company in South Korea, with only a fraction of exports reaching the European Union and the United Kingdom.
Domestic revenue, recorded at 6.3 billion HUF, is derived solely from waste sales, with a total waste generation of 44.5 million kilograms, of which a significant portion, 31.9 million kilograms, is classified as hazardous.
Despite the challenging market conditions, Samsung SDI's manufacturing capacity is reportedly expanding, with the workforce in 2024 increasing by over 500 to a total of 3,866 employees.
Personnel-related expenditures also rose by approximately 10 billion HUF to 76.4 billion HUF.
Conversely, spending on labor leasing decreased notably, dropping to 34 billion HUF from 47 billion HUF in 2023.
Financial support from the government has been substantial.
Between 2022 and 2024, Samsung SDI accessed a total of 140 million euros (approximately 56 billion HUF) in state subsidies, outlined in the Ministry of Foreign Affairs and Trade's database.
Specific support instances include grants for electric vehicle battery production expansion and investments in solar systems for the Göd facility.
SK On Hungary Kft.
also reported a sharp financial reversal, shifting from a profit of 13 billion HUF in 2023 to a loss of nearly 10 billion HUF in the subsequent year.
Revenue fell by around 14%, with sales approximating 345 billion HUF.
Established in 2020, SK On operates a 430,000 square meter facility capable of producing 7.5 GWh of batteries annually.
A larger plant, planned in Iváncsa with a capacity of 30 GWh, faced challenges amid declining EV demand, leading to layoffs and labor disputes within the company.
Despite losses, SK On has increased its workforce to 2,700, which marks an addition of 390 employees compared to 2023. Associated wage costs amounted to approximately 35 billion HUF, while the company manages significant long-term debts totaling 1.56 billion and short-term debts of 1 billion dollars.
Another entity, SK Battery Manufacturing Kft., located in Komárom, recorded a loss exceeding 11 billion HUF, doubling its previous year's deficit.
This company’s revenue fell short of the previous year's figure, coming in at about 257 billion HUF compared to 450 billion HUF in 2023. The average workforce diminished to 1,012, a reduction of 131 jobs.
The company also referenced conditional governmental support, citing a contract with the Ministry of Foreign Affairs and Trade for a 199 billion HUF investment, qualifying for up to 28.494 billion HUF in budgetary support, contingent upon fulfilling certain obligations between 2023 and 2028. These commitments include maintaining the investment's assets, sustaining employment levels, and achieving specified revenue and wage targets.
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