Márton Nagy Proposes EU-Level Support Program to Boost Electric Vehicle Purchases in Hungary
Subheading: Advocating for European Intervention, Hungary Warns of Falling Behind in the EV Race
Budapest - Márton Nagy, the Minister of National Economy, proposed establishing a European Union-wide incentive program to support electric vehicle purchases at the Hungarian Business Leaders Forum (HBLF) conference.
Budapest - Márton Nagy, the Minister of National Economy, proposed establishing a European Union-wide incentive program to support electric vehicle purchases at the Hungarian Business Leaders Forum (HBLF) conference.
He emphasized that such a plan is critical not only for Hungary but also for the future competitiveness of the whole EU.
According to Minister Nagy, the expansion of electric vehicles (EVs) is accelerating globally, with significant growth in China and the EU and a strong rise in the United States, although the latter is currently lagging two years behind. China has emerged as a leader in automobile production, now surpassing the manufacturing capacities of Germany and Japan, partly due to the presence of a large Tesla factory in Shanghai that exports to Europe. He also mentioned BYD, another Chinese firm currently constructing facilities in Szeged, Hungary.
The minister highlighted that electric vehicles accounted for approximately 30% of new car sales in China in 2022, 21% in Europe, and only 8% in the USA. As these regions progress with transitions to electric mobility, government subsidies become vitally important in offsetting the high costs of electric vehicles.
Globally, countries subsidize 10% of investments in the sector, contributing $30-40 billion. "China supports this indefinitely, attributing $23 billion, with the EU adding $14 billion to the industry," said Nagy, predicting that this year, global contributions could increase to €100 billion.
The lavish subsidies have allowed China to currently dominate the green industry while the US is rapidly catching up and Europe begins to fall behind. Nagy expressed astonishment at how swiftly the US processed industry funds, investing $100-150 billion within a year and possibly equalling China's manufacturing capacity by 2024. In his opinion, this demonstrates possible acceleration for the EU, provided it recognizes the urgency, while for now, Europe remains in discussions.
Nagy addressed the issue of rare metals, where China also takes the lead, and Europe lags after only recognizing the sector's significance amidst the US-China chip war. Europe's traditional automotive industry is marked by significant overcapacity, evidenced by lower utilization rates of factories compared to China's near 90%.
Turning to Hungary's relevance in this context, Nagy pointed out that Hungary is one of the major players in the EU vehicle export, making the creation of a robust electric vehicle ecosystem critical. He noted that foreign companies also regard Hungary as offering attractive investment opportunities, especially for export activities.
Given Hungary's status as the world's fourth-largest battery manufacturer, the health of the electric car market is key for the national economy. While European market stagnation is concerning, Hungary continues to export heavily to the region, with half of its battery production going to Germany, a figure that is on the rise.
However, Hungary is not immune to the slowdown in Germany, evidenced by a decline in Hungarian data for the final quarter of 2023. While the manufacturing of electrical equipment grew by 9.3% throughout 2023, there was a significant 23% reduction in December.
Nagy reaffirmed the necessity for an EU-level EV stimulus program highlighting that, in contrast to $4000 in the US and $4175 in China, Europe has significantly less support following Germany's termination of its subsidy program. He concluded by stressing that backing electric vehicles is critical for advancing the broader ecosystem, including solar panel adoption on homes.
As Hungary assumes the EU Presidency in the second half of the year, it will push for this initiative, though achieving unanimity may prove challenging.
According to Minister Nagy, the expansion of electric vehicles (EVs) is accelerating globally, with significant growth in China and the EU and a strong rise in the United States, although the latter is currently lagging two years behind. China has emerged as a leader in automobile production, now surpassing the manufacturing capacities of Germany and Japan, partly due to the presence of a large Tesla factory in Shanghai that exports to Europe. He also mentioned BYD, another Chinese firm currently constructing facilities in Szeged, Hungary.
The minister highlighted that electric vehicles accounted for approximately 30% of new car sales in China in 2022, 21% in Europe, and only 8% in the USA. As these regions progress with transitions to electric mobility, government subsidies become vitally important in offsetting the high costs of electric vehicles.
Globally, countries subsidize 10% of investments in the sector, contributing $30-40 billion. "China supports this indefinitely, attributing $23 billion, with the EU adding $14 billion to the industry," said Nagy, predicting that this year, global contributions could increase to €100 billion.
The lavish subsidies have allowed China to currently dominate the green industry while the US is rapidly catching up and Europe begins to fall behind. Nagy expressed astonishment at how swiftly the US processed industry funds, investing $100-150 billion within a year and possibly equalling China's manufacturing capacity by 2024. In his opinion, this demonstrates possible acceleration for the EU, provided it recognizes the urgency, while for now, Europe remains in discussions.
Nagy addressed the issue of rare metals, where China also takes the lead, and Europe lags after only recognizing the sector's significance amidst the US-China chip war. Europe's traditional automotive industry is marked by significant overcapacity, evidenced by lower utilization rates of factories compared to China's near 90%.
Turning to Hungary's relevance in this context, Nagy pointed out that Hungary is one of the major players in the EU vehicle export, making the creation of a robust electric vehicle ecosystem critical. He noted that foreign companies also regard Hungary as offering attractive investment opportunities, especially for export activities.
Given Hungary's status as the world's fourth-largest battery manufacturer, the health of the electric car market is key for the national economy. While European market stagnation is concerning, Hungary continues to export heavily to the region, with half of its battery production going to Germany, a figure that is on the rise.
However, Hungary is not immune to the slowdown in Germany, evidenced by a decline in Hungarian data for the final quarter of 2023. While the manufacturing of electrical equipment grew by 9.3% throughout 2023, there was a significant 23% reduction in December.
Nagy reaffirmed the necessity for an EU-level EV stimulus program highlighting that, in contrast to $4000 in the US and $4175 in China, Europe has significantly less support following Germany's termination of its subsidy program. He concluded by stressing that backing electric vehicles is critical for advancing the broader ecosystem, including solar panel adoption on homes.
As Hungary assumes the EU Presidency in the second half of the year, it will push for this initiative, though achieving unanimity may prove challenging.
