Chinese New Energy Forces Expanding to France, Hungary, and Serbia
Chinese Battery Factory CATL in Hungry

Chinese New Energy Forces Expanding to France, Hungary, and Serbia

This article covers the current state and trends of Chinese new energy forces investing and setting up factories in France, Hungary, and Serbia in recent years.

1

Serbia: A Frontier for Entering Europe

China has become Serbia's second-largest trading partner, behind Germany, and the largest source of foreign direct investment. The automotive parts manufacturing sector attracts the most Chinese investments in Serbia, featuring both industry leaders and specialized SMEs. With the upcoming China-Serbia Free Trade Agreement, over 90% of trade will be tariff-free, particularly benefiting categories like automobiles, lithium batteries, and photovoltaics.

Some Chinese auto parts companies that have already built factories in Serbia

Serbia, located at the edge of the EU, is not only highly friendly to China and socially stable but also has labor and energy costs that are half those of EU countries. The implementation of zero tariffs presents significant operational cost advantages. Serbia, which has long aspired to join the EU, sees this as a golden opportunity to become an indispensable part of the European automotive supply chain.

Serbia has become a front-line base for automotive parts companies targeting the European market. Electric giants are clustering in Hungary, forming an initial industrial cluster, while France, the starting point of the historic Orient Express and representing the core EU market, is undoubtedly the ultimate destination for Chinese new energy vehicle brands expanding abroad.

Early Movers in Serbia:

  • Johnson Electric: This Hong Kong-based automotive parts supplier was one of the first to set up in Serbia, with a factory in Niš operational since 2014, investing around 600 million RMB to produce various automotive motors, switches, and actuators.
  • Yanfeng Automotive Interiors: A subsidiary of SAIC's Huayu Automotive, Yanfeng opened an interior plant in Kragujevac in 2019, investing nearly 500 million RMB and employing 1,000 local workers. Clients include Volkswagen, Mercedes, and BMW.
  • Minth Group: This aluminum battery box supplier started production in Mačvanski in 2022, with a total investment exceeding 2 billion RMB, creating 1,000 jobs. It serves European clients like BMW, Volkswagen, Renault, and Tesla's German factory.
  • Xingyu Automotive Lighting: Launched its first overseas lighting plant in Niš at the end of 2022, with a total investment of nearly 500 million RMB, focusing on supporting European OEMs.
  • Linglong Tire: Their factory in Zrenjanin became operational in 2023, with a total investment of over 7 billion RMB, producing 13 million tires annually for various vehicle types.
  • Lianbo Precision: This "gazelle" company started producing new energy vehicle drive motor components in Novi Sad in April 2024, with an investment of about 600 million RMB.

2

Hungary: Emerging Industrial Cluster

Adjacent to Serbia, Chinese automotive companies have made significant investments in Hungary, making China the largest investor with 10.7 billion euros in 2023. Friendly policies, the lowest corporate tax rate in the EU (10-19%), and the presence of German manufacturers’ new electric production bases are major attractions.

The buses produced by BYD in Hungary have been sold to many European countries.

Recent Investments in Hungary:

  • Huashuo Technology: Launched its first overseas factory in Debrecen in February 2023, investing 300 million RMB in producing aluminum precision die-casting housings for electric vehicle engines and transmissions.
  • Jiangsu Spring Automotive: Invested 400 million RMB in a factory in Miskolc, producing metal castings and modules for electric vehicles.
  • Shenzhen Kedali: Opened a production base near Budapest in May 2023, investing around 300 million RMB to manufacture precision structural parts for lithium and storage batteries.
  • Shanghai Baolong Automotive: Started operations in its sensor production park near Budapest in September 2023, with an investment of over 100 million RMB.
  • EVE Energy: Began constructing a battery factory in Debrecen in November 2023, investing over 7.5 billion RMB, with plans to supply BMW’s Hungarian factory.
  • Enjie Shares: Opened a factory producing key wet process base films and functional coated membranes for lithium batteries in December 2023, investing 2.5 billion RMB.
  • CATL: Planning to build a 100 GWh battery production line with an investment of 57 billion RMB, operational by late 2025.
  • BYD: Announced in December 2023 the construction of a new energy passenger vehicle production base in Szeged, investing over 55 billion RMB to produce 200,000 vehicles annually.
  • NIO: Built a facility in Hungary in 2022 to manufacture electric vehicle battery swap stations.

3

France: The Real Test

Last week, French Economic Minister Bruno Le Maire announced plans to increase domestic electric vehicle sales fourfold to 800,000 units annually within three years. Facing the influx of Chinese electric vehicles, France stands firmly on protectionist grounds, unlike Germany. French automotive brands are less intertwined with China, and the country has launched anti-subsidy investigations against Chinese electric vehicles.

In 2023, the best-selling Chinese-made new energy vehicles in France were the Dacia Spring (produced by Renault-Nissan-Dongfeng in Hubei), the Tesla Model 3 (produced in Shanghai), and the MG 4 series by SAIC. Major Chinese brands like BYD and NIO have yet to appear on French best-seller lists.

France's eco-bonus policy from December 2023 requires the entire production and transportation process of electric vehicles and batteries to meet carbon footprint standards, excluding most Chinese imports from subsidies. Furthermore, France imposes high environmental taxes on large-engine vehicles, favoring smaller, more efficient models—an area where French brands excel.

Future Prospects:

  • BYD’s A0-class Dolphin and Seagull series could gain traction in France if produced locally in Hungary.
  • Great Wall Motors' Ora series might also succeed if produced locally.

While South Korean brands Hyundai and Kia have performed well in the French market, China's entry will be challenging, testing their R&D, marketing, and service capabilities.


EU: A Choice at the Crossroads

During the recent trilateral summit, French President Emmanuel Macron played the role of a friendly host, while EU President Ursula von der Leyen maintained a tough stance on China. Von der Leyen highlighted the structural overcapacity of Chinese electric vehicle manufacturing and Europe’s inability to absorb this capacity, stating that the EU would use all possible trade protection tools.

Ongoing anti-subsidy investigations target BYD, SAIC, and Geely, while Tesla’s Shanghai factory is excluded, potentially forcing Tesla to shift production to its Berlin factory.

Amidst divergent views within the EU, European politicians must find the right approach to engage with China.

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#NewEnergy #ElectricVehicles #ChinaInvestments #AutomotiveIndustry #SustainableEnergy #Serbia #Hungary #France #EUTrade #GreenTechnology #Manufacturing #RenewableEnergy #GlobalExpansion #InvestmentOpportunities #ElectricMobility #ChinaBusiness #MarketInsight

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