China's CATL said on Friday it's going to build a 7.3 billion euro $7.6 billion battery plant in Hungary, Europe's largest so far, as the world's biggest electric vehicle battery maker gears up to meet growing demand from global automakers.
The construction of the 100 GWh gigawatt hours plant in the eastern Hungarian city of Debrecen, the biggest overseas investment, would start this year after approvals and should last no more than 64 months, according to CATL.
Once built, it is set to be Europe's largest battery cell plant and CATL's second in the region, making battery cells and modules for carmakers including Volkswagen, BMW, Stellantis and Mercedes-Benz.
The expansion came as European automakers began to adopt electric vehicles in their home markets, prompting a surge in demand for batteries from local suppliers and causing a run on supply deals to avoid production bottlenecks.
Volkswagen, Mercedes-Benz and Tesla have started to implement major battery expansion plans in Europe to secure access to vital cells and raw materials and support their electrification strategies.
Zeng Yuqun, the founder and chairman of the company's founder and chairman, said in a statement that CATL's investment will be a huge leap in CATL's global expansion.
Despite the tensions between Beijing and Washington, the Chinese company is moving ahead with plans for battery production in North America by 2026 for clients including Ford Motor.
The investment is important for Hungary, which is becoming a hub for electric vehicles and batteries in Europe.
In western Hungary, Debrecen is home to a plant built by BMW, while Volkswagen's Audi brand has a factory in Gyor and Mercedes-Benz operates one in Kecskemet, in the central part of the country.
BMW plans to release some battery related information in early September, but it won't say anything. VW and Stellantis didn't respond immediately to requests for comment.
Mercedes-Benz said in a separate statement that it would be the first partner to receive battery cells from CATL's Hungarian plant, and that its order marked the highest initial order volume for the site.
The new state-of-the-art European CATL plant in Hungary is another milestone for the scale-up of our EV production together with our key partners, according to Markus Schaefer, Mercedes-Benz management board member.
CATL previously said it would start providing cylindrical cells to BMW for its new electric vehicles in the year 2025.
The Chinese company is looking into establishing facilities for battery materials in Europe, and is looking into the possibility of collaborating with local partners.
As of the end of 2021, CATL had an annual battery production capacity of 170.39 GWh, with 140 GWh capacity under construction. The company said it aims to install a total of 670 GWh of annual capacity by the year 2025.