EU investigates BYD plant in Hungary for subsidies

The European Union is looking into a BYD electric car factory in Hungary to see if it benefited from unfair Chinese government subsidies. This investigation comes at a time when Hungary's Prime Minister Viktor Orbán has welcomed significant Chinese investments into his country. Brussels is in the early stages of this investigation. If they find that BYD received improper financial support from China, it could lead to serious consequences. BYD might have to sell assets, cut back production, return the subsidies, and face fines for failing to comply. Orbán has had a complicated relationship with EU officials, particularly over issues concerning Russia and the Ukraine war. He is expected to block increased military aid to Ukraine during an EU summit. His government has attracted around 25% of Chinese investments in Europe. The BYD plant is expected to cost about €4 billion and could create around 10,000 jobs in southern Hungary. EU officials point out that the factory mainly uses Chinese labor and parts, which does not significantly benefit the European economy. Hungary’s Europe minister noted that the country was not informed of the probe but said it is common for the European Commission to quickly scrutinize investments in Hungary. The EU's Foreign Subsidies Regulation has only been used a few times since it was introduced in 2023, primarily targeting Chinese companies. This regulation can enforce various measures if non-EU government support is discovered. It was previously reported that BYD and other Chinese automotive firms received subsidies that led to import tariffs. EU members are keen for Chinese factories to set up operations in Europe but insist they follow European rules to ensure fair competition. BYD is planning to expand in Europe after recently raising $5.6 billion in investments. Besides Hungary, it also aims to establish a plant in Turkey and is considering another location. However, it faces scrutiny from the Chinese government regarding its international expansion plans, particularly a proposed factory in Mexico. Other Chinese electric vehicle manufacturers are also exploring investments in Europe.