Hungary’s bet on EV battery boom hits bumps in the road – sagging demand and environmental issues

Battery factory, Hungary [credit: Hungary today]

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Viktor Orbán wants to turn his country into a European battery hub by offering massive subsidies, but residents at the sharp end of the process aren’t happy about the risks and conditions they’re facing. To add to the problems, the supposedly inevitable success of the scheme is questionable as EV’s fail to sell in the expected large numbers, throwing the whole concept into doubt right across Europe.
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In recent years, billions of dollars in investment have poured into Hungary with the promise to create thousands of jobs and support Europe’s green transition, but stagnating EV demand and strong environmental opposition to new “gigafactories” have dogged Orbán’s showcase economic strategy, says Climate Home News.

Many battery producers in Europe are delaying or shelving plans to expand due to uncertainties about profit levels going forward as battery prices fall, according to the International Energy Agency – and the downturn hasn’t spared manufacturers in Hungary.

Meanwhile, weakening of the country’s environmental regulatory powers has left protestors like Szemán worried that authorities are unable to prevent pollution or hold those that cause it accountable.

Activists argue that decision-makers have prioritised battery investments at the expense of environmental protection.
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Orbán’s economic reboot
For Orbán’s nationalist government, the battery industry is a key way to reboot the economy and create jobs. More than 40 plants involved in the battery manufacturing ecosystem are either currently operating, under construction or planned.

To attract investors, his administration has simplified rules for foreign investments and developed “incredibly generous” financial incentives and tax breaks, said Tamás Matura, associate professor at Corvinus University of Budapest and founder of the Center for Central and Eastern European and Asian Studies.

Local media have estimated the state aid granted to battery companies at about 1.5 trillion Hungarian forints ($4.2 billion) – equivalent to around 2% of the country’s annual GDP.
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Europe’s appetite for EVs stalls
But fearful local residents and environmental challenges are not the only roadblocks facing the industry’s development.

Stagnating demand for electric vehicles in the European market saw Hungary’s battery production plummet last year, with production 51% lower in December 2024 compared to a year earlier.
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Solvent leaks face scrutiny
In the Hungarian village of Mikepércs, which lies five kilometres from the CATL factory in Debrecen, mother-of-three Éva Kozma said she worries most about the risk of pollution from N-Methylpyrrolidone (NMP), a colourless liquid used as a solvent in the production of lithium-ion batteries that can be harmful to health.

NMP exposure has been found to impact the fetal development of unborn children and cause miscarriages. Studies also showed that NMP lingers in water and moist soils and can migrate to groundwater.

Although there are efforts to develop alternatives to NMP in battery production, these have yet to be widely adopted.
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Elsewhere in Hungary, a series of leaks involving the NMP solvent have become a focus of environmental opposition to battery plants.
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“Of course, battery factories are necessary, as energy storage and electromobility play a key role in the green transition,” said Greenpeace’s Gergely. But, he added, “the current model – which simply aims to replace internal combustion engine cars with electric cars – is not sustainable.”

Scientists have also warned that more effort is needed to reduce the environmental and emission footprints of battery production, which is water and energy-hungry. It also involves chemicals that can have damaging effects on people and the environment if not adequately managed.

Full article here.
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Image: Battery factory, Hungary [credit: Hungary today]