Mercedes in pact with China's Amperex Technology to build battery factory in Hungary

The $7.6bn plant will have a capacity of 100 gigawatt hours, enough to power more than a million cars

Mercedes-Benz will join China’s Contemporary Amperex Technology in building a battery factory in Hungary. Photo: Mercedes-Benz.

Mercedes-Benz will join China’s Contemporary Amperex Technology Company, CATL as it is known, in building a battery factory in Hungary with an investment of as much as €7.3 billion ($7.6bn), with some of Europe’s leading car makers set to become customers too.

The plant will have capacity of 100 gigawatt hours, enough to power more than one million cars, and will run on renewable energy, the world’s biggest electric-vehicle battery maker CATL said on Friday.

Planned to be built in Debrecen, the complex will be in proximity to customers BMW, Stellantis and Volkswagen, CATL said.

“There is no doubt that our plant in Debrecen will enable us to further sharpen our competitive edge, better respond to our European customers, and accelerate the transition to e-mobility in Europe,” said Robin Zeng, founder and chairman of CATL.

The Debrecen plant, which will be Hungary’s biggest investment ever, will create about 9,000 jobs, Hungary’s Deputy Foreign Minister Levente Magyar told the MTI state news service. While CATL didn’t say when production would start, Mercedes said the batteries would go into its next generation of EVs, due to go on sale from around mid-decade.

Car makers including VW and Stellantis have embarked on ambitious plans to make batteries, mostly with partners, to ensure enough supply of the core EV components.

VW is building six facilities in Europe alone, while Mercedes has joined Stellantis and TotalEnergies in a €7bn battery venture and is pursuing a total of eight facilities globally. The European Union is also pushing for a regional battery supply chain that lessens dependence on dominant Asian players, led by Sweden’s Northvolt.

“This 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,” said Markus Schaefer, chief technology officer at Mercedes.

Mercedes first forged a partnership with CATL in 2020, while BMW is a foundation customer for the Chinese company’s factory in Erfurt, Germany, that is due to start production at the end of this year.

CATL’s Hungary investment follows a flurry of other announcements from the company on new battery sites, including a 14 billion yuan ($2bn) investment in east China’s Shandong province and a 13bn yuan battery project in Fujian province, where CATL is based.

CATL has also been considering an investment of up to $5bn in either Mexico or the US, though that announcement has been delayed after US House Speaker Nancy Pelosi travelled to Taiwan, sources said.