Ultimately, local residents may feel disconnected from these batteries and the green energy transition they enable because Hungarians are not the target group. Most lithium batteries produced in Hungary are destined for Western European car markets, where consumers are wealthier and already convinced of the need to switch to clean energy. “The average Hungarian has the money to buy a ten-year-old used car from Germany, usually powered by diesel or gas. They don't have the money to buy electric vehicles,” says Bartók.
Slow question
It's worth keeping in mind that not all international deals announced by Chinese battery makers have come to fruition. Of the 68 factory investments we found, at least five have been suspended or officially canceled, in some cases even after construction had already begun. Part of that is because consumer adoption of electric vehicles in these markets has proven to be a much more gradual process than in China.
Chinese battery makers planned aggressive global expansions at a time when governments were giving generous subsidies to factory projects and tax breaks to consumers buying electric cars, and they are now having to recalibrate as that enthusiasm wanes. In the US, the Inflation Reduction Act passed under Joe Biden incentivized both Chinese and American companies to build factories, but then the EV subsidies outlined in the legislation were canceled under President Donald Trump. Even Europe, which had previously set itself the goal of completely cessating the production of petrol cars by 2035, is now starting to have doubts.
“Battery makers would obviously have less incentive to make large investments if they are unsure of the policy direction,” said Alexander Brown, a senior analyst who studies industrial policy at the Mercator Institute for China Studies.
What if the world doesn't want electric cars? Some battery companies are already implementing a backup plan: switch to energy storage. Ford, which is building a massive battery factory in Michigan using CATL manufacturing technology, announced in December that it would switch from making EV batteries to producing batteries for energy storage. Envision AESC, another major Chinese battery company whose plans to expand in the US were on hold for most of last year, also recently announced that its existing factory in Tennessee will switch from making EV batteries to storage batteries.
While some parts of the traditional auto industry may lobby against electric cars, everyone seems happy to see more batteries in power grids and homes that could prevent power outages and even allow consumers to sell electricity back to the grid. (Well, at least almost everyone. Pakistan's National Utility Company and the Chinese banks that lend to it are not too happy with the rise of Chinese batteries, as another part of our package expertly discussed.)
In any case, the good news is that energy storage technology is rarely politicized. In the US, both deeply Democratic California and Republican Texas have become big proponents of grid-scale battery storage, so Chinese ambitions to build more factories are unlikely to be completely lost.
Reverse technology transfer
For the partner companies and governments that work with Chinese battery makers to bring factories to their countries, the goal has always been clear: trade market access and subsidies for the promise that these companies will eventually train local workers to produce state-of-the-art batteries themselves.
The irony here should not be lost on anyone who pays attention to the global auto industry. Over the past thirty years, American, European, Japanese and Korean car manufacturers have happily exchanged their technological knowledge to gain access to the Chinese car market. But today that relationship is reversed.
