Hungary's alternative low-road model for the integration in the European battery value chain

Abstract:

Hungary has become a European centre of battery manufacturing for electric cars. The Hungarian battery value chain is dominated by East Asian companies which will employ around 30,000 people by the mid-2020s.
The paper argues that Hungary's positioning in the automotive value chain through the low-road model has not changed with the transition to electric cars. Nevertheless, compared to the previous embeddedness into value chains dominated by German OEMs, an alternative integration has taken place with a double dependence from German OEMs and East Asian battery manufacturers. The development of the battery industry in Hungary is based on highly flexibilised labour markets, an increasing share of third-country migrant workers, an increasing share of low-value added activities in battery production, as well as state aids shortening the payback period of investments.