CATL Diversifies Its Plant in Debrecen due to Dwindling Demand for Electric Cars

In view of fluctuating demand for electric vehicles in Europe, Chinese battery giant Amperex Technology (CATL) is adjusting its strategy. As Matt Shen, CATL’s general manager for Europe, told Bloomberg at the IAA in Munich, the €7.3 billion plant in the eastern Hungarian city of Debrecen has been redesigned to produce a wider range of batteries.

The 100 GWh facility, considered the largest greenfield investment in Hungary, was originally intended to manufacture mainly three-component lithium-ion batteries. However, now it will also enable the production of lower-cost lithium iron phosphate (LFP) and sodium-ion cells. “The huge fluctuation of lithium-ion material prices in the past few years has in fact jeopardized the whole industry, alerting some of our customers,” Matt Shen told the news agency.

CATL, a key supplier to automotive giants such as Tesla and BMW, is continuing its European expansion despite market fluctuations.

Matt Shen emphasized that two LFP batteries had recently been introduced specifically for the European market. These could also be used in China if necessary, should demand shift. To mitigate risks, CATL has introduced “mutual guarantee mechanisms” with its partners in the automotive industry.

Cooperation between the University of Debrecen and CATL for Skilled Workforce

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The Debrecen plant is progressing according to plan. In the first of three construction phases, CATL is aiming for a capacity of 40 GWh per year. The second phase is also on schedule, with the battery module production line already in operation since the end of 2024.

Once completed, the plant is expected to have the capacity to power over one million cars per year.

Although the project is expected to create 8,000 to 9,000 jobs and has already hired 800 employees, including over 500 locals, it is facing local resistance. Residents have expressed concerns about potential environmental impacts from toxic emissions and high water consumption in an increasingly arid region. In response, CATL says it has invested tens of millions in technologies to reduce water and electricity consumption and ensure compliance with local regulations.

Matt Shen pointed out that production costs in Germany remain more than 40 percent higher than in China. He expects costs in Hungary to fall somewhere between those of the two countries.

Parallel to developments at CATL, German automakers such as BMW, VW, and Mercedes-Benz presented their latest electric models at the IAA. At the same time, companies are showing a contradictory attitude by lobbying against the planned ban on sales of combustion engines in 2035, according to Bloomberg‘s report. Some had already scaled back parts of their ambitious electrification plans. This uncertainty in the automotive industry underscores the need for suppliers such as CATL to remain flexible.

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