South Korean SK Innovation announced on November 30 it is to build a HUF200bn (€641mn) gigafactory in Komarom, north Hungary, to manufacture electric car battery cells to supply the electric vehicle plans of European automakers.

European carmakers have announced plans to roll out electric cars in big volumes in the coming years, but due to the lack of production capacities they import batteries from China or South Korea, Hungarian business portal Portfolio writes.

The announcement by SKI Innovation means that Hungary will become the largest EV car battery producer in Europe after 2020, Portfolio claims. The company said that they plan to break ground in February 2018 and start production in early 2020.

The total capacity of EV batteries produced at the Komarom factory will reach 7.5GWh each year, enough to power 200,000-250,000 vehicles. SK Innovation will supply batteries to Daimler, among other carmakers. It is not clear whether the new factory will solely be an assembly unit or whether it will also host research and development activities, Portfolio observes, adding that the HUF200bn size of the investment suggests the first possibility.

Komarom, situated on the Hungarian-Slovakian border, is also home to the first European plant of Chinese electric bus maker BYD, which opened the factory in the spring.

Korea’s Samsung SDI launched a HUF100bn EV battery project in God, Pest county, in May that will be able to produce batteries for 50,000 electric cars annually when it begins production next year.

Hungary’s regional rivals are also shifting to higher gears when it comes to attracting the new technology. LG Chem announced the opening of an EV battery factory, the largest lithium-ion battery plant factory in Europe, in Wroclaw with a $1.6bn investment. The South Korean company will produce 100,000 units of EV batteries annually from 2018.

Hungary and other Visegrad countries, with a strong vehicle manufacturing base, are pushing to expand into electric vehicle-related industries to diversify investments. The Hungarian government has outlined plans to ease the over-dependence on the vehicle sector, which remains a key driver of industrial growth, as it accounts for 5% of the country's annual GDP, 20% of its exports and 30% of total industrial output.

Hungary and other CEE countries are also reported to be in the race to host Tesla's European “gigafactory” for electric car batteries. The Californian electric car maker was to pick its investment site this autumn.