China's top electric carmaker BYD announced on Friday it plans to build a car factory in Hungary, in a bid to expand into Europe despite an investigation into Chinese subsidies in the tech field.

BYD Europe announced plans to build a factory in the southern Hungarian city of Szeged. It said the move would mark "a significant step toward green mobility in Europe."

"This state-of-the-art facility showcases BYD's commitment to sustainable development and local economies," it said.

Hungary celebrated the news. Foreign Minister Peter Szijjarto said it would bring to the country "thousands of new jobs and the latest technology in the industry of the future."

What do we know about the new factory?

The planned factory would be the first major consumer EV production facility for a Chinese carmaker in Europe.

BYD said it hopes by setting up the new plant to "accelerate the entry of new energy passenger vehicles into the European market, further deepen [the firm's] global layout, and actively promote the green transformation of the global energy structure."

It is also expected to create thousands of jobs in Hungary.

The project "will be one of the largest investments in Hungarian economic history," Foreign Minister Szijjarto said, adding that the government would provide financial incentives to BYD for building the plant.

The factory's construction will "further strengthen the position of the Hungarian economy, further strengthen the foundations of long-term economic growth, and further strengthen Hungary's position in the global electric automotive transition," he added.

Hungary is trying to position itself as a global hub for EV production.

China's attempts to expand into Europe

BYD declared itself "the world's leading manufacturer of new energy vehicles and power batteries," after becoming the first global manufacturer to pass the 5 million milestone in electric vehicle (EV) production earlier this year. Last year, it also became the first carmaker to announce that it had halted pure petrol or diesel engine car production entirely.

It had a global market share of around 18% of all electric or hybrid vehicles sold in 2022, according to a study by the EV Volumes database, compared to just 13% for US giant Tesla. However, Tesla still sells more all-electric vehicles with no hybrid component. And BYD is still almost completely dependent on its massive domestic market, with foreign sales accounting only for around 10% of its total.

China's budding electric car sector has faced growing scrutiny from the EU, which announced an investigation into Beijing subsidies which the firms have benefited from for decades. The European bloc argues that these subsidies present a risk of unfair competition.

Though an EU member, Hungary offers Asian businesses lucrative tax breaks, infrastructure and job creation subsidies as part of its "look East" policy.

rmt/msh (AFP, AP)