European regulators are investigating potentially unfair Chinese state subsidies given to BYD to build its battery-electric vehicle assembly plant under construction in Hungary.
Europe’s trading body, the European Commission, is sending investigators into the plant at Szeged, the regional center of Hungary’s Southern Great Plain, to determine if funding of its construction violates fair trade rules.
The probe could result in BYD being forced to sell assets, reducing the plant's capacity, repaying subsidies given unfairly by the Chinese government and paying a fine for non-compliance.
Additionally, the EC probe casts doubt over the construction of BYD’s other factory underway in Izmir, Turkey, because, while not a member of the European Union, imports of its products may also be seen to violate trading regulations if unfair state subsidies are being paid to fund that project.
The investigation could also delay or even halt BYD’s speculative plans for a third knock-down kit assembly plant in Germany, according to the Financial Times.
Hungary's Prime Minister Viktor Orban is seen as a rogue leader by the EC, citing civil rights infringements and his vocal opposition to supporting Ukraine in its war since the Russian invasion.
Orban, pro-Russia, has broken ranks with other EU leaders. The Hungarian leader also hosted Chinese President Xi Jinping in Budapest last year after several attempts to persuade Chinese automakers to build factories in his country to boost employment.
Europe’s regulators, however, point out that BYD used Chinese labor to build the Szeged plant which will assemble components made exclusively in China in line with Chinese state instructions warning its automakers not to build vehicles from scratch to protect intellectual property.
This EC investigation follows the commission’s probe in 2024 that determined most Chinese automakers, including BYD, receive unfair subsidies from China, resulting in the tariffs on imports for those companies brought into effect last year.
Hungary's Europe Minister, Janos Boka, tells the FT that Budapest had not been informed of the probe.
He adds: “It is not surprising and it is generally known that any investment that takes place in Hungary appears on the Commission's radar very quickly, and the Commission follows with redoubled attention every state aid decision that takes place in Hungary." BYD has not yet made a comment to WardsAuto.
