The European Commission may block a planned grant of €108 million for Samsung SDI to expand battery cell production in Hungary.
Hungary has managed to successfully attract a few EV battery investments in recent years, including Samsung SDI plant, but because of fierce competition between European countries looking for more jobs, those investments were often connected to noticeable public support.
According to the latest news, the European Commission is now looking at the planned grant of €108 million ($119 million) for Samsung SDI to expand battery cell production.
“The European Commission has opened an in-depth investigation to assess whether Hungary’s plans to grant €108 million of public support to Samsung SDI for investing in the expansion of its battery cell production facility in Göd (Hungary) is in line with EU rules on regional State aid.
Samsung SDI’s investment in God is around €1.2 billion ($1.32 billion) to expand lithium-ion cell and modules/packs for electric vehicles. The project is already well advanced, which means that the company might face less favorable circumstances than anticipated when starting.
“The Commission has doubts at this stage that the planned aid support of €108 million to Samsung SDI in Göd complies with all relevant criteria of the Regional Aid Guidelines:
- the Commission has doubts whether the measure has an “incentive effect”. In this respect, the Commission will investigate whether the decision by Samsung SDI to invest in Hungary was directly triggered by the Hungarian public support, in line with the conditions set out in the Guidelines or whether the investment would have been carried out in Göd, even absent the public support;
- the Commission also has doubts in relation to the public support’s contribution to regional development and on its appropriateness and proportionality; and
- the Commission cannot exclude at this stage that the public support may lead to the relocation of jobs from other EU Member States to Hungary.”
As over the year we saw that probably all countries are trying to attract business one way or another, the case might be politically driven.
Anyway, as the EV battery market is on a rising curve, Samsung SDI should be fine even without the grant.
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