The world’s largest battery manufacturer will build a huge factory near Debrecen

After a series of foreign investments in lithium-ion battery factories, Poland’s production capacity has grown so much that last year the country overtook the US to become the world’s second largest producer, behind only China. In fourth place is another Eastern European country, Hungary, which got there thanks to foreign investments. For Hungary, electric batteries have been the number 1 export for a year.

These batteries are vital for the electromobility industries, without which electric cars, scooters and bicycles cannot function, and for the storage of electricity obtained from renewable sources. With the investments of the three big German car manufacturers Daimler, Volkswagen and BMW, Hungary will become a European center for the production of electric cars. Poland has plans to launch its own electric car brand, but these are more difficult to advance. Also, Mercedes chose Poland to build a one-billion-euro factory where it will produce only electric vans.

Until the Polish electric cars are on the market, another sector of the economy of the future is developing in the largest Eastern European economy: the production of heat pumps. They are considered one of the solutions to the problem of heating or cooling the house with the lowest possible energy consumption and the lowest possible pollution. The devices became popular after Europe was hit by the energy crisis that erupted when natural gas was weaponized in the context of Russia’s invasion of Ukraine.

In Poland, they are also seen as a way to reduce pollution by replacing coal-fired power plants and stoves. The story of Polish heat pumps reached epic proportions in April, when Japanese manufacturer Daikin Industries launched construction work on its first factory in Poland, an investment of 300 million euros. Daikin is a giant of the profile industry. The factory is being built in Ksawerów, a small town on the outskirts of Lódz, and is due to be completed in 2024. In 2030, it will provide jobs for 3,000 people.

The Japanese giant explained that it was attracted to Poland because there it has “access to the largest source of labor force with professional training, openness to more markets and the opportunity to benefit from stable supply chains”. Just a few days after this announcement, the German industrial colossus Bosh released the news that it will also build a heat pump factory in Poland, in Dobromierz. Production will start towards the end of 2025 or at the beginning of 2026, and the investments amount to almost 255 million euros. The construction works will be started next year.

The plant will have 500 employees. Dobromierz is close to the border with Germany and is a special economic zone that offers investors incentives to develop greenfield projects there. Bosh explained that the expansion of European production by building a factory in the Polish city has to do with the increase in demand as the German state tries to deal with its dependence on Russian gas. In Germany, the largest European economy and the most populous state in the EU, the demand for efficient heat pumps increased by 50% last year. But Poland is the European country with the largest increase in the heat pump market.

In Europe, a record three million pumps were installed last year, according to Daikin data. The company estimates that the figure will increase to 3.5 million by 2025. Heat pumps work like air conditioners, only in reverse, transferring thermal energy from the outside of the building inside. The European Association of Heat Pumps estimates that the cumulative number of devices installed last year in 16 European states is almost 40% higher than in 2021.

In the case of Poland, the increase is 140%. The Czech Republic is in second place, with a 100% lead. In Poland, demand has exploded thanks to various subsidies granted by the government, through programs such as Clean Air and My Electricity. Both the Polish and Hungarian governments boast record investments in 2022. In Hungary, the champions were South Korean companies, followed by German ones. In Poland, German corporations took first place, followed by Swiss and Japanese corporations.

In Hungary, this year the world’s largest battery producer, the Chinese company CATL, will start building a huge factory near Debrecen, an investment of 7.3 billion euros. The plant and related facilities will occupy a land area equivalent to that of 280 football stadiums. The resources it will use, including water and electricity, are commensurate with its size and that is why the Chinese investment is among the most controversial.