La European Commission has started apreliminary investigation to check if the China has provided unjustified subsidies to the Hungarian factory of Byd, the Chinese car manufacturer that is rapidly expanding in the electric car sector. The initiative is part of the Regulation on Foreign Subsidies, introduced in 2023, with the aim of ensuring a fair competition in the European single market. This was reported by the Financial Times, explaining that if the investigation were to confirm the presence of unfair state aid, Brussels could impose corrective measures, including reducing production capacity, selling assets, repaying subsidies received and possible economic sanctions.
Hungary's role and tensions with Brussels
BYD's investment in Hungary includes the construction of a factory in the southern region of Szeged, with a financial commitment up to 4 billion of euros and the creation of around 10 jobs (operational by the end of 2025). European officials, however, have raised doubts about thereal added value for the local economy, as the factory would be built with Chinese labor and will mainly use imported components, including batteries.
The Hungarian government, led by Viktor Orbán, has attracted much Chinese investment in Europe and consolidated ever closer ties with Beijing. Orbán, often in contrast with Brussels, Has criticized community policies on state aid and reiterated that Hungary carefully assesses subsidies granted to companies.
The Minister for Europe, János Boka, stated that Budapest was not officially informed of the investigation. “It is not surprising,” Bóka commented to Financial Times – “and it is well known that every investment that is made in Hungary appears on the Commission’s radar very quickly, and the Commission follows with double attention every State aid decision that is made in Hungary.”
The implications for the European market
The investigation into BYD represents a Testbed for EU industrial strategy towards Chinese investments. On the one hand, Brussels wants attract electric vehicle manufacturers to stimulate the ecological transition; on the other hand, it intends to avoid that these factories are transformed into simple assembly centers without technology transfer or tangible benefits for the European industry. The Commission has already established that BYD and other Chinese electric car manufacturers have received state subsidies, imposing at the end of 2024 17% import duties of the house in Shenzhen.
The Foreign Subsidies Regulation allows the EU to investigate companies that they receive direct or indirect funding from non-EU governments, including subsidies, soft loans, tax incentives and funding for research and development. Brussels has already made it clear that Chinese companies can invest in the continent, but they must respect European rules. Sabine Weyand, responsible for trade in the European Commission, stressed that Brussels will not accept investments without added value for the local market.
Byd's numbers
Byd is going through a big expansion phase. As of February 2025, it has sold over 322 thousand electric vehicles, by registering a increase of 164% compared to the same month in 2024. With a 32% market share in the new energy vehicle (NEV) sector in China, the company is consolidating its position as a leader, while its rival Tesla, also an accomplice Elon Musk's "exits", has registered a decrease of 19%, slipping to fourth place.
The company is also revolutionizing the industry with technological innovations. Just in these days he has 1.000 kW Super e-Platform presented, an ultra-fast charging technology that allows you to add 400 km of autonomy in just five minutes, far exceeding the performance of Tesla's V4 Superchargers.
And the Shenzhen-based company's expansion strategy does not stop at Hungary. In addition to the Hungarian plant, the construction of a plant in Türkiye e a third production site in a country yet to be defined. Italy is also in the running, with the involvement of companies such as Pirelli, Brembo and Prime Industrie in the Chinese group's supply chain.
