As of June this year, Hungary has experienced a remarkable surge in electric vehicle (EV) registrations, more than doubling the numbers recorded in 2020. The country has consistently ranked among the top in Europe for EV growth, with an impressive 150% increase in new registrations from January to May 2024 compared to the previous yearIn May alone, there was a striking 63% rise in the number of registered electric vehicles, making Hungary the third fastest-growing market in Europe, especially when the average growth rate across European countries was a mere 2% for the first five months.

This remarkable growth can be attributed largely to the Hungarian government’s incentives introduced at the end of last yearA considerable 90 billion forint (approximately 237 million euros) support package aimed at promoting electric vehicles has driven domestic demand for eco-friendly transport solutions

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This initiative has made EVs more financially accessible, thereby expanding their market share significantlyIn February, additional regulations allowed businesses to apply for various amounts of pure electric vehicles, ranging from personal cars to trucks, based on their size, which received positive feedback from enterprisesBy the end of June, over 3,200 businesses had applied for these incentives, with the disbursed subsidies amounting to half of the total available 30 billion forint budget reserved for companies.

Data from April showcased a year-on-year increase of 21.4% in new passenger car registrations in Hungary, reaching 10,402 vehiclesAmong these, hybrid and plug-in hybrid cars constituted 51% of total sales, while battery electric vehicles accounted for 7%. Despite the latter's relatively low sales volume, they witnessed an impressive growth rate of 79%. In terms of market share, pure electric vehicles represented 5.1% of all new car sales last year, which has surged to 7.3% in the first four months of this year, indicating a steadily increasing consumer demand for electric options

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Experts believe this enthusiasm for electric vehicles will persist, and possibly intensify, throughout the remainder of the year.

Hungary has taken decisive action in promoting electric vehicle adoption as part of its commitment to combat climate changeThe government is dedicated to integrating EVs into households, industry, and the transportation sector to take center stageFurthermore, Hungary maintains a firm stance against protectionism and supports free trade, opposing the European Union's plans to impose tariffs on Chinese electric vehiclesHungarian Minister of Economic Development, Mihály Varga, clearly stated that without healthy competition, there can be no robust European economyHe emphasized that instead of punitive tariffs, support should be directed towards enhancing the competitiveness of the European electric vehicle industry globally.

Hungary envisions a future dominated by green energy, where new technology sectors, represented by renewable energy and electric vehicles, drive a green circular economy

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The country has already established itself as a leader in battery production, with exports of batteries and related components accounting for over 5% of its GDPWith major investment from battery manufacturing firms like CATL, Hungary’s production capacity could reach an astounding 250 gigawatt-hours (GWh), fulfilling 35% of Europe’s demandThis growth could escalate the GDP contribution of battery exports to 11%, positioning Hungary as a significant player in the global battery manufacturing sector.

Yet the transition to electric vehicles is not without its hurdlesA significant challenge remains the lack of infrastructure and charging networks across Europe, which currently lacks interconnectivity, rapid recharging capabilities, and convenience for usersThere’s also a pressing need to foster a robust second-hand vehicle market to facilitate the circulation of used electric cars

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The battery segment poses three critical issues that need addressing: the ability to accurately assess battery health requires universally accepted EU standards in battery testing; there needs to be mechanisms to assist in the partial or complete replacement of battery modules to extend the lifespan of electric vehicles; and there must be support for battery reprocessing and recyclingCurrently, in Hungary and other EU countries, the industry for battery reprocessing and recycling compliant with the new EU battery regulations is lacking.

From July to December, Hungary will assume the rotating presidency of the European UnionDuring this period, the country has pledged to develop an action plan geared towards enhancing the competitiveness of electric vehicles in EuropeThis plan will include introducing new EU incentives for auto purchases from both manufacturers' and consumers' perspectives, establishing new standards to bolster the second-hand EV market, and encouraging private investments in charging infrastructure

New rapid charging facilities will be built along cross-European transport networks and gas stations to facilitate this transition.

In its ongoing commitment to promote electric vehicles, Hungary aims to accelerate energy transition and establish the necessary infrastructure for zero-emission transportA substantial funding initiative was launched to provide 28 billion forints aimed at expanding the charging network within rural areas while encouraging the establishment of modern charging stations equipped with solar panels and energy storage systemsRegulations now allow for the erection of over 100 new public charging stations outside the capitalApplicants must commit to building at least one charging station in areas with fewer facilities while ensuring that a minimum of 10% of the total project costs is covered by their own capital to qualify for a low-interest loan ranging from 100 million to 6 billion forints over 15 years