Transition to electric vehicles in Hungary: A devastating crisis or business as usual? New paper by Andra Szalavetz

This paper discusses the impact of the transition to electric vehicles on the Hungarian automotive sector that is highly specialised in the manufacture of internal combustion engine vehicles and parts. Building on the industry lifecycle theory, we argue that electrification conveys many opportunities for upgrading, since it requires such a proliferation of innovative tasks that, coupled with a tight deadline imposed by the European regulatory framework, can be accomplished only through further decentralisation of R&D activities.

Based on twenty expert interviews in Hungary and a review of global automotive actors’ electrification-related transactions in central Europe, we find that the manufacturing-led growth model is not jeopardized by the transition to electrification, at least not in the medium run. Data suggests, however, that chances to harness the opportunities of electrification for meaningful industrial upgrading are low. Results predict continuity rather than radical change.