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SEOUL, Nov 30 (Reuters) - South Korea’s SK Innovation said on Thursday it will invest 840.2 billion won ($777 million) to build an electric vehicle battery plant in Hungary to meet demand from automakers in Europe.

SK Innovation, which owns South Korea’s top refiner SK Energy, plans to break ground in February 2018 and start production from early 2020, the company said in a statement.

The new plant would have a capacity to produce 7.5 gigawatt hours per year of batteries and customers would include Mercedes-Benz, it said.

The announcement comes as SK Innovation and other South Korean EV battery makers have suffered a major setback in China, the world’s top auto market, amid diplomatic tensions between the two countries.

Electric vehicles powered by South Korean batteries have been excluded from state subsidies in China.

SK Innovation has suspended an EV battery pack plant in China with China’s Beijing Automotive Group and Beijing Electronics, and had also delayed a plan to build an EV battery cell factory in China. ($1 = 1,080.7300 won) (Reporting By Jane Chung and Hyunjoo Jin; Editing by Richard Pullin)