Thursday, March 28, 2024
HomeWorld NewsBattery Factories Are Driving Chinese Investment in Europe

Battery Factories Are Driving Chinese Investment in Europe

Battery makers from China are rapidly expanding in Europe, responding to a growing market for electric vehicles while bucking an overall contraction in Chinese investment on the continent.

Mostly shunned from North America because of the U.S. Inflation Reduction Act, which seeks to reduce American companies’ dependence on China’s supply chain, battery makers in China have instead focused on Europe, the world’s second-largest market for electric vehicles. They have become the main source of Chinese investment in the region, according to a study released on early Tuesday local time by the Mercator Institute for China Studies, a think tank, and Rhodium Group, a research institution.

China leads the world in electric vehicle production, including batteries used to power the cars. By contrast, Europe has few major firms making batteries, leaving it open to Chinese investment as its automakers race to remain competitive in the global market. China’s largest E.V. battery manufacturers are meeting that demand, building or expanding several plants in Britain, France, Germany and Hungary,

Since 2018, Chinese battery firms have announced investments in Europe worth $17.5 billion, including plans by Contemporary Amperex Technology Company Limited, or CATL, to build a factory in Hungary that would be the largest of its kind in Europe. But the Chinese are also interested in moving beyond batteries, to build cars in Europe, to meet growing demand for E.V.s ahead of the European Union’s planned ban on cars that emit carbon dioxide by 2035.

“China’s strength in green technologies is a good match to Europe’s green agenda,” the report said.

The surge in battery factories comes as overall Chinese investment in Europe dropped to 7.9 billion euros, or $8.7 billion, in 2022, down 22 percent from 2021 and the lowest point in a decade, the study found. Although China’s “zero Covid” restrictions played a role, the increased wariness among European lawmakers toward Chinese investors also drove the drop in acquisitions. Heightened scrutiny of deals involving goods that can be used in both the military or private sectors, such as semiconductors, also played a role.

European governments are also wary of Chinese companies gaining access to their critical infrastructure. This year, Germany’s economy ministry was forced to re-examine whether Cosco, a Chinese state-owned shipping company, could acquire a stake of up to 25 percent in a terminal in Hamburg harbor. Chancellor Olaf Scholz had approved the sale last year.

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