EV battery plants are driving Chinese investment in Europe

The rise in greenfield investments was mainly driven by several large-scale initiatives by Chinese battery giants to build factories in Germany, Hungary, the UK, and France. Last year, for example, major Chinese battery makers including CATL and Svolt announced major expansions in their European production capacity.

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“Europe has become a key part of China’s global electric vehicle expansion,” the Rhodium report found. “Battery investments are now the mainstay of Chinese investment in Europe.”

For Europe, these come as a double-edged sword. The ramp-up in EV and battery production capacity will help the bloc meet surging demand for electric cars and eventually phase out internal combustion engines. But it also deepens Europe’s dependence on Chinese technology and manufacturing, even as the EU works to build its own battery supply chain.

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China is witnessing a “magnificent transition” in its auto industry

Meanwhile, Beijing is celebrating the rise of its EV and battery industry as a vindication of the past decade’s industrial policies targeted at the domestic automotive sector. That the EU is welcoming battery plants built by Chinese companies is seen as a sign that Chinese automakers have overtaken legacy incumbents like Volkswagen and Mercedes-Benz.

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China’s auto industry, the state-run People’s Daily said in an editorial last month (link in Chinese), has “overtaken on the bend” and is making a “magnificent transition” from “using its market in exchange for technology, to using technology in exchange for market.”

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