Battery factories boost Chinese investment in Europe

Although China is investing less in Europe overall, Chinese battery producers are building factories to meet the region's growing need for electric vehicles.

Chinese battery makers are expanding rapidly in Europe, responding to a growing electric vehicle market while dealing with an overall contraction in Chinese investment on the continent.

Mostly shunned from North America due to the US Inflation Reduction Act, which aims to reduce US businesses' dependence on With respect to the Chinese supply chain, battery manufacturers 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 Tuesday morning local time by the Mercator Institute for China Studies, a think tank, and Rhodium Group, a research institution. p>

China is the world leader in the production of electric vehicles, including the batteries used to power cars. By contrast, Europe has few major battery companies, leaving it open to Chinese investment as its automakers struggle to stay competitive in the global market. China's largest E.V. Battery manufacturers are responding to this demand by building or expanding several factories in Britain, France, Germany and Hungary.

Since 2018, Chinese battery companies 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 building cars in Europe, to meet growing demand for electric vehicles ahead of the European Union's planned ban on cars that emit carbon dioxide from by 2035.

"China's strength in green technologies aligns well with Europe's green agenda," the report says.

< p class="css-at9mc1 evys1bk0">The surge in battery factories comes as overall Chinese investment in Europe fell to 7.9 billion euros, or $8.7 billion, in 2022, down 22% from 2021 and the lowest point in a decade, according to the study. Although China's "zero Covid" restrictions played a role, European lawmakers' heightened mistrust of Chinese investors also drove the drop in acquisitions. Extensive scrutiny of transactions involving goods that can be used in both the military and 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 reconsider whether Cosco, a state-owned Chinese shipping company, could acquire up to a 25% stake in a terminal in the port of Hamburg. Chancellor Olaf Scholz approved the sale last year.