According to a report by Rhodium Group, Chinese outbound foreign direct investment along the electric vehicle value chain is expected to set a new record in 2023 as western economies increase their scrutiny of China's production-focused, debt-driven development model. Washington's import tariffs in 2018 marked the beginning of the West's trade war with Beijing. Growing concern over Chinese industrial overcapacity flooding the European Union with low-cost products, particularly electric vehicles, is opening a new front in this conflict.
Chinese companies invested $28.2 billion in EV-related industries in 2018, according to the report. This amount is less than the $29.7 billion invested in 2022, but it does not include a number of expensive projects with unknown costs, like the BYD plant in Hungary and Gotion's 25% ownership of a battery manufacturer in Slovakia.
According to consulting firm Automobility, China may be producing 10 million extra cars annually, or two thirds of all cars produced in North America in 2022.
Brussels' trade strategy is currently becoming more defensive towards China. In September, the 27-member trade bloc began looking into possible unfair subsidies that China's automakers receive from the government. Additionally, the White House disclosed intentions in December to exclude China from its battery supply chain.
"These regulatory dynamics have spurred more investment by Chinese producers, who realise that an export-only strategy could create severe political push back in host economies and cut them out of lucrative markets," the organisation said.
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