Europe remains open to Chinese investment in the electric vehicle sector


The European Union seeks to remain open to Chinese investments in the electric vehicle (EV) sector, unlike the United States, where President Joseph R Biden, Jr. has imposed a 100 percent tariff on EVs from China.

Hungary is the first EU member to receive significant Chinese EV-related foreign direct investment, hosting two EV plants and two EV battery plants. But France, Germany, and other EU members have also hosted Chinese investments. France’s finance minister, Bruno Le Maire, wants to go further, declaring that France would welcome all industrial projects, including the Chinese auto industry and its top producer BYD.

Chinese EV battery manufacturing investments have grown rapidly in Europe, with nine new plant locations. Chinese EV battery producers like CATL and even BYD are keen to partner with non-Chinese EV producers, including Tesla, BMW, and Mercedes, lending their expertise and high-quality inputs through technology licensing agreements and other arrangements.

EU member state governments are unlikely to deny Chinese EV-related investments and the related jobs they bring to their economies. Recent trends suggest Chinese EV production will increasingly take place inside the European Union and that high-end EVs will continue to be exported from Germany to China. Any tariff or attempt to sever EV sector commercial relations between EU and Chinese firms are likely to fail because EV producers in Europe do not want to lose access to China’s increasingly advanced EV technology.

This PIIE Chart is adapted from Jacob Funk Kirkegaard's blog post, "Europe is taking a constructive approach to the influx of Chinese electric vehicles."

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