China to Focus on Morocco for EV Manufacturing

July 4, 2024

( 3 Minutes Read)

At least eight Chinese battery makers have announced new investments in the North African kingdom since President Joe Biden signed the Inflation Reduction Act, the USD 430 billion U.S. law designed to fight climate change

After the United States passed new subsidies designed to boost domestic electric vehicle production and cut into Beijing’s supply chain dominance, Chinese manufacturers began investing in countries like Morocco. The Chinese have announced plans for new factories to make parts for EVs that may qualify for USD 7,500 credits to car buyers in the United States. The new factories will come up near Tangiers and in industrial parks near the Atlantic Ocean. Similar investments have been announced in other countries that share free trade agreements with the United States, including South Korea and Mexico.

By moving operations to U.S. trading partners like Morocco, Chinese players that have long dominated the battery supply chain are seeking a pathway to cash in on increasing demand from American carmakers like Tesla and General Motors, said Kevin Shang, a senior battery analyst at the consulting firm Wood Mackenzie. The United States and the European Union have both imposed major new tariffs on Chinese vehicle imports since May. The United States also finalized eligibility rules governing the tax credits in May.

The Chinese have announced many development plans outside their own country. They openly admit that the focus on Africa, particularly Morocco, was to take advantage of the incentives being provided by the US for motivating countries across the world to go for energy transition to fight the menace of climate change. CNGR, one of China’s largest battery cathode producers, which in September announced a USD 2 billion plan to build a base in the world and pan-Atlantic region in a joint venture with the Moroccan royal family’s investment group, Al Mada.

Though CNGR owns slightly more than a 50% stake in the project, Thorsten Lahrs, CEO of its Europe division, said he’s confident its cathodes can qualify for the tax credits and change its board composition if necessary. If not, the company would pivot to other markets, including Europe, which just hiked tariffs on electric vehicles imported from China.

The Chinese battery projects include at least three joint ventures and several that reference Morocco’s trade ties with the United States. The largest among them is Chinese-German battery maker Gotion High-Tech, which signed a deal with Morocco last year for a USD 6.4 billion investment to construct Africa’s first electric vehicle battery factory.

https://trendsnafrica.com/morocco-to-develop-20-new-greenfield-airports/

Investments also include Youshan, a joint venture backed by Korean giant LG Chem and China’s Huayou Cobalt. It declined to provide details about the size of its investment. Still, it said the Morocco base means their cathodes will be supplied to the North American market and subsidized by the U.S. Inflation Reduction Act as Morocco is a signatory to the U.S. Free Trade Agreement. LG Chem said the venture would adjust ownership shares as necessary to comply with U.S. rules.