Morocco attracting Chinese EV battery manufacturers with new factories

China’s Electric Vehicle Investments in Morocco

Boosting Domestic Electric Vehicle Production

Following the United States’ implementation of new subsidies to enhance domestic electric vehicle production and reduce China’s supply chain dominance, Chinese manufacturers have set their sights on Morocco. In areas like Tangiers and industrial parks near the Atlantic Ocean, plans for new factories to produce EV parts that could qualify for $7,500 credits in the U.S. have been announced.

Investments in U.S. Trading Partners

China’s move to invest in Morocco comes in the wake of similar investments in countries like South Korea and Mexico, which share free trade agreements with the United States. Morocco, in particular, has seen a significant increase in Chinese battery maker investments following the passing of the Inflation Reduction Act.

Pathway to Cash In

By shifting operations to U.S. trading partners such as Morocco, Chinese companies aim to capitalize on the growing demand from American automakers like Tesla and General Motors. This strategic move allows them to align with the regulatory changes brought about by the Inflation Reduction Act.

Compliance and Opportunities

To qualify for subsidies under the new regulations, carmakers must adhere to strict eligibility rules that govern sourcing of critical minerals and battery components. Companies with ties to U.S. adversaries are being monitored, providing an opportunity for Chinese manufacturers to realign their strategies to meet the criteria.

Expanding Infrastructure in Morocco

With Morocco emerging as a hub for car manufacturing, industrial parks in regions like Tangiers and Kenitra have attracted American, European, and Chinese component makers. This expansion aims to meet the escalating demand while navigating the regulatory framework established by the Inflation Reduction Act.

Joint Ventures and Strategic Alliances

Several joint ventures between Chinese and Moroccan entities have been formed to leverage the new U.S. subsidies. Companies like CNGR and Gotion High-Tech are strategically positioning themselves to benefit from the evolving landscape of EV manufacturing and trade agreements.

Market Opportunities and Challenges

As the global shift towards electric vehicles gains momentum, Morocco stands out as a beneficiary of the evolving market dynamics. However, concerns around protectionist policies and competitive pressures persist, prompting officials to navigate the changing economic landscape.

Complexities of the Supply Chain

While the Inflation Reduction Act aims to bolster EV adoption and domestic manufacturing, the intricate dynamics of the electric vehicle supply chain pose challenges. Striking a balance between reducing reliance on Chinese manufacturers and fostering industry growth remains a key focus for policymakers.

Read More of this Story at fortune.com – 2024-07-03 09:15:00