China is strengthening its defense of overseas EV sales against US and EU counterattacks

Also this week, ahead of the annual ‘two-session’ parliamentary meetings, the China National Democratic Construction Association – a small political party – said it planned to approach the advisory body of the Chinese Political Consultative Conference on the EV issue, according to Chinese news agency Cailianshe.

As US concerns about the EU grow, will overcapacity limit exports of China’s ‘new three’?

The party proposed pursuing mutual recognition of EV “standards” with the European Union, which would strengthen Chinese companies’ intellectual property rights abroad and improve trade-related logistics.

The European Commission has launched an anti-subsidy investigation in Chinese EVs last year, while the US bans its EV battery materials from China, which it considers a “foreign entity of interest”.

Chinese EV makers receive “generous government subsidies, which have helped reduce production costs,” Moody’s Analytics said earlier this month.

Western leaders see China’s massive EV industry, led by companies like BYD and Nio, as a threat to their smaller businesses.

Chinese investors are increasingly facing political backlash in host economies

Rhodium group

About three-quarters of the $28.2 billion of Chinese investment in the EV value chain abroad last year went to Europe, the Middle East, North Africa and other parts of Asia, research firm Rhodium Group said in an industry outlook report on Thursday.

“The EU could create rules that create obstacles to the sale of Chinese electric vehicles in the European market,” said Yun Sun, director of the China program at the Stimson Center think tank in Washington. “They could also challenge Chinese EVs as a national threat.”

The Rhodium Group pointed to the growing dissatisfaction abroad.

“Chinese investors are increasingly facing political backlash in host economies, particularly the US, as they seek to limit Chinese influence over its EV supply chains,” the outlook said.


Chinese EV maker BYD launches electric cars in Indonesia

Chinese EV maker BYD launches electric cars in Indonesia

And China’s protests against the EU and the Chamber of Commerce’s proposed measures to help Chinese companies would not soften the response, said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis.

“It’s not convincing,” Garcia said. “It won’t help unless they radically change their proposals.”

Overcapacity in China will likely push greater factory production of electric vehicles and batteries to foreign markets at lower prices.

But Chinese EV investments abroad should “remain strong” this year as they shift from battery investments to EV production in Europe, Latin America and around Asia, according to Rhodium Group’s outlook.

‘Just the Beginning’: Chinese EVs Go Uphill as US and EU Put Up Roadblocks

And companies in China’s EV supply chain may already have a solution to the backlash in Europe, the report suggested.

A “key driver” for business this year is “the demand from host economies for higher value-added investments and employment in return for market access,” the outlook said.

In Finland, Chinese lithium battery material maker Ningbo Shanshan has announced investments in a $1.35 billion factory, according to the report, while Beijing Easpring has formed an $844 million joint venture with Finland’s Minerals Group to make battery materials .

Rhodium Group said that 92 percent of Chinese investments in EV-related industries in Europe last year went to Finland, Hungary and Sweden.

China remains an input and a business partner

Timo Kantola

Timo Kantola, the Finnish Consul General in Hong Kong, said EV battery projects were to Finland’s advantage due to the availability of some of the “rare” minerals needed.

And some projects have accepted Chinese “partners and participation,” he added.

“China remains an input and a business partner,” Kantola said, but Finland, like other European countries, is still “looking at the vulnerabilities and is aware” of China’s role.

However, policymakers in Beijing can ultimately rein in the EV supply chain, according to the Rhodium Group.

They are “increasingly concerned” about reverse technology transfers and “value-added” clean technology production moving abroad, while China “urgently needs to build new drivers of economic growth at home,” the outlook said.

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