Chinese electric vehicle companies are increasing their investments in overseas factories to strengthen competition with US Tesla and other global automakers.

According to a report by CNBC on the 18th, consulting firm Rhodium Group released a report on Monday showing that Chinese electric vehicle supply chain companies invested approximately $16 billion overseas last year, slightly higher than their domestic investment of $15 billion. This marks the first time since records began in 2014 that Chinese electric vehicle companies' overseas investment exceeded domestic investment.

The report stated that Chinese companies have adopted different foreign direct investment (FDI) strategies based on their market segments. Battery manufacturers show significantly higher internationalization levels and are pioneers in overseas expansion, while electric vehicle manufacturers still focus primarily on the domestic market.

Data shows that China's foreign investment in the electric vehicle supply chain is mainly concentrated in the battery sector, accounting for the largest share of overseas investment at 74% of total investment. The report noted that driven by high transportation costs and localized supply demands, major battery manufacturers including CATL, Envision Group, and Guoxuan High-tech have followed existing clients like Tesla and BMW in expanding into overseas markets.

In contrast, against the backdrop of increasing trade barriers, Chinese automakers have only recently begun to focus more on overseas local production, though investment in overseas assembly plants is also "growing rapidly."

Meanwhile, domestic manufacturing investment in China's electric vehicle industry has declined significantly, dropping from $41 billion in 2023 to $15 billion last year. The investment peak for projects announced in 2022 once exceeded $90 billion.

The report pointed out, "This is the first time overseas investment by Chinese zero-emission vehicle companies has taken a dominant position, representing a historic shift. Previously, about 80% of investment was concentrated in the domestic market."

Armand Meyer, senior research analyst at Rhodium Group and report author, told Bloomberg that "overseas investment exceeding domestic investment reflects both market saturation in China and the strategic attractiveness of expanding overseas for higher returns."

However, data also shows that Chinese companies face far greater challenges in overseas investment than domestically. Overseas projects typically have higher costs, longer construction periods, and must deal with higher regulatory and political risks.

The report noted, "Battery factories in China typically can start construction within 3 to 12 months, while overseas factories require 10 to 24 months. In some cases, the preparation process before groundbreaking even exceeds two years."

CNBC mentioned that another study released by Rhodium Group in late July showed that in the second quarter of this year, the automotive industry was the second most active sector for Chinese outbound investment, with 29 major investments totaling $6.8 billion, second only to materials and metals.

The report pointed out that just two transactions accounted for 56% of total investment: Huayou Cobalt announced a $2 billion investment to participate in an $8.4 billion electric vehicle battery integrated park project in Indonesia, replacing South Korea's LG Energy Solution in the project; and GAC Group announced a $1.3 billion investment to build an electric vehicle factory in Goias, Brazil.

Rhodium Group also noted that "Chinese electric vehicle parts manufacturers showed higher than usual investment activity, completing 8 transactions exceeding $100 million each. The largest was led by Chinese battery material manufacturer GEM, which committed $293 million to expand its ternary precursor factory in Indonesia."

According to CNBC, multiple overseas factory projects have recently begun production.

Just last Friday (August 15), coinciding with the 51st anniversary of China-Brazil diplomatic relations, Great Wall Motor announced that its first factory in Brazil officially began production. Brazilian President Lula attended the inauguration ceremony in Iracemápolis, an inland town in São Paulo state. While congratulating the Chinese automaker, Lula encouraged the company to use Brazil as a platform for expanding into the Latin American market.

"Use Brazil as a base, as your platform for selling products to Latin America... We will do everything possible to attract other industries to invest here and create more jobs," he said, subtly referencing Western companies that had left the Brazilian market. "Count on the Brazilian government. Those who want to leave can leave, and we welcome with open arms those who want to come."

Lula expressed that Brazil eagerly anticipates Chinese new energy vehicle companies bringing innovative technology and high-quality employment to Brazil, helping Brazil's automotive industry achieve revival. He mentioned that while Western automotive companies like Ford and Mercedes have withdrawn from Brazil, Chinese companies like Great Wall Motor chose to enter and increase investment in Brazil.

Similarly, in July 2023, BYD took over Ford's abandoned factory in Camaçari, Bahia state, to establish a large production base complex. Two years later, in July this year, the Camaçari factory successfully held its first vehicle roll-off ceremony.

Earlier, battery technology company Envision AESC announced in early summer June that its battery gigafactory in Douai, France, officially began production. French President Macron delivered a speech holding a kerosene lamp and battery, symbolizing Douai's transition from a traditional energy center to a clean and intelligent electricity era.

As a landmark achievement of cooperation between China and France in green energy and advanced manufacturing, the factory is expected to provide high-performance power batteries for approximately 200,000 electric vehicles annually, primarily supplying automakers like Renault.

Chinese vehicle manufacturers are also accelerating their global deployment. As China's highest-selling automaker, BYD, which already has factories in Brazil and Thailand, also plans to further build new facilities in Turkey and Indonesia; Chery Automobile has also committed to investing $1 billion to build an electric vehicle factory in Turkey.

There are also reports that Great Wall Motor is considering building another factory in the Latin American region, with a decision expected as early as mid-next year. The company has not yet responded to requests for comment.