Chinese automakers that are already prominent in foreign countries have been expanding their territory by announcing investments and building factories on almost every continent.
Those auto companies have been outpacing U.S. automakers in investment, analysts said, who told CNBC that the U.S. is at risk of becoming isolated and uncompetitive as China builds its presence.
“We’re facing a situation where companies like China’s BYD are becoming the new GMs and Fords of the EV era,” said Kyle Chan, a fellow at the Brookings Institution. “They’re gaining equity from building these supply chains around the world, from long-term investments around the world. And it’s going to be very difficult to dislodge them as the market leader in this space.”
Ford and General Motors did not immediately respond to a request for comment.
Atlas Public Policy, a think tank that tracks clean technology investments, found that Chinese companies have announced overseas EV and battery investments of up to $101 billion from 2019 to 2025.
Analysts disagree about how much to count when tracking Chinese investment abroad.
For example, Rhodium Group analyst Armand Meyer and his colleagues estimate that foreign direct investment since 2014 by Chinese companies in all clean technology sectors – solar, wind and EVs – is about $173 billion. That estimate is much lower than what some tracking groups call “loose figures for deal announcements” of $400 billion. Rhodium Group also said that only about half of the announcements they followed, about $85 billion, turned out to be factories or finished facilities.
“It’s probably much less of a threat than we expect in terms of size,” Meyer said.
Tom Taylor, a senior policy analyst at the research firm Atlas Public Policy, points to differences in the different tracking methods for counting institutions and ages.
However, American companies have been leading the Chinese in foreign direct investment in 2021, according to Atlas Public Policy data. After that, it turned around.
There were three factors behind that. First, China’s “brutal” domestic auto market is saturated, Chan said, suffering from price wars and factory overcapacity.
“The result is that China is a very difficult place to make a profit,” Chan said. “So what’s the next option? The next option is to export or look at international markets.”
Overseas demand has also been strong for Chinese EVs. Eighty percent of electric cars sold in Latin America are Chinese, for example, according to auto industry analyst Felipe Muñoz.
“Unprecedented growth in demand for Chinese cars outside of China is accelerating,” Muñoz wrote in this month’s report.
According to Muñoz’s data on new light vehicle sales from 86 markets around the world in the first quarter, China’s car sales grew by 51% year-on-year. Growth was faster in advanced economies, such as Europe and Australia.
Factories are a long-term investment – a deeper commitment than a container ship looming in a port somewhere. But the timing of the operation also reflects a third factor: prices.
Faced with the flood of Chinese EVs, many countries have put up trade barriers to protect local industries or increase China’s desire to access the market to increase manufacturing activity.
“You see a lot of Chinese investment going to countries that offer one of two things,” Chan said. “Either they are large markets themselves or they provide access to large markets.”
The Chinese factory in Hungary, for example, allows access to the European Union market without tariffs.
“Whether or not those costs existed at the time or whether the Chinese companies anticipated those costs, that’s the bottom line of the investment,” Atlas’ Taylor said. “And so we’re in the midst of a real manufacturing revolution in terms of commerce.”
‘Industrial diplomacy’
There are many advantages for automakers to build a global presence.
They can increase their market share, ensure they have a complete supply chain and distribution network, and get a head start on a variety of technologies built on EVs, which are both popular around the world and the preferred platform for other technologies such as software, sensors and power trains, Chan said.
“That has negative consequences for other related industries, such as robotics,” he said. “And so I think for Americans, we might feel like, ‘Oh, EVs, they’re good. We’re not losing much.’ But you have to see what else we are missing if we skip this important step in the development of this broad technology wave. “
China’s investment in Europe, Asia, North Africa, Latin America and other places has also created deep connections with participating countries.
“China is doing what I call industrial diplomacy,” Chan said. “The countries where they invest… [are] countries with which China has very good relations or wants to cultivate better ones. “
Meyer also said that comparing US and Chinese foreign direct investment numbers risks a big difference between them, adding that he thinks trade in general is a better metric for measuring countries.
For example, he said, American car manufacturers in recent years have focused more on the domestic market, retreating from their global presence. American companies already have factories in countries like Mexico, China and parts of Europe, which means they have little incentive to build new ones.
Still, Meyer said Chinese EV makers are investing four to six times as much outside China as their American counterparts.
“It accelerates this rule,” he said. “And I think in the very long term, it will probably close the dependency.”
