Chinese battery makers boost $90bn abroad

Chinese battery producers are sharply expanding their overseas footprint as western trade protection and weak domestic demand reshape the sector. Since 2023, Chinese companies have announced nearly $90 billion of foreign investment, with around $52 billion earmarked for battery cell manufacturing and $38 billion for battery materials production. The move is framed by tighter import barriers in major western markets targeting batteries, components and related materials.

The Financial Times reported that in the current year Chinese groups have concluded 14 deals abroad worth $12 billion.

South-east Asia and Europe have become focal regions for this capital. Since 2023, south-east Asia has drawn $35.2 billion of Chinese battery-related investment, the largest regional share. Europe has attracted $31.5 billion over the same period, reflecting both its large automotive base and new regulatory demands for localised production.

In Europe, Brussels aims to have the bloc’s battery supply chain fully localised by the end of the decade, with new localisation rules taking effect next year. Carmakers’ associations have argued that more time is needed, citing gaps in expertise, materials access and cost competitiveness, but Chinese battery makers are already positioning new capacity to meet these standards.

Major groups including CATL, BYD (1211.HK), Gotion, CALB and Sungrow are central to the expansion. CATL, described as China’s largest battery maker, already operates plants in Germany, Hungary and Spain and is scouting additional European factory sites. The company has said it will localise key components in line with regulatory requirements and is encouraging Chinese suppliers to follow it overseas, effectively transplanting a China-centred supply chain to foreign soil.

Gotion has committed more than €1 billion through a joint venture with Volkswagen (VOW3.DE) to produce batteries in Spain, Slovakia and Morocco. This investment, agreed in late September, underlines how Chinese cell makers are partnering with global automakers to secure long-term demand and local market access.

Alongside foreign trade barriers, domestic overcapacity is pushing Chinese producers to expand abroad. Analysts describe a situation in which battery capacity in China exceeds near-term demand, encouraging companies to seek growth in overseas markets to sustain output levels. Some industry voices characterise the overseas shift as necessary for corporate survival.

Despite strong cost advantages at home, manufacturers are accepting higher expenses to globalise. A gigafactory in China can be built for about one-third of the cost and in roughly one-third of the time required in Europe.

Wood Mackenzie projects that China’s structural role in the battery supply chain will remain substantial. Wood Mackenzie estimates Chinese companies hold more than 80% of global output across four key raw materials used in batteries.

The combination of rising protectionism, regulatory localisation demands and domestic oversupply is therefore reshaping where Chinese battery groups build factories, without significantly eroding their upstream strength in critical materials and technology.