Gregor Sebastian
Senior Analyst at Rhodium Group
European Union member states have increased their scrutiny of foreign acquisitions, particularly those from China, in recent years. However, Chinese EV producers are showing new interest in investing in greenfield plants in Europe, sparking fresh debates about the benefits and risks of such investments. Greenfield investments – setting up manufacturing plants or research centers – have generally been seen as positive, bringing knowledge, jobs, and much-needed technology to Europe. In the case of EVs, they could benefit consumers through affordable EV models.
However, Chinese EV investment comes with several risks, some of which have been highlighted by Commissioner Valdis Dombrovskis and in Mario Draghi’s report on EU competitiveness. These concerns include a lack of value-added benefits, minimal technology transfer, low employment of local workers, increased reliance on China in a strategic sector, market distortions due to subsidies for Chinese producers, and cybersecurity and data risks.
With proper guardrails, the EU can, however, ensure that the benefits of Chinese EV investment outweigh the risks. These could include guarantees of local content, data localization, and stronger technology transfer requirements. However, implementing these measures will require significant political will, including potential reforms to the EU’s inbound investment screening framework.
Moreover, an evidence-based assessment of current and future Chinese investments will be crucial. Investments in EVs could range from cathode production to EV manufacturing plants, and each supply chain step may require specific tools and risk assessments. Properly managed, Chinese EV investments could be a valuable asset to Europe’s automotive sector.