Muthomi Ireri
After the U.S. enacted new subsidies to boost domestic electric vehicle (EV) production and reduce reliance on Beijing’s supply chain, Chinese manufacturers started investing in Morocco, a surprising yet strategic choice. In the areas around Tangiers and Atlantic industrial parks, they plan to establish factories for EV parts that may qualify for U.S. tax credits of $7,500 for car buyers.
This trend is not limited to Morocco; similar investments are being made in countries with free trade agreements with the U.S., such as South Korea and Mexico. However, Morocco has seen a particularly significant surge, with at least eight Chinese battery makers announcing investments since the Inflation Reduction Act was signed by President Joe Biden. This $430 billion law aims to combat climate change and promote U.S. manufacturing.
Chinese companies, aiming to benefit from the increased demand from U.S. automakers like Tesla and General Motors, are relocating operations to U.S. trading partners like Morocco. Kevin Shang, a senior battery analyst at Wood Mackenzie, explained that Chinese companies want to capitalize on this opportunity.
The U.S. and the EU have imposed substantial tariffs on Chinese vehicle imports and established rules governing EV tax credit eligibility. These rules prevent companies with significant ties to adversaries like China from qualifying, encouraging carmakers to gradually reduce their dependence on Chinese suppliers.
Critics argue that these regulations benefit China and sustain its EV industry dominance, while the Biden administration believes they will attract substantial investment in U.S. EV manufacturing.
In Morocco, a largely agricultural economy with a median income of $2,150 per month, extensive industrial parks have emerged around Tangiers, Kenitra, and El Jadida, housing American, European, and Chinese component manufacturers. These parks build on existing infrastructure that has already established Morocco as a car manufacturing hub.
The Rhodium Group, a policy research firm, reported that Chinese producers are investing in countries with U.S. free trade agreements, like South Korea and Morocco, to circumvent barriers posed by the Inflation Reduction Act. Some Chinese investments in Morocco explicitly mention the new U.S. subsidies as a motivating factor.
Many of these investments are joint ventures that can adjust board composition to comply with U.S. regulations. For instance, CNGR, a major Chinese battery cathode producer, announced a $2 billion project with the Moroccan royal family’s investment group, Al Mada, aiming to qualify for U.S. tax credits.
Among the significant investments is Gotion High-Tech’s $6.4 billion plan to build Africa’s first EV battery factory in Morocco. Other ventures include Youshan, a joint venture backed by LG Chem and Huayou Cobalt, and BTR Group’s cathode factory, which noted Morocco’s favorable trade status with the U.S. and Europe.
Abdelmonim Amachraa, a supply chain expert and former official at Morocco’s Ministry of Industry and Trade, highlighted Morocco’s strategic position as a mediator between China and the U.S. The country hosts over 250 companies involved in car manufacturing or component production, exporting nearly $14 billion in cars and parts annually.
As global competition for EV market share intensifies among China, the U.S., and Europe, Morocco emerges as a significant player. However, Moroccan officials are concerned that anti-competitive policies like tariffs and subsidies may eventually hinder their ability to attract investment.
Dj Vnyash
Silverio Omari
