Chinese Manufacturers Investing in Morocco to Take Advantage of U.S. EV Subsidies

China Invests in Moroccan EV Parts Factories to Tap into US Subsidies

TANGIERS, Morocco (AP) — In a surprising turn of events, Chinese manufacturers are setting up new factories in Morocco to produce parts for electric vehicles (EVs) in response to the United States’ new subsidies aimed at boosting domestic EV production and reducing China’s supply chain dominance.

The move comes after the US passed the Inflation Reduction Act, a $430 billion law designed to fight climate change, which includes $7,500 credits for EV car buyers. Chinese companies are now investing in Morocco to take advantage of these incentives and supply components to American carmakers like Tesla and General Motors.

Since the signing of the Inflation Reduction Act by President Joe Biden, at least eight Chinese battery makers have announced investments in Morocco, making it a hotspot for EV manufacturing in North Africa.

According to Kevin Shang, a senior battery analyst at Wood Mackenzie, Chinese companies are eager to capitalize on the growing demand for EVs in the US market and are looking to partner with countries that have free trade agreements with the US, like Morocco.

The rules set by the US to qualify for the subsidies aim to reduce reliance on Chinese manufacturers, but Chinese firms are finding ways to comply by establishing joint ventures in Morocco and adjusting ownership shares to meet the requirements.

Morocco’s strategic location and trade ties with the US and Europe make it an attractive destination for Chinese investments in the EV sector. With industrial parks and partnerships in place, Morocco is positioning itself as a key player in the global transition to electric vehicles.

While the investment has benefited Morocco’s economy, concerns have been raised in Washington about Chinese firms accessing American subsidies. Critics argue that US taxpayers’ money should not benefit Chinese businesses with ties to the Chinese Communist Party.

However, the US Energy and Treasury departments are working to strike a balance between promoting domestic manufacturing and reducing dependence on Chinese suppliers. Despite the challenges, the transition to electric vehicles is seen as a global trend that can strengthen energy security and competitiveness.

As the competition for market share intensifies between China, the US, and Europe in the EV sector, Morocco finds itself in a unique position to attract investment and drive innovation in the industry. The country’s ability to navigate the complex landscape of international trade and regulations will determine its success in the evolving EV market.