Chinese Investment in Moroccan Electric Vehicle Industry Surges After Biden’s Subsidies for Domestic Production
TANGIERS, Morocco — In response to new subsidies aimed at promoting domestic electric vehicle production in the United States and reducing China’s dominance in the supply chain, Chinese manufacturers have turned their attention to an unexpected location: Morocco.
The hilly terrain near Tangiers and industrial parks near the Atlantic Ocean have become hotspots for new factories that will produce components for electric vehicles eligible for $7,500 credits in the U.S.
Similar investments have also been announced in countries with free trade agreements with the U.S., such as South Korea and Mexico. However, Morocco has seen a significant increase in Chinese investments in the sector.
Since the passing of the Inflation Reduction Act by President Joe Biden, at least eight Chinese battery makers have announced plans to invest in Morocco. These investments aim to tap into the growing demand from American car manufacturers like Tesla and General Motors.
By shifting operations to U.S. trading partners like Morocco, Chinese firms hope to capitalize on the incentives provided by the new law, which restricts companies with ties to U.S. adversaries but allows carmakers time to reduce their reliance on China in order to qualify for subsidies.
Critics argue that these rules favor China and will prolong its dominance in the electric vehicle market. However, the Biden administration maintains that the regulations will attract billions in investments in the U.S. electric vehicle manufacturing sector.
Morocco has emerged as a key player in this scenario, attracting Chinese investment due to its free trade agreement with the U.S. The country’s robust automotive industry infrastructure has also been a significant draw for foreign manufacturers.
As the global shift towards electric vehicles intensifies, Morocco finds itself in a unique position as China, the U.S., and Europe compete for market share. However, officials in Morocco are concerned that protectionist policies could hinder future investments in the country.
While these investments are boosting Morocco’s economy, they have raised concerns in the U.S. about Chinese companies benefiting from American subsidies. The delicate balance between reducing reliance on Chinese manufacturers and ensuring the growth of the domestic electric vehicle industry remains a challenge for policymakers.
Despite the complexities involved in reshaping the electric vehicle supply chain, the surge in Chinese investments in Morocco highlights the long road ahead in diversifying the global electric vehicle market.
