China's EV Giants Bet Big on Global Expansion, Chasing Higher Returns

According to the article, a major shift is underway in China's electric vehicle (EV) industry. In 2024, Chinese EV giants poured more capital overseas than at home, marking a historic turning point. After years of focusing 80% of their investment on the domestic market, these firms are now looking beyond China's borders.

The driving force behind this global expansion is the need to escape the brutal overcapacity and price wars that have squeezed margins in the Chinese EV market. By going abroad, these companies aim to chase higher returns, dodge Western tariffs, and meet customer demands for localized supply chains.

The muscle behind this move is undeniable, with battery makers like CATL, Envision, and Gotion accounting for about three-quarters of all outbound spending. Many are following their heavyweight clients, such as Tesla and BMW, to foreign soil, citing high transport costs and on-site manufacturing requests. For instance, CATL, the world's largest EV battery producer, has made overseas growth its top priority. Meanwhile, BYD already operates plants in Brazil and Thailand and is eyeing more in Turkey and Indonesia, while Chery has pledged $1 billion to build EVs in Turkey.

However, this global land grab is not without its challenges. Overseas projects take longer, cost more, and carry higher political and regulatory risk. Only 25% of announced projects abroad have actually been completed, compared to 45% inside China. Execution risks are rising fast, with BYD's Mexico plant being shelved indefinitely due to U.S. trade policy uncertainty, and Svolt walking away from nearly all of its foreign factory plans.

As Chinese regulators start to worry about the implications of this global pivot for jobs, know-how, and industrial resilience back home, the future of this high-stakes balancing act remains uncertain.