In response to new US subsidies intended to boost local manufacture of electric cars (EVs), Chinese automakers are turning to Morocco. Chinese companies have made significant investments in this North African nation in an effort to benefit from the $7,500 credit offered to US automobile buyers.
These investments are concentrated in Morocco because of its advantageous geographic position and free trade agreements with the US. After the passage of the Inflation Reduction Act, which allocates $430 billion to combat climate change, at least eight Chinese battery producers announced their plans to establish operations in Morocco. These include well-known businesses with significant initiatives they are working on in collaboration with local groups, such as CNGR and Gotion High-Tech.
The Inflation Reduction Act’s new rules restrict subsidies to companies with strong ties to US adversaries while also allowing automakers some time to wean themselves off of Chinese supplier networks. To circumvent these bans, Chinese enterprises are forming joint ventures and modifying their organizational structures to comply with US law.
Morocco’s well-established auto industry infrastructure—which includes sizable plants near El Jadida, Kenitra, and Tangiers—makes the country appealing. These regions have a robust automotive sector because they are home to a wide variety of Chinese, European, and American component makers. The more than 250 automakers and their $14 billion in annual exports demonstrate the country’s attempts to attract these kinds of investments.
Of the new projects, the $2 billion project by CNGR is significant. It was founded in collaboration with the Moroccan royal family’s investment division, Al Mada. Even though CNGR owns the majority of the firm, the company is certain that, with the right board reorganization, it can still meet the requirements for the US tax credit.
Gotion High-Tech has also committed to spending $6.4 billion to build Morocco’s first EV battery plant, underscoring the country’s growing role in the global EV supply chain. Among the other noteworthy investments is a joint venture between LG Chem and Huayou Cobalt, which is intended to service the North American market.
These developments underscore Morocco’s strategic edge, even as concerns regarding potential protectionist actions from key markets endure. Politicians from Morocco, like Minister of Industry and Trade Ryad Mezzour, acknowledge that the global shift to electric vehicles has both possibilities and challenges.
The US Treasury and Energy ministries are still working to find a middle ground between ensuring that enough automobiles qualify for subsidies and reducing dependency on Chinese manufacturers. Morocco is poised to become an even more important manufacturing base as the global EV sector grows thanks to investments from both the East and the West.
