China’s battery makers race to invest abroad to avoid western barriers

Chinese battery and energy-storage groups (CATL, BYD, Gotion, CALB, Sungrow) are building supply chains outside China as western barriers rise. In China a gigafactory costs about a third as much and is built three times faster than in Europe. According to Climate Energy Finance, Chinese firms have announced $12bn across 14 overseas deals this year and about $90bn since 2023 ($52bn in cells, $38bn in materials). Europe has drawn $31.5bn since 2023, second only to south-east Asia ($35.2bn). In late September Gotion agreed a >€1bn JV with Volkswagen for batteries in Spain, Slovakia and Morocco. EU localisation rules take effect next year and Brussels wants the battery chain fully localised by the end of the decade. Carmakers' body ACEA says more time is needed, citing a lack of know-how, materials and price competitiveness. CATL, which has plants in Germany, Hungary and Spain and is scouting new European sites, says it will localise main components 'whatever the regulation orders'. Its German plant, which builds for Porsche and Audi, sources just under half its parts in Europe, and CATL is pushing its Chinese suppliers abroad too. Overseas investment and tech transfer need Beijing's approval (Simon Engelke, Battery Associates), while western regulators are getting tougher (the UK blocked Ming Yang turbines in March; Germany blocked a Chinese acquisition at its biggest seaport this month). Counterweights: Wood Mackenzie says new entrants such as the failed Northvolt face huge investments and long payback ('to make 100 GWh is totally different'), and sees Chinese share above 80% in four key building blocks little changed by 2034. Rystad says the expansion is driven by overcapacity at home ('they need to survive'). CATL shares fell more than 8% after a third-quarter miss and have almost halved since early June. Sungrow is in talks with leading US AI companies on storage, but UBS doubts US access amid tariffs and bans.