Tangiers, Morocco – In response to the United States’ new subsidies aimed at boosting domestic electric vehicle (EV) production and curbing Beijing’s supply chain dominance, Chinese manufacturers have turned to Morocco as a strategic investment hub.
Spurred by the Inflation Reduction Act, a $430 billion U.S. law designed to combat climate change, at least eight Chinese battery makers have announced new investments in Morocco. These factories will produce parts for EVs that may qualify for $7,500 credits available to U.S. car buyers, thus navigating around stringent new tariffs and eligibility rules imposed by the U.S. and the European Union.
A Strategic Pivot to Morocco
The appeal of Morocco lies in its free trade agreement with the U.S., allowing Chinese companies to sidestep some of the barriers set by the Inflation Reduction Act. This law limits tax credits for carmakers sourcing critical minerals or battery parts from companies with substantial Chinese control. By establishing operations in Morocco, Chinese firms aim to meet U.S. demand without falling foul of these restrictions.
Kevin Shang, a senior battery analyst at Wood Mackenzie, notes that Chinese companies are eager to capitalize on the booming American EV market. “Chinese companies don’t want to miss this big party,” he said.
Economic Transformation and Industrial Growth
Morocco’s burgeoning industrial parks, particularly in Tangiers, Kenitra, and El Jadida, have become hotbeds for automotive manufacturing. These developments leverage the country’s existing infrastructure, which has already established Morocco as a car manufacturing hub.
Prominent investments include a $2 billion joint venture by China’s CNGR and Morocco’s royal family investment group, Al Mada. Similarly, Chinese-German battery maker Gotion High-Tech has committed $6.4 billion to construct Africa’s first EV battery factory. Other notable investments come from joint ventures involving LG Chem and Huayou Cobalt, and BTR Group.
Challenges and Opportunities
While these investments signal a significant economic boost for Morocco, the nation faces challenges due to protectionist measures. Moroccan officials, such as Abdelmonim Amachraa, stress the importance of fostering balanced trade relations amid global competition. Despite these hurdles, Morocco’s strategic position allows it to serve as a critical link between Eastern and Western automotive markets.
A Collaborative Future
With over 250 automotive companies operating within its borders, Morocco is well-positioned to play a pivotal role in the global transition to electric vehicles. However, its officials remain cautious about the long-term impact of tariffs and subsidies on attracting further investment.
As global powers vie for dominance in the EV market, Morocco’s growing industry stands at a crossroads, benefiting from its unique geopolitical and economic landscape.
