China’s outbound investment in electric vehicle manufacturing is showing signs of slowing following five years of aggressive global expansion, with targets for spending shifting toward Asia and into less capital-intensive areas of the supply chain.
Capital intensive battery and raw material projects drove investment levels in the EV supply chain to a peak in 2023, but the value of new overseas investments has plateaued as companies shift to building lower-cost vehicle assembly facilities.
A total of 144 transactions worth USD 19.6 billion in EVs and the related value chain were announced by Chinese companies last year, with value nearly halving compared to the year before. For the first half of 2025, companies announced 64 transactions worth USD 10.4 billion, according to US-based consulting firm Rhodium Group, of which more than a third by value went toward downstream factories.
“Most of those [upstream] plans were in Europe, but now you have quite a slowdown, so we have a lot of projects having been canceled,” said Armand Meyer, senior research analyst at Rhodium Group’s China Data Services, adding that Chinese EV players are in effect blocked from the US market.
Despite the slowdown, Chinese companies’ overseas investments in the sector are expected to continue to outpace domestic ones, according to the US-based consulting group. Foreign direct investment started to rebound last year from Covid-19 pandemic lows.
A quarter of China’s completed outbound investments last year were in the EV value chain, up from 5% in 2021, as many projects are becoming fully operational or are expected to come online in the next few years. Production lines are cranking up as the Chinese government is set to begin restricting exports of passenger EVs next year.
Battery makers Contemporary Amperex Technology (CATL), BYD, and Envision were the top three investors in the EV supply chain in the last 11 and a half years, with a majority of investments bound for Europe.
Chinese battery executives told Nikkei Asia that new outbound investments have tapered this year due to an uncertain geopolitical environment and US President Donald Trump’s sweeping tariffs that have upended global trade relations.
They added, however, that overseas markets remain more lucrative and their share of total revenue has grown as Chinese companies wage a cutthroat price war in their home market.
One battery executive said companies are exploring less capital intensive deals that may include licensing their technology with local manufacturing partners.
Trade protectionist measures by foreign governments, in particular the US and Europe, have prompted companies to move the supply chain outside of China. Europe has been the main beneficiary of Chinese EV investments, but companies are now shifting their spending toward Asia and the Middle East.
Indonesia has been a large recipient of Chinese capital, with its large resource of raw materials like nickel. Many of Indonesia’s nickel mines are Chinese owned, and Huayou Cobalt became a strategic partner in a major EV battery project earlier this year.
“Indonesia can also manufacture battery materials and battery cells, but Indonesia is also a very large market, so now you have EV assembly plans, too,” Meyer said.
A wave of domestic investment in China’s EV industry in 2021 and 2022 created battery manufacturing capacity two times local demand and 1.2 times global demand, according to Rhodium Group.
Chinese officials in recent months have spoken of combating overcapacity and price wars in sectors such as EVs and solar. Regulators have summoned clean energy companies, including EV maker BYD and solar panel manufacturer Trina Solar, to address “involution,” a term used to describe excess competition that has led to aggressive price cuts.
One senior sales manager at a battery maker, speaking on condition of anonymity because he is not authorized to speak publicly, added that the Chinese government has made it more challenging for companies to invest further overseas, with new export control rules on critical technologies for battery cathode materials unveiled in July.
The latest restriction, which requires battery firms to obtain government approval to use key LFP (lithium iron phosphate) battery-making technologies outside China, follows a move to ban exports of rare earth magnet technologies.
Some analysts expect Chinese companies will be cleared to use the tech in their overseas facilities but that licensing it to foreign competitors is unlikely.
Investment into the US remains low compared to other markets as hostile US government policies have tightened scrutiny of Chinese battery manufacturers and largely shut Chinese EVs out of the market.
The outbound pursuit by Chinese electric car companies and their suppliers is part of China’s larger clean technology industry acceleration overseas. Solar manufacturing made up the majority of outbound capital before the Covid-19 pandemic, according to a report by John Hopkins University’s Net Zero industrial Policy Lab, but batteries and EVs have gained momentum from 2022.
The report also highlighted a general slowdown in China’s overseas clean tech buildout as companies navigate tighter rules of origin and other tariff concerns.
“Light-asset strategies—technology licensing, contract manufacturing, and OEM (original equipment manufacturing) deals—are spreading from EV makers to battery and solar firms, allowing Chinese champions to preserve market access without large fixed-asset bets,” wrote the authors Xiaokang Xue and Mathias Larsen.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.