China is becoming a global EV battery building giant – Jalopnik

China’s auto industry has committed to producing electric vehicles ahead of its established Western counterparts, with the encouragement of government subsidies. Now the country’s biggest players are opening battery factories abroad and steadily positioning themselves as the linchpin of the global lithium economy. As in other multinational industries, offshoring factories is a way to pursue higher profit margins. These batteries not only power electric vehicles, but also serve as energy storage to support alternative energy infrastructure.

The international effort did not come without reason. The Chinese government hinted last year that it would end subsidies for the country’s EV industry, which is now considered mature enough to sustain itself financially. It’s a position that feels very conservative considering more than 80% of the world’s battery cells are produced in China. Wired examined the global spread of Chinese battery production and recorded a 29% profit margin on foreign-built batteries, compared to 23% for domestically produced batteries. Armand Meyer, a senior research analyst at Rhodium Group, said:

“They are ready to exit the domestic market and are as competitive as traditional Western players, if not more so. We think this is just the beginning.”

Those profit margins will only grow in the coming years as trade barriers are removed. The European Union is currently negotiating with China to completely eliminate tariffs of up to 35%. The policy change comes as the European auto industry successfully lobbied the EU to drop the bloc-wide ban on sales of new ICE cars, essentially handing the continent’s EV market to Chinese automakers. Canada is even reopening its market to the main Chinese manufacturers. However, I wouldn’t expect Chinese electric vehicles to arrive on American shores anytime soon.