MERICS

REPORT

EVBATTERYINVESTMENTSCUSHION

DROPTODECADELOW

ChineseFDIinEurope:2022Update

AgathaKratz(RhodiumGroup)|MaxJ.Zenglein(MERICS)|

GregorSebastian(MERICS)|MarkWitzke(RhodiumGroup)

AreportbyRhodiumGroupandtheMercatorInstituteforChinaStudies(MERICS)

May2023

MERICSReport|May2023|2

Contents

Keyfindings3

1.Introduction:AneweraofChineseFDI4

2.ChineseinvestmentinEuropehasseenprofoundchangesoverthelastdecade5

2.1GreenfieldnowdominatesChina’sFDItoEurope5

2.2Chineseinvestmentcontinuestoconcentrateon“BigThree”,withgreater

variationsatthemargins7

2.3AutomotiveinvestmenthasbecomethecoredriverofChineseinvestment

inEurope10

2.4Chineseinvestmentisincreasinglyconcentratedonahandfulof

Chinesefirms11

3.Infocus:Europe’sroleinChina’sglobalEVexpansion12

3.1GreenfieldbecomesamajorformofChineseinvestmentinEurope10

3.2ChineseventurecapitalinvestmentinEuropemorethandoubles12

3.3Europeancountriescontinuetotighteninvestmentscreeningregimes14

4.Infocus:EuropeheightensscrutinyofChineseinvestment16

4.1EuropeaninvestmentscreeningregimeslimitChineseacquisitionsof

strategictechnologies16

4.2Europeancountriescontinuetoadoptnewscreeningmeasures18

4.3TheEUCommissiontoughensregulationsonforeignsubsidies19

5.Outlook20

Annex22

Theauthors26

Buildingonalong-standingcollaborationbetweenRhodiumGroupandMERICS,thisreportsummarizesChina’sinvestmentfootprintintheEU-27andtheUKin2022,analyzingtheshiftingpatternsinChina’sFDI,aswellaspolicydevelopmentsinEuropeandChina.

MERICSReport|May2023|3

Keyindings

China’sglobaloutboundinvestmentfallstoan8-yearlow:Inlinewiththeglobaldeclineincross-borderinvestment,Chineseoutboundforeigndirectinvest-ment(FDI)fellby23percentin2022comparedto2021,toUSD117billion(EUR111billion).China’soutboundmergersandacquisitions(M&A)activityalsodropped,falling21percentfrom2021levelstoatotalofEUR22billion.Arangeofexternalandinternalfactors–fromChina’szero-Covidpoliciestorisingglobalrisksfollow-ingRussia’sinvasionofUkraine–createdstrongheadwindsforChineseinvestors.

ChineseinvestmentinEurope(EU-27+UK)continuesitsmulti-yeardecline:

ChineseFDIinEuropereachedadecadelowofjustEUR7.9billionin2022,down22percentcomparedto2021.ThedroptakesChineseinvestmentbacktoits2013level.AlackofChineseM&Aactivitywastheprimereasonforthefall.Onlyonetransaction–Tencent’spurchaseofBritishvideogamedeveloperSumoDigital–exceededonebillioneuros.

GreenfieldinvestmentovertakesM&Aforthefirsttimesince2008:Drivenbyelectricvehiclebatteryfactories,ChinesegreenfieldinvestmentinEuropein-creasedby53percent,exceedingM&Aflowsforthefirsttimesince2008.

Investmentconcentratesheavilyonthe“BigThree”andHungary:88percentofinvestmentflowedtojustfourcountries,the“BigThree”Europeaneconomies(theUK,FranceandGermany)andHungary.AllfourreceivedmajorgreenfieldinvestmentsbyChinesebatterymakers,aswellasmostoftheyear’sM&Aactivity.

Consumerproductsandautomotiveremainthetopsectors:Asin2021,con-sumerproducts–againdrivenbyasinglelargeacquisition–andautomotivere-mainedthetwotopsectors.ThreequartersoftotalChineseinvestmentflowedintothesetwosectors.

EuropehasbecomeakeypartofChina’sglobalelectricvehicleexpansion:

BatteryinvestmentsarenowthemainstayofChineseinvestmentinEurope.Fur-thergreenfieldexpansioninEuropeinup-anddown-streamsegmentsofelectricvehicle(EV)valuechains,includingvehicleproduction,arebeingconsideredbyChinesefirms.

EuropeangovernmentsincreasescrutinyofChineseinvestment:Theycon-tinuetotighteninvestmentscreeningmeasures,impactingChineseacquisitionsofstrategicassetssuchasEuropeansemiconductorcompaniesandcriticalinfra-structure.

Astrongreboundin2023isunlikely,butinvestmentcouldrecoverslightly:

TheendofChina'szero-CovidpolicycouldboostChineseoutboundinvestmentin2023,butChina'sfragileeconomicsituationandgeopoliticalpressuresmakeareboundtomid-2010investmentlevelsunlikely.

MERICSReport|May2023|4

1.Introduction:AneweraofChineseFDI

Globalcross-borderinvestmentactivitiesdeclinedin2022afterthestrongrecoveryoffor-

eigndirectinvestmentflows(FDI)seenin2021.AccordingtotheUnitedNationsConference

onTradeandDevelopment(UNCTAD),globaldirectinvestmentflowsdippedafterthefirst

quarterof2022duetotheglobalcrisestriggeredbyRussia’sinvasionofUkraine.Thewar

escalatedinflationasfoodandenergycostssoared,leadingcentralbankstohikeinterestrate

inadvancedeconomies.Theresultingeconomicuncertaintyandshiftsinglobalfinancial

conditionshavespreadcautionandsuppressedinvestment.

Chineseglobalinvestmentwasnoexceptiontothetrend,fallingagainin2022.Accordingto

officialChinesestatistics,China’soutboundnon-financialinvestmentfellby23percentcom-

paredto2021:itreacheditslowestvaluesince2014,registeringatotalofUSD117billion

(EUR111billion)in2022.China’sglobaloutboundmergersandacquisitions(M&A)activity

alsoslippedtoarecordlow.AccordingtoBloombergdata,completedChineseM&Atotaled

justEUR23billion,down21percentonthe2021recordlowofEUR38billion.

Nexttoglobalfactorshinderinginvestmentactivities,domesticandChina-specificfactors

alsolimitedChineseglobaloutwardFDI.Theseincludedongoingdomesticconstraintson

outboundcapitalflows,economicuncertaintycausedbythetechrectificationcampaignand

China’sadherencetoazero-Covidstrategyformostof2022.Thelattercomplicatedcross-bor-

dertravelandthusdeal-makingactivities.InQ2,thetotalshutdownofShanghai,China’s

financialcenter,likelycompoundedthetrend.Chineseinvestorswhoovercametheseob-

staclestopursuedealsfoundthemselvesfacingstricterinvestmentscreeningregimesand

politicaloppositioninmanyplaces.

Exhibit1

?MERICS/RhodiumGroup

181

158

152

140

121

122

128

121

117

117

107

93

80

66

56

67

44

33

24

134

China’sglobaloutboundinvestmentscontinuedtofallin2022InUSDbillion

MOFCOM:China'soutboundnon-financialFDI

ValueofannouncedglobalM&AtransactionsbyChinesecompanies

200

180

160

140

120

100

80

60

40

20

0

2013201420152016201720182019202020212022

Sources:MinistryofCommerce(MOFCOM,2022dataarepreliminary),Bloomberg

MERICSReport|May2023|5

InthisnewiterationoftheMERICS-RhodiumjointreportonChineseFDIinEurope,wecon-

sidertrendsoverthelastdecadetoexplainChina’schanginginvestmentfootprintinthe

region.WealsolookatEurope’sroleinChina’sglobalFDIinelectricvehicles(EVs).Finally,

weoutlinehowEurope’sstricterscrutinyofinvestmentcouldimpactChineseinvestment.

2.ChineseinvestmentinEuropehasseen

profoundchangesoverthelastdecade

In2022,ChineseFDIinEuropereachedafreshdecadelowofEUR7.9billion,down22

percentonthepreviousyear.Thedropreflectedthe23percentdeclineinChina’sglobal

investmentactivities.ThemostrecentdeclinemeansthatChineseFDIinEuropeisnow83

percentbelowits2016peak.Backthen,Chinesecapitalcontrolsweremuchlooser,China’s

economicandregulatoryconditionsweremorefavorable,andscrutinyofChineseinvest-

mentinEuropewasmuchmorelimited.

GiventhenewenvironmentoflowinvestmentflowsfromChinatoEurope,ahandfulof

dealscancauselargesectoralorgeographicalshifts,complicatinganyanalysisofkeyag-

gregatepatterns.Still,wehavehighlightedseveralkeydevelopmentsofthepastfewyears

below,aswellashowChina’sFDIintoEuropenowdiffersdrasticallyfromadecadeago.

2.1GREENFIELDNOWDOMINATESCHINA’SFDITOEUROPE

Afteryearsofrapidgrowth,levelsofChinesegreenfieldinvestmentinEuropehaveovertak-

enM&Atransactionsforthefirsttimein20years,reachingEUR4.5billion(and57percent

ofthetotal).Thisreversalwaspropelledbystrongexpansioningreenfieldinvestmentcou-

pledwithamassivedownturninM&Aactivityfromitspeakin2016.

Exhibit2

?MERICS/RhodiumGroup

50

45

40

35

30

25

20

15

10

5

0

7.9

7.9

47.4

39.8

27.4

19.7

15.4

15.3

10.1

7.7

ChinesegreenfieldinvestmentinEuropeovertakesM&AvolumeInEURbillion

M&AGreenfieldinvestment

2013201420152016201720182019202020212022

Source:RhodiumGroup

MERICSReport|May2023|6

Theincreaseingreenfieldinvestmentwasdrivenmainlybyafewlarge-scaleprojects,

almostexclusivelyconcentratedintheautomotivesectorasChinesebatterygiants–in-

cludingCATL,EnvisionAESCandSVOLT–investedinbuildingbatteryplantsinGermany,

Hungary,theUKandFrance(formoreseechapter3).

Bycontrast,ChineseM&AactivitiesinEuropefelltotheirlowestlevelsince2011,with

justEUR3.4billioninvested.Thecontinuedabsenceoflargetransactionswasthemain

reasonforthis–therewasonlyonebillion-Euroacquisition,namelyTencent’spurchaseof

BritishvideogamedeveloperSumoDigital.WhilethescaleandvalueofM&Atransactions

hasbeengraduallydecreasingsince2016,thenumberofindividualtransactionshadre-

mainedsteady(seeexhibit4)tilllastyear.Acquisitionshavegenerallybecomesmaller.In

2022,wealsosawasharpdownturninindividualM&AdealsinEurope.

Exhibit3

?MERICS/RhodiumGroup

GreenfieldprojectsdominateChineseinvestmentinEurope

Topteninvestmentsbyvalue,inEURmillion

TYPE

ANNOUNCEDDATE

CHINESE

INVESTOR

INVESTMENT

COUNTRY

SECTOR

VALUE

GFI

Aug12,2022

CATL

Batteryplant

Hungary

Automotive

7,600

GFI

May24,2017

ZhejiangGeelyHoldingGroup

GroupLotus

UK

Automotive

2,600

GFI

Jun28,2021

Envision

AESC

Batteryplant

France

Automotive

2,000

GFI

Nov17,2020

SVoltEnergyTechnologyCo.

Batteryplant

Germany

Automotive

2,000

GFI

Jun6,2018

CATL

Batteryplant

Germany

Automotive

2,000

M&A

Jan17,2022

Tencent

SumoDigital

UK

Entertainment,

mediaand

education

1,260

M&A

Jul1,2021

Wallaby

Medical

phenoxGmbH

Germany

Health,pharmaandbiotech

539

GFI

May15,2021

Envision

AESC

Batteryplant

UK

Automotive

450

GFI

Aug6,2020

Bytedance

(Tiktok)

Datacenter

Ireland

ICT

420

M&A

Nov17,2021

ChinaThree

Gorges(CTG)

Windfarm

portfolio

(181MW)

Spain

Energy

349

Source:RhodiumGroup

MERICSReport|May2023|7

Exhibit4

?MERICS/RhodiumGroup

ChineseM&Avolumeandtransactionsindecline

Investmentindexedat:2016=100

M&AinvestmentvolumeNumberofM&Atransactions

100

80

60

40

20

0

2013201420152016201720182019202020212022

Source:MERICScalculationsbasedonRhodiumGroupdata

2.2CHINESEINVESTMENTCONTINUESTOCONCENTRATEON“BIGTHREE”,WITHGREATERVARIATIONSATTHEMARGINS

In2022,thiswasthecaseaswell.Asinpreviousyears,ChineseinvestmentinEuropewas

highlyconcentrated,with88percentoftotalFDIflowingtoonlyfourcountries(seeannex

foroverallgeographicaldistribution).The“BigThree”economiesofGermany,Franceand

theUKaccountedfor68percentofChina’sFDIintheregion–evenhigherthanthe56per-

centaveragethesethreecountriesreceivedintheprecedingdecade(seeexhibit5).

Amongthem,theUKreceivedthemostChineseinvestment(EUR2.3billion),mainlydriven

byTencent’sSumoDigitalacquisitionforEUR1.3billionandEnvisionAESC’scontinued

greenfieldinvestmentsinabatteryplantinSunderland.GermanyandFranceattractedEUR

1.9billionandEUR1.3billionrespectively.Investmentsweredrivenbygreenfieldbattery

plantinvestments,WallabyMedical’sEUR539milliontakeoverofGermanmedicalequip-

mentmakerphenoxGmbHandTencent’sacquisitionofsharesinFrenchcompanyUbisoft

forEUR300million.

MERICSReport|May2023|8

Exhibit5

?MERICS/RhodiumGroup

AverageshareofChineseinvestmentinthe"BigThree"(2012–2021):59%

28.9

30.1

32.1

51.450.3

45.447.944.942.6

63.7

71.1

69.9

67.9

48.649.7

54.6

36.3

Investmentin"BigThree"remainsstabledespitelowvolumeChineseinvestmentbycountrygroups,inpercentshare

"BigThree":Germany,France,UKOtherEUMemberStates

100%

90

80

70

60

50

40

30

20

10

0

2013201420152016201720182019202020212022

Source:RhodiumGroup

HighlevelsofChineseinvestmentinHungary(EUR1.6billion)weremoreoutoftheordi-

nary,accountingfor20percentoftotalinvestment.Between2017and2021,thecountry

receivedlessthan1percentofallChineseinvestmentinEurope.In2022,bycontrast,Chi-

neseinvestmentinHungarywasalmostentirelydrivenbyCATL’snewgigafactorywithan

announcedtotalvalueofEUR7.6billionEUR(duetotrackinggreenfieldoperationsover

thetimeofconstructionratherthanallatonce,wehavesofarascribedEUR1.5billion).

AnotherChinesebatteryproducer,EVE,reportedlyalsoplanstosetupabatteryplant

nearDebrecen,Hungary,tosupplyEuropeancarmakers,andSEMCORPaproduceroflith-

ium-ionbatteryseparatorshasalreadystartedlocalproduction.Leveragingthiswaveof

Chineseinvestment,HungarycoulddevelopintoabatterymanufacturinghubforEurope.

HungaryhasrelativelystrongpoliticaltieswithBeijingandseveralcarmakershavebuilt

assemblyplantsthere,includingMercedes-BenzandAudi.OutsideofHungarytherewas

nonewChineseinvestmentinEasternEurope.

InvestmentinSouthernEurope(EUR656million)decreasedby38percentandwashighly

concentratedonSpainduetotwoinvestmentsinrenewableenergyassetsbyChinaThree

GorgesforEUR560million,astate-ownedenterprise(SOE)thatalreadypossessesother

renewableenergyassetsinthecountry.InvestmentinNorthernEuropecollapsedtoEUR

200million,duetoadearthofnewM&Adealsandgreenfieldprojects.Almosttheentire

sumwasduetocontinuedinvestmentbyTikTok’sparentcompanyBytedanceintoadata

centerinIreland.

MERICSReport|May2023|9

Exhibit6

?MERICS/RhodiumGroup

–2022)

Cumulativevolumeinbillion(2000

0–0.50.5–22–10

10–20

>20

Estonia0.2

Latvia<0.1

Ireland8.1

Lithuania0.1

Poland

2.4

Germany32.0

<0.1

Hungary

4.4

France

17.0

Romania1.5

Italy16.0

Portugal6.8

Spain6.1

Malta1.5

Czech

Greece4.2

Austria

1.2

Slovenia

1.3Croatia

Republic

Bulgaria0.3

0.4

Source:RhodiumGroup

Cyprus0.3

1.3Slovakia

Belgium

2.7

Finland13.0

UnitedKingdom81.4

Denmark1.2

Netherlands13.7

Sweden8.8

Luxembourg

2.5

EUiadGermahniysattrIactedibyinfarthemost,Chineseinvestment

EUR

MERICSReport|May2023|10

Exhibit7

?MERICS/RhodiumGroup

44.9

90

100

ChineseSOEinvestmentisincreasinglylimitedtoSouthernEuropeInvestmentinpercentshare

UK

100%

GermanyFranceBeneluxEasternEuropeSouthernEuropeNorthernEurope

90

80

70

60

50

40

30

20

10

0

2013201420152016201720182019202020212022

“Benelux”includesBelgium,Netherlands,andLuxembourg.“EasternEurope”includesAustria,Bulgaria,CzechRepublic,Hungary,Poland,Romania,andSlovakia.“SouthernEurope”includesCroatia,Cyprus,Greece,Italy,Malta,Portugal,Slovenia,andSpain.“NorthernEurope”includesEstonia,Denmark,Finland,Ireland,Latvia,Lithuania,andSweden.

Source:RhodiumGroup

2.3AUTOMOTIVEINVESTMENTHASBECOMETHECOREDRIVEROFCHINESEINVESTMENTINEUROPE

AlthoughChineseinvestmenthasremainedrelativelystableinitsgeographicalspread,

therehavebeenbigchangesinitssectoraldistribution.Therehasbeenasharpdownturn

inenergy,infrastructure,realestateandfinance–thesectorsthatdominatedChinesein-

vestmentinEuropeuntil2017(seeexhibit8).Thisstemsfromagreaterfocusonreducing

financialrisksfromhighlyindebtedcompaniesinthesesectorsinChina,strictercapital

controls,andnowtighterinvestmentscreeningmeasuresinEurope,particularlyincritical

infrastructurebecauseofdeterioratingEU-ChinarelationsandRussia’sinvasionofUkraine.

ThefallinChineseinvestmentintheseSOEdominatedsectorsisalsolinkedwiththefallin

ChineseSOEinvestmentinEurope(seeannex).Chinesecapitalnowflowstowardssectors

whereChineseprivatefirmsarehighlycompetitive,likeautomotive,orendconsumer-ori-

entedsectorslikevideogamingorhouseholdproducts.

GreenfieldinvestmentsintheBigThreeeconomiesandHungarybyChineseautomakers

haveproducedahighconcentrationontheautomotivesectoramidlowoverallChinese

investment.With53percentoftotalChineseinvestment,automotivereceivedthehighest

concentrationofChineseinvestmentinasinglesectorinoveradecade(seeannexforthe

sectoraldistribution).Previously,Chineseinvestmentinautomotivewasprimarilyfocused

onacquisitionsoffirmslikeVolvoinSwedenbyGeelyin2010.Now,Europehasbecomea

MERICSReport|May2023|11

keyregioninChina’sglobalelectricvehicle(EV)expansion(seechapter3),whichshows

bothChina’sstrengthintheEVsupplychainandgrowingneedtobeclosetothemarketto

gainafootholdinEurope’sautoindustry.

IncontrasttothegreenfieldnatureofChina’sEuropeanautomotiveinvestments,thein-

vestmentinend-consumer-orientedsectorswasdrivenbylargeacquisitions.Followingthe

hugeHillhouseCapitalacquisitionofPhilip’shouseholdappliancesbusinessesin2021

(EUR3.7billion),TencentacquiredBritishvideogamemakerSumoDigitalforEUR1.3bil-

lion.LargeChineseacquisitionsareincreasinglylimitedtotheseconsumer-focusedsectors

becausetheyaregenerallyconsiderednon-sensitive.

Exhibit8

?MERICS/RhodiumGroup

Shifttowardsautomotiveandconsumer-orientedsectors

Investmentinpercentshare

Infrastructure,realestate,finance,energyAutomotiveEndconsumer-orientedOther

100%

90

80

70

60

50

40

30

20

10

0

2013201420152016201720182019202020212022

Endconsumer-orientedincludes:(1)Consumerproductsandservicesand(2)Entertainment,mediaandeducation.Infrastructure,realestate,financeandenergyincludes:(1)Transport,constructionandinfrastructure,

(2)Realestateandhospitality,(3)Financialandbusinessservicesand(4)Energy.

Otherincludes:(1)ICT,(2)Machinery,(3)Agricultureandfood,(4)Basicmaterials,(5)Health,pharmaandbiotech,(6)Electronicsand(7)Aviation.

Source:RhodiumGroup

2.4CHINESEINVESTMENTISINCREASINGLYCONCENTRATEDONAHANDFULOFCHINESEFIRMS

ChineseinvestmentinEuropehasalwayscomemainlyfromlargeinvestors,butthispat-

ternofconcentrationhasintensified.In2022,awhopping72percentoftotalinvestment

stemmedultimatelyfromjustfiveinvestors,includingCATLandTencent,ariseof18per-

centagepointsonfiveyearsearlier.Thetypeofinvestorandchannelofinvestmenthasalso

changed.Adecadeago,investorswereprimarilymajorSOEsacquiringEuropeanfirms.

Now,theyareprivatefirmsbuildinggreenfieldassetsinEurope.

MERICSReport|May2023|12

Exhibit9

?MERICS/RhodiumGroup

80%

70

60

50

40

30

20

10

0

AhandfuloffirmsinvestthelionshareinEurope

InEURbillion,percentshare

InvestmentsbytopfiveChineseinvestors[leftaxis]

OtherChineseinvestors[leftaxis]

ShareofinvestmentbytopfiveChineseinvestors[rightaxis]

16bn

14

12

10

8

6

4

2

0

3.3

62%

5.7

72%

62%

10.7

54%

9.5

9.0

42%

6.3

5.8

4.6

3.9

2.2

20182019202020212022

Source:RhodiumGroup

3.Infocus:Europe’sroleinChina’sglobalEVexpansion

ChinesebatteryplantinvestmentshavebecomeakeydriverofoverallChineseFDIinEu-

rope.ThegreenfielddealsarepartofChina’sglobalpushtocapturekeyinputsandglobal

marketsharesforitsalreadyvibrantanddomesticallyleadingEVsector.

From2016to2022,announcedChineseFDIintheEVvaluechainsurgedmorethanfor-

ty-foldfromUSD605millionin2016tooverUSD24billionin2022(seeexhibit10).EV

sectordealshaveaccountedfor19percentofannouncedChineseglobaloutboundFDIover

thepastfiveyearsandrepresented58percentofChina’stotaloutboundFDIin2022alone.

China’sEVexpansioneffortshaveevolvedfromanearlierfocusonmineralsdealsincountries

suchastheCongo,IndonesiaandChile(stillamajorinvestmentdriver)toagrowingnumber

ofcompaniesnowsettingupbatterymanufacturingplantsclosetokeyfinaldemandmarkets.

China’sinterestinEurope,theworld’ssecondbiggestEVmarketafterChina,isthereforenot

surprising.Ithascomparativelygoodcharginginfrastructureandgenerousgovernmentpur-

chasingsubsidies,developedwithinawidergreenagendatodecarbonizeroadtransporta-

tion.Furthermore,unlikeothermajorautomotivehubssuchasJapanorSouthKorea,Europe

hasfewmajorbatteryfirmsofitsownandisstillveryopentoChineseinvestmentinthe

industry.

MERICSReport|May2023|13

Exhibit10

?MERICS/RhodiumGroup

40

30

18

12

4

19

11

11

5

5

02013201420152016201720182019202020212022

China'sglobalEVinvestmentshaveshiftedfrommineralstobatteriesInEURbillion,dealcount

50

Minerals[leftaxis]Batteries[leftaxis]Manufacturing[leftaxis]Dealcount[rightaxis]

25bn

20

40

30

15

20

10

5

10

0

Note:2022dataonlyincludestransactionsannouncedbyDecember1,2022.ThisdatasetincludespubliclyannouncedtransactionsworthoverUSD1million.OnlytransactionslikelytocontributetotheEVsupplychainareincluded,basedonthecompaniesinvolvedandtargetedassets.ThesefindingsshouldbeconsideredthefloortolikelyChineseoutboundFDIintheEVsupplychainduetolackofreportingincertaincountriesandbecauseweexcludeChineseinvestmentsintheproductionofwidelyuseditems,likecopperwiringandsteel,thatmayormaynotgointoanEV.

Source:RhodiumGroup

Exhibit11

Group

?MERICS/Rhodium

1.0

1.0

5.0

4.4

7.2

0.6

0.8

1.70.4

2.10.2

0.7

2.0

China'sglobalbatteryinvestmentsquadrupledin2022

InEURbillion

FranceGermanyHungarySpainUKIndonesiaUSOther

16

14

12

10

8

6

4

2

0

20182019202020212022*

*2022datathroughDec1,2022

Source:RhodiumGroup

MERICSReport|May2023|14

ThatcreatessignificantexpansionopportunitiesforgloballyleadingChinesebatteryplay-

erslikeCATLorSVOLT.Since2018,Chinesebatteryfirmshaveannouncedinvestments

worthUSD17.5billioninEurope.TheanticipatedoutputbytheirEuropeanfactoriescould

beroughly20percentofthecontinent’stotalbatteryproductioncapacityby2030.

Exhibit12

?MERICS/RhodiumGroup

China'sbatteryandEVmakerstargetEurope

AnnouncedinvestmentsalongtheEVsupplychain

Sweden

Eskilstuna

2

Gothenburg

Sunderland

GermanyPoland

Lauchhammer

U.K.

?rem

Bohumin

4

Naila

Czechia

Douai

5

überherrn

3

1

d?ll?apest

France

Spain

Portugal

TOP5INVESTORS

1CATL

2Volvo(Geely-owned)

3Svolt

4CATL

5Volvo(Geely-owned)

OUTPUT

100GWh

50GWh

24Gwh

14GWh250,000EVs

INVESTMENT(EURMILLION)

2,650

2,000

2,000

1,200

7,600

Navalmoral

SinesdelaMata

Electricvehicles(EV)Batterycomponents

G?ttingen

Erfurt

Kosice

Slovakia

G?

Bud

Hungary

Debrecen

Batteries

Sources:MERICS,RhodiumGroup

Sofar,thelargestoftheseinvestmentshavefocusedontheproductionofbatterymodules

andpacks,suchasCATL’s100GWhplantinHungary,whichwillbeEurope’sbiggestwhen

completed.ButChinesefirmsarealsoeyeingopportunitiesfurtherup-anddownstream.

Upstream,Chineseinvestorsaremovingintobatteryinputs.In2022,CNGRAdvancedMa-

terialandFinnishMineralsGroupannouncedplanstoestablisha60:40jointventureto

buildaplantforprecursorcathodeactivematerials,whichareusedtomakelithium-ion

batteries.Semcorp’sHungarianEUR184millionplantwillproducelithium-ionbattery

separatorfilms.InGermany,WuxiLeadIntelligentEquipmentacquiredbankruptspecial-

izedmachinerycompany