Already a leading exporter of electric vehicles, Chinese automakers are expanding their footprint by announcing investments and building factories on nearly every continent.
Analysts told CNBC that these car companies are outspending U.S. automakers, and that the U.S. risks becoming isolated and less competitive as China increases its presence.
“We’re facing a situation where companies like China’s BYD are effectively becoming the new GM or Ford of the electric vehicle era,” said Kyle Zhang, a fellow at the Brookings Institution. “They benefit from scale by building global supply chains through long-term investments around the world, and it will become increasingly difficult for them to break away from their position as market leaders in this area.”
Ford and General Motors did not respond to requests for comment.
Atlas Public Policy, a think tank that tracks investments in clean technology, found that Chinese companies announced nearly $101 billion in total overseas EV and battery investments from 2019 to 2025. The group said U.S. companies invested just over $38 billion in the same period.
Analysts are divided on how much should be counted when tracking China’s overseas investments.
For example, Rhodium Group analyst Armand Meyer and his colleagues estimate that since 2014, Chinese companies have invested about $173 billion in foreign direct investment across the clean technology sector, including solar power, wind power, and electric vehicles. This estimate is much lower than what they call the “rough tally of deal announcements” by other tracking groups, which total nearly $400 billion. Rhodium Group also said that only about half of the announcements it tracked, about $85 billion, actually materialized in the form of completed factories and facilities.
“In terms of scale, it’s probably not as much of a threat as we would expect,” Meyer said.
Tom Taylor, senior policy analyst at research firm Atlas Public Policy, said the differences are due to different tracking approaches when counting facilities and years.
Still, U.S. companies led Chinese companies in foreign direct investment through 2021, according to Atlas Public Policy data. Then it flipped.
There were three factors behind this. First of all, China’s “brutal” domestic auto market is saturated and suffering from price competition and excess factory capacity, Zhang said.
“As a result of this, it has become very difficult to make a profit in China,” Zhang said. “So what’s the next option? The next option is to export or look to the world market.”
Overseas demand for Chinese EVs is also strong. For example, 80% of electric cars sold in Latin America are made in China, according to auto industry analyst Felipe Muñoz.
“Unprecedented growth in demand for Chinese cars outside of China is accelerating,” Muñoz said in a report this month.
According to Muñoz data on new light vehicle sales in 86 markets around the world in the first quarter, car sales in China increased 51% year-on-year. Growth was faster in developed countries such as Europe and Australia.
A factory is a long-term investment, deeper than a container ship of cars docked at some port. But the timing of this hike also points to a third factor: tariffs.
In the face of China’s EV deluge, many countries have erected trade barriers to protect local industry or take advantage of China’s desire for market access to increase manufacturing jobs.
“We see that the majority of investment from China is going to countries that offer one of two things,” Zhang said. “Either they are major markets themselves or provide access to major markets.”
For example, Chinese factories in Hungary are granted tariff-free European Union market access.
“Whether or not those tariffs existed at the time, or whether Chinese companies were anticipating those tariffs, that’s the central driver of this set of investments,” Atlas’s Taylor said. “And we are in the midst of a real generational shift in trade.”
“Industrial diplomacy”
For automakers, there are many benefits to being able to build a global presence.
It can expand market share, ensure a complete supply chain and distribution network, and get a head start on various technologies built on EVs, which are gaining popularity around the world and are also the preferred platform for other technologies such as software, sensors and powertrains, Zhang said.
“It’s having a ripple effect into other industries that are actually connected in some way, such as robotics,” he said. “So I think for Americans, it’s going to feel like, ‘Oh, EV, okay. We’re not missing out that much.'” But if we skip this important step in the evolution of this broader technology wave, we need to understand what else we’re missing. ”
Chinese investments in Europe, Asia, North Africa, Latin America and elsewhere are also forging deeper ties with host countries.
“China is engaging in a process that I call industrial diplomacy,” Zhang said. “The countries they’re investing in are countries that… either China has a pretty good relationship with or is trying to have a better relationship with.”
Meyer also said that comparing U.S. and Chinese foreign direct investment figures risks overlooking important differences between the two, adding that he believes overall trade is a better measure of a country.
For example, U.S. automakers have focused on the domestic market in recent years and retreated from a global presence, he said. U.S. companies already have factories in countries such as Mexico, China and parts of Europe, which could mean they have less incentive to build new factories.
Still, Meyer said Chinese EV makers invest four to six times more outside of China than their U.S. counterparts.
“This dominance is accelerating,” he said. “And I think in the very long term, we’re probably going to see dependencies become entrenched.”
