Chinese EV makers are outpacing U.S. automakers in overseas investments

Chinese automakers, which already dominate electric vehicle exporters, are expanding their footprint by announcing investments and building factories on nearly every continent.

Analysts speaking to CNBC stated that these automobile companies have surpassed American automakers in investments, and that the United States faces the risk of becoming isolated and less competitive compared to China strengthening its presence.

“We are facing a situation where companies like BYD in China are essentially becoming the new GMs and Fords of the EV era,” said Kyle Chan of the Brookings Institution. “They benefit from the scale of building these global supply chains and long-term investments around the world. And it will become increasingly difficult for them to leave their position as market leaders in this space.”

Ford and General Motors did not respond in a timely manner to a request for comment.

Atlas Public Policy, a think tank that tracks clean technology investments, found that Chinese companies announced a total of nearly $101 billion in overseas EV and battery investments from 2019 to 2025. U.S. companies invested just over $38 billion in the same period, the group said.

Analysts disagree on how much should be taken into account when tracking Chinese investments abroad.

For example, Rhodium Group analyst Armand Meyer and colleagues estimate that Chinese companies’ foreign direct investment across all cleantech sectors (solar, wind, and electric vehicles) since 2014 has been around $173 billion. That estimate is well below what other monitoring groups call a “loose tally of deal announcements” that total close to $400 billion. Rhodium Group also said that only half of the announcements they tracked (about $85 billion) actually occurred in the form of completed factories or plants.

“It probably poses less of a threat than we expected in terms of size,” Meyer said.

Tom Taylor, a senior policy analyst at research firm Atlas Public Policy, attributes the differences to different monitoring approaches in which facilities and years are counted.

Still, American companies were leading Chinese companies in foreign direct investment through 2021, according to Atlas Public Policy data. After that it turned upside down.

There were three factors behind this. China’s “brutal” domestic car market is saturated due to price wars and excess factory capacity, Chan said.

“The net effect of this in China is that it is a really difficult place to make a profit,” Chan said. “So what’s the next alternative? The next alternative is to export or look at global markets.”

Demand for Chinese electric vehicles is also strong from abroad. For example, according to automotive industry analyst Felipe Muñoz, 80 percent of electric vehicles sold in Latin America are made in China.

“Unprecedented growth in demand for Chinese cars outside China is accelerating,” Muñoz wrote in a report this month.

Vehicle sales in China rose 51% year-on-year, according to Muñoz’s data on new light vehicle sales in 86 markets worldwide in the first quarter. Growth was faster in developed economies such as Europe and Australia.

Factories are long-term investments; It is a deeper commitment than container ships arriving at a port somewhere. But the timing of the increase also points to a third factor: tariffs.

In response to the influx of electric vehicles in China, many countries have erected trade barriers either to protect local industries or to strengthen China’s desire for market access to increase manufacturing employment.

“You see the bulk of Chinese investment going to countries that offer one of two things,” Chan said. “They are either big markets themselves or offer access to big markets.”

For example, a Chinese factory in Hungary allows duty-free access to the European Union market.

“Whether these tariffs existed at the time or whether Chinese companies anticipated these tariffs was a key driver of a lot of these investments,” Atlas’ Taylor said. “And so we are in the middle of a real generational change in terms of business.”

There are many advantages for automakers to establish a global presence.

Chan said they can grow their market share, ensure they have a complete supply chain and distribution network, and get a head start on a range of technologies built on top of EVs, which are both increasingly popular around the world and a preferred platform for other technologies such as software, sensors and powertrains.

“This has spillover effects into other industries that are actually interconnected, like robotics,” he said. “And I think for Americans we can think: ‘Oh, EVs, they’re good. We’re not losing much.’ But you have to see what else we miss when we skip this important step in the evolution of this broader technology wave.”

China’s investments in Europe, Asia, North Africa, Latin America and elsewhere are also creating deeper connections with host countries.

“China is conducting a process I call industrial diplomacy,” Chan said. “The countries they invest in… [are] “Countries with which China either has fairly good relations or is trying to establish better relations.”

Meyer also noted that comparing the foreign direct investment figures of the United States and China risks overlooking fundamental differences between them, adding that he thinks trade in general is a better metric for measuring countries.

For example, American automakers have withdrawn from their worldwide presence in recent years and focused more on the domestic market, he said. American companies already have factories in Mexico, China and parts of Europe, which may mean they have less incentive to build new ones.

Still, Meyer said Chinese EV makers are investing four to six times more outside China than their U.S. counterparts.

“This accelerates dominance,” he said. “And I think in the very long term the dependencies will probably lock in.”