China’s investment in Europe is evolving from a supportive financial role to a dominant force in the battery supply chain, with over €30 billion allocated to lithium processing and electric vehicle (EV) manufacturing. This shift signifies a strategic move towards establishing a fully integrated supply chain, allowing Chinese companies to exert control over critical battery infrastructure across the continent.
In 2024, foreign direct investment from China surged to around €10 billion, predominantly targeting clean energy sectors. Notably, this influx is characterized by greenfield projects that prioritize the establishment of new facilities rather than acquisitions. Such investments are driven by the need to comply with stringent European regulations and a strategic focus on local production hubs, long-term supply chain control, and vertical integration from raw materials to finished batteries.
Hungary has emerged as a central hub for this investment wave, with major players like CATL committing billions to large-scale battery plants. CATL’s flagship facility aims for nearly 100 GWh of annual production capacity, positioning itself as a key supplier for Europe’s automotive sector. This trend is not confined to Hungary; Spain is also witnessing significant developments, including a €4.1 billion gigafactory being established through a joint venture between CATL and Stellantis, set to commence operations by 2026.
Portugal is positioning itself strategically within this evolving landscape, with Zhongchuang Aviation leading a €2 billion lithium battery plant project that will deliver 15 GWh capacity. Additionally, CALB is advancing another €2 billion facility potentially aided by EU funding, illustrating the intricate dynamics of Europe’s industrial policy where domestic support can bolster foreign supply chain interests.
The most critical investments are occurring upstream in processing and refining, where Chinese firms are consolidating their influence over high-value segments of the supply chain. A prime example is the cathode active material (CAM) plant in Finland developed by Beijing Easpring and Finnish Minerals Group, which aims to produce enough material for batteries powering 800,000 electric vehicles annually.
In France, Orano and XTC New Energy Materials are constructing an integrated CAM and precursor complex with an investment of €1.5 billion, creating 1,700 jobs and establishing a significant hub for advanced battery materials in Europe. These initiatives reflect a broader trend of building an interconnected industrial ecosystem that mirrors China’s existing dominance in global processing of essential materials such as lithium and cobalt.
The geographic concentration of Chinese investment spans several key countries—France, Germany, the UK, Hungary, Spain, and Slovakia—each offering proximity to major automotive manufacturing hubs and favorable industrial policies conducive to large-scale battery projects. This concentration underscores strategic priorities aimed at facilitating efficient production and supply chain management.
The rapid growth of Chinese-backed infrastructure presents both opportunities and challenges for Europe. While it accelerates decarbonization efforts and job creation within the region, it simultaneously raises concerns about increased reliance on foreign technology and capital. Chinese companies now rank among the largest investors in Europe’s EV ecosystem, encompassing all aspects from raw material processing to battery recycling.
From an investment standpoint, the battery sector promises attractive returns due to substantial capital expenditures required for facilities ranging from €1 billion to €4 billion and expected EBITDA margins of 15% to 25%. Projects that secure upstream supply linked to Chinese-owned mining operations globally stand to achieve even higher profitability.
This transformation represents more than just an influx of foreign capital; it signifies a fundamental reconfiguration of industrial ownership within Europe. As the continent strives for a cleaner energy future, it faces the challenge of balancing industrial growth with strategic autonomy—ensuring that its energy transition remains resilient while navigating the complexities introduced by foreign investment in critical processing capabilities.
