Chinese Electric Vehicle Companies Eye Western Deals Amid Geopolitical Tensions
Chinese electric vehicle (EV) companies are actively seeking partnerships with western companies, despite geopolitical tensions and security concerns. These Chinese firms, involved in various aspects of the EV supply chain, believe that their lower costs and technological leadership will make them attractive partners for western companies. By collaborating with China’s EV sector, foreign companies can develop cars faster and reduce costs significantly.
Paul Li, founder of U-Power, a Chinese EV parts supplier, highlights the advantages of working with China’s EV industry. He points to Volkswagen’s $700 million partnership with Chinese rival Xpeng as evidence that global automakers recognize the benefits of collaborating with Chinese companies. Stellantis, the parent company of Jeep, Fiat, and Citroën, also invested €1.5 billion in Chinese EV start-up Leapmotor.
U-Power, based in Hefei and Silicon Valley, designs and sells EV chassis known as skateboards. The company recently signed a deal to supply New York-based EV start-up Olympian Motors with its skateboards. U-Power is also working with Singapore-based FEST Auto to sell EVs in the European logistics market.
Another example is Appotronics, a Shenzhen-based company that provides laser projectors for nearly half of China’s cinemas. Appotronics will supply BMW with laser technology for its latest in-car displays. DeepRoute.ai, based in Shenzhen and with a US office, is setting up an office in Europe to sell its mapping technology for driverless cars.
Chinese companies are confident that trade tensions and decoupling efforts will not hinder their collaboration with Europe and the US in building up their local EV industries. They believe that Europe and the US, which have been slower to adapt to the transformation to smarter, cleaner vehicles, will require Chinese assistance.
Chinese companies are adopting new approaches to gain a foothold in foreign markets, such as establishing factories and research centers in Europe and North America and forming joint ventures with European and US companies. BYD, the world’s largest EV manufacturer and a key competitor to Tesla, plans to build a factory in Hungary and is exploring production sites in Mexico to expand its sales in Europe and the US.
However, Chinese EV companies face challenges. The EU is conducting a trade investigation into the Chinese EV industry, and the Biden administration’s Inflation Reduction Act restricts Chinese companies from benefiting from subsidies in the US. Some Chinese producers of EV battery materials are forming joint ventures with South Korean industrial groups to access western markets indirectly. It remains unclear whether such arrangements will be allowed under the IRA’s foreign entities of concern rules.
Western countries have become more cautious about relying on China-dependent supply chains, particularly those associated with state-owned or state-backed companies. Concerns have expanded beyond military and telecommunications to critical minerals and energy. However, experts argue that the US should recognize areas where it can learn from China in low-carbon technologies as it develops its own cleantech industry. They suggest deeper ties between California and Chinese counterparts, research collaboration, and cross-border venture capital flows.
Chinese EV executives, like Paul Li, want their companies to be seen as global players. To achieve this, U-Power’s US unit operates as a separate legal entity with an independent share structure, rather than being a subsidiary of the Chinese business.
Despite geopolitical tensions, Chinese EV companies are actively pursuing partnerships with western companies. Their lower costs and technological leadership make them attractive partners for foreign companies looking to develop EVs quickly and reduce costs. As China continues to lead the world in EV production, the global automotive industry is recognizing the advantages of collaborating with Chinese firms.
