Morocco Emerges as Key Hub for Chinese Electric Vehicle Investment in Europe

The automotive sector is bringing Morocco and China closer than ever. King Mohammed VI’s official visit to Beijing in 2016 was the trigger. This trip had resulted in a strategic partnership agreement covering several sectors. This is how in 2022, the kingdom joined the Chinese "Belt and Road" initiative, aimed at massively investing in countries along the economic corridor. Morocco’s appeal for Chinese investments in 2023 is focused in particular on the production of batteries for electric vehicles, due to the availability of materials used in the manufacture of these batteries, such as cobalt and phosphate.

The sovereign’s visit also gave rise to the construction of a $1 billion "industrial city" near Tangier (north), which should host some 200 Chinese companies and create thousands of jobs. A memorandum of understanding had been signed in May 2016 in Beijing. The following year, the Moroccan authorities had signed an agreement with the Chengdu (central China)-based Haite group and presented the outlines of this future "Mohammed VI Tanger Tech City". After the withdrawal of the initial Chinese sponsor - the aviation giant Haite Group - in 2021 due to questions about the scale of the project and the ownership of the city, the project finally started last year following an agreement between the Moroccan government and other China-based companies, according to the South China Morning Post.

This project "which jointly concerns the two heads of state" - has "made significant progress" and is "now ready to receive investments from China and other countries," said Li Changlin, China’s ambassador to Morocco. "China should become a key player in Morocco’s electric vehicle industry and contribute to Morocco’s industrialization process," the Chinese diplomat wrote in a November 1 article marking the 65th anniversary of bilateral diplomatic relations. Qingdao Sentury Tire Company, which has invested nearly $300 million to build a factory, is among the first companies to settle in the Tangier Science and Technology City.

"As a key market for electric vehicles, Europe is a strategic destination for Chinese companies looking to quickly supply their customers," said Abdelmonim Amachraa, a Moroccan expert in sustainability and global value chains, adding that China’s expansion of global value chains in countries like Morocco can help Beijing get closer to European automakers and the European market, reducing transport distances and production costs for electric vehicles. "Morocco’s free trade agreement with the EU and the US puts Chinese companies in a more favorable position to benefit from subsidies under the US Inflation Reduction Act, as well as EU critical raw materials-related policies," comment Zakia Subhan, Head of Middle East and Africa Forecasting, and David Leah, Principal Analyst at Powertrain Forecast, both part of LMC Automotive.

"Electric vehicle manufacturers, especially Chinese ones, are turning to lithium iron phosphate batteries, and phosphates are abundant in Morocco," said François Conradie, Principal Political Economist at Oxford Economics Africa.