At the beginning of the new year, many Chinese new energy vehicle companies have announced their plans to go global in 2024.

BYD announced that it will establish a new energy vehicle production base in Szeged, Hungary. This will be the first passenger car production base built by Chinese car companies in Europe. Meanwhile, BYD also plans to invest 1.3 billion US dollars to build a car factory in Indonesia, with an expected production capacity of 150000 vehicles.

NETA announced that it has completed the groundbreaking ceremony for its third overseas factory in Rembau Chembong Industrial Zone, Negeri Sembilan, with Malaysian partners. The factory is scheduled to officially start production in 2025.

This is a microcosm of Chinese new energy vehicle companies accelerating their layout in overseas markets. From the hot sales of Chinese made new energy vehicles overseas to building factories overseas, going abroad has become a necessary option for Chinese new energy vehicle companies that are currently at the forefront of the storm. Not only BYD and Nezha, but also in recent years, Chinese independent brands of new energy vehicles such as SAIC, Changan Automobile, Great Wall Motors, and NIO have already or are planning to build factories overseas.

Lyu Yue, a professor at the Academy of China Open Economy Studies and Executive Dean of the Academy of Global Innovation and Governance at the University of International Business and Economics, stated that Chinese new energy vehicle companies are accelerating their pace of going global, especially in the past two years when they have started large-scale outward investment in emerging fields such as automobile manufacturing and charging services. Asia, Europe, America and other regions are the main investment destinations for Chinese new energy vehicle companies.

According to the 2022 China’s Foreign Direct Investment (FDI) Report in Europe, from 2018 to 2022, the transaction volume of the electric vehicle industry accounted for 19% of China's announced global outward foreign direct investment. Among them, the transaction volume in 2022 accounted for 58% of China's total outward direct investment, exceeding 24 billion US dollars.

Due to the fact that one of the important purposes for new energy vehicle companies to invest abroad is to be close to the consumer market, their main investment countries are concentrated in Europe, Southeast Asia, and other regions. Currently, Chinese new energy vehicle companies have laid a good market foundation in Europe, Southeast Asia, and other regions through vehicle exports, and have achieved certain first mover advantages. Lyu Yue introduced that in Europe, investment destinations mainly include countries with relatively backward automobile industries and relatively relaxed policies such as Hungary and Norway. In Southeast Asia, thanks to policy support and market maturity, Chinese enterprises have made particularly impressive investments in Thailand in recent years, becoming one of the important destinations for overseas investment in the electric vehicle industry. In addition, countries such as Indonesia and Malaysia have also become important destinations for Chinese new energy vehicle companies to invest overseas.

This can be seen from the overseas factory construction news announced by Chinese new energy vehicle companies in 2023. In 2023, BYD alone announced investments in Brazil, Thailand, Uzbekistan, and Hungary to build new energy vehicle production bases. SAIC, Changan, Great Wall and others have successively announced investment and factory construction plans in Southeast Asia, Europe and other places.

Behind their rapid progress, Chinese new energy vehicle companies also face some difficulties in going global and localizing their operations. Lyu Yue believes that firstly, some European countries have developed automobile industries and fierce market competition. The recognition of Chinese new energy vehicle brands in these countries is relatively low, and their competitiveness still needs to be improved. In addition, local European car companies are also accelerating their entry into the new energy vehicle field, which brings new challenges for Chinese car companies to deeply enter the European market. Secondly, multiple investment and trade barriers such as the US Inflation Reduction Act, the EU's stringent environmental requirements, and anti subsidy investigations have not only raised the entry threshold for Chinese new energy vehicle companies, but also made them more susceptible to unfair market treatment. The political risks and pressure of localized operations remain significant. Thirdly, consumers in Southeast Asia have a low acceptance of new energy vehicles, and there are certain differences in product preferences compared to domestic consumers in China. At the same time, the incomplete and unsuitable local infrastructure has also raised the cost of localization operations for Chinese enterprises.

How to deal with the operational risks of overseas investment? Lyu Yue suggested: Firstly, we should adhere to high-level opening up to the outside world, actively support the global business strategy of local car companies, and improve global market competitiveness through external investment while ensuring that core links remain in China. Second, strengthen regional economic and trade cooperation, continue to rely on the "the Belt and Road" initiative, RCEP, etc. Provide enterprises with more space for production capacity cooperation, and help enterprises to invest in Southeast Asia, the Middle East, Africa and other regions. Thirdly, new energy vehicle companies should strengthen their analysis of the market situation, policy trends, and potential risks of investment destinations, and adopt forms such as joint ventures, mergers and acquisitions, and group expansion to reduce overseas investment risks.