Morocco becomes the new Chinese and American economic battlefield through their investments in electric vehicles production, as both are eyeing Morocco’s industrial zones and benefiting from the Kingdom’s proximity to the European market, according to the British newspaper “The Independent”.
More than 250 companies that manufacture cars or their components currently operate in Morocco, where the automotive industry now accounts for 22% of Gross Domestic Product (GDP) and receives 14 Bln dollars in exports, the British daily writes.
“At least eight Chinese battery makers have announced new investments in the North African kingdom since President Joe Biden signed the Inflation Reduction Act, the $430 billion U.S. law designed to fight climate change, according to an Associated Press tally,” The Independant notes.
Morocco has distinguished itself from other locations hosting foreign company plants by developing its ports, free zones, and infrastructure, the same source underlines quoting the government.
Abdelmonim Amachraa, a supply chain expert who previously worked in Morocco’s Ministry of Industry and Trade, said that Morocco benefits from its “ability to coexist when a link can’t be found between China and the United States.”
As the globe shifts to electric vehicles, Morocco may emerge as an unexpected benefit as China, the United States, and Europe vie for market share. However, officials are concerned that anti-competitive policies such as tariffs and subsidies may make attracting investment more difficult in the long run.
Ryad Mezzour, Morocco’s minister of industry stated in an interview that all new investment does not reveal the whole story. Morocco has also lost out on several projects due to what he describes as “a new age of protectionism.”
“The investment has been a boon to countries like Morocco. But in Washington, Chinese firms have raised alarm by angling to access the American subsidies,” continues the British outlet.
But at risk are the complexities of both the electric car supply chain and the Inflation Reduction Act, which aims to increase EV adoption while also boosting domestic manufacturing.
The U.S. Energy and Treasury departments have attempted to strike a difficult balance, reducing reliance on Chinese manufacturers while guaranteeing that enough vehicles qualify for the credits. The Department of Energy did not answer inquiries about how its restrictions applied to Chinese investments in countries with which the United States has free trade agreements.
“China has spent years subsidizing companies that extract critical battery minerals, manufacturers of cathodes, anodes and electrolyzers and carmakers like BYD. Those companies’ eagerness to invest in Morocco to cash in on the Inflation Reduction Act shows how decoupling Chinese manufacturers from the supply chain will take years, if not decades, said Chris Berry, an adviser to battery companies and investors,” adds the same source.
Moroccan officials want to recruit industrial enterprises from China, Europe, and the United States as they work to create affordable electric vehicles on a mass scale.
In comparison to other economies, Morocco’s political situation and close proximity to Europe make it a safe investment.
The electric vehicle could dethrone the internal combustion engine in Morocco, particularly given the cost of oil and the need to limit CO2 emissions. Beyond the purely technical aspects, the Kingdom is looking to renew its usage, diversify its economy by attracting more Foreign Direct Investment (FDI) and improve the external competitiveness of its automotive industry.