Business
Chinese Firms Eye Morocco As Way To Cash In On US Electric Vehicle Subsidies
After the United States passed new subsidies designed to boost domestic electric vehicle production and cut into Beijing’s supply chain dominance, Chinese manufacturers began investing in an unlikely place: Morocco. In the rolling hills near Tangiers and in industrial parks near the Atlantic Ocean, they have announced plans for new factories to make parts for EVs that may qualify for $7,500 credits to car buyers in the United States.
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. By moving operations to U.S. trading partners like Morocco, Chinese players that have long dominated the battery supply chain are seeking a pathway to cash in on increasing demand from American carmakers like Tesla and General Motors.
The United States and European Union have both imposed major new tariffs on Chinese vehicle imports since May. The United States also finalized eligibility rules governing the tax credits in May. The latter limit companies with ties to U.S. adversaries, but give carmakers time to reduce their reliance on China. To qualify for the subsidies, carmakers cannot source critical minerals or battery parts from manufacturers in which China and other “foreign entities of concern” control more than 25% of the company or its board.
In Morocco, a largely agrarian economy where the median income is $2,150 a month, giant industrial parks full of American, European and Chinese component makers have sprung up in the rural outskirts of Tangiers, Kenitra
and El Jadida. Expanding on infrastructure that has made Morocco a car manufacturing hub, they hope to meet growing demand and overcome rules designed to exclude them from the incentives the Inflation Reduction Act is injecting into the U.S. car market, the world’s second-largest.
Many are joint ventures that have cited their ability to tinker with board seats and governance to comply with U.S. rules. The Chinese battery projects include at least three joint ventures and several that reference Morocco’s trade ties with the United States. The largest among them is Chinese-German battery-maker Gotion HighTech, which signed a deal with Morocco last year for $6.4 billion investment to construct Africa’s first electric vehicle battery factory.
Investments also include Youshan, a joint venture backed by Korean giant LG Chem and China’s Huayou Cobalt. It declined to provide details about the size of their investment but said the Morocco base means their cathodes “will be supplied to the North American market and subsidized by the U.S. Inflation Reduction Act as Morocco is a signatory to the U.S. Free Trade Agreement.” LG Chem said the venture would adjust ownership shares as necessary to comply with U.S. rules.
China’s BTR Group’s announcement of a cathode factory in April noted that Morocco’s trade status with the United States and Europe would ensure “a seamless entry for the majority of its manufactured products into these regions.” Officials in Morocco have publicly and privately worked to foster ties up and down the automotive supply chain in both the East and the West. The country hosts more than 250 companies that manufacture cars or their components, including Stellantis and Renault as well as Chinese, Japanese, American and Korean factories that make seats, engines, shock absorbers and wheels.
The industry exports almost $14 billion in cars and parts annually. As the world transitions to electric vehicles, Morocco may appear to be a surprising beneficiary as China, the United States and Europe compete for market share. But its officials worry that anti-competitive policies like tariffs and subsidies could ultimately make it more difficult to lure investment. Ryad Mezzour, the country’s minister of industry and trade, said in an interview that all the new investment doesn’t tell the full story. Morocco has also lost out on some projects due to what he called “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. “Under the Biden administration’s electric vehicle regulations, America’s working families will have to watch their hard-earned tax dollars go to line the pockets of Chinese billionaires and businesses with links to the Chinese Communist Party,” U.S. Rep. Jason Smith, a Missouri Republican, said
of the new guidelines
Nigerian banks’ rush to upgrade their core banking systems has caused confusion and frustration for many customers. With banks upgrading to more secure software, the lack of communication and customer support has left millions unable to access their funds, sparking questions about the bank’s commitment to customer welfare.
Dr. Uju Ogubunka, President of Bank Customers Association of Nigeria (BCAN), emphasized the severe impact of these disruptions, stressing the need for better communication and customer preparedness during such transitions. Banks must strike a balance between technological upgrades and customer service to retain trust, especially in an economy facing devaluation pressures.
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As Nigeria commemorates its 64th Independence anniversary, the stark contrast between celebration and the persistent challenges of corruption, mismanagement, and unfulfilled promises becomes evident.
The editorial revisits historical attempts at reform, such as the Independent Corrupt Practices Commission’s (ICPC) prosecutions and the House of Representatives’ inquiry into the unfulfilled $14.5 million aircraft repair contract. Many of these initiatives have faded from public memory, leaving questions about accountability unresolved.
High-profile corruption cases, including the Halliburton scandal involving alleged bribes of $180 million, highlight systemic failures within the political landscape.
The editorial emphasizes the need for collective action from citizens, civil society, and the media to demand transparency and accountability. It warns that without addressing these entrenched failures, Nigeria’s path toward democracy and good governance may continue to be fraught with unfulfilled promises.
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In a significant blow to Scotland’s energy sector, the 100-year-old Grangemouth refinery is set to close in 2025, citing its inability to compete with modern plants in Africa, Asia, and the Middle East. The refinery’s operator, Petroineos, announced the closure, which will result in the loss of 400 jobs.
Located in Scotland, Grangemouth refinery has been in operation since 1924, making it the country’s oldest and only refinery. However, despite its rich history, the refinery has struggled to remain competitive in the face of mounting global competition. Petroineos, a joint venture between PetroChina Internation al London (PCIL) and INEOS Group, a British chemicals firm founded by billionaire Sir Jim Ratcliffe, has invested $1.2 billion in the refinery since 2011.
However, the company has incurred significant losses, totalling over $775 million during the same period. According to Petroineos, the refinery is currently losing around $500,000 per day and expects a $200 million loss in 2024.
The company’s Chief Executive, Frank Demay, stated that the market for petrol and diesel fuels is expected to shrink further due to the upcoming ban on new petrol and diesel cars within the next decade. “Grangemouth is increasingly unable to compete with bigger, more modern and efficient sites in the Middle East, Asia and Africa.
Due to its size and configuration, Grangemouth incurs high levels of capital expenditure each year just to maintain its licence to operate,” Demay explained. The closure of Grangemouth refinery marks a significant shift in the global oil refining landscape, with modern and efficient plants in Africa, Asia, and the Middle East gaining a competitive edge. The Dangote Refinery in Nigeria, one of the largest refineries in Africa, may have contributed to the decline of Grangemouth refinery.
The refinery will be converted into a fuel import terminal, ensuring Scotland’s energy needs are still met. However, the closure raises concerns about the country’s energy security and the impact on local communities.
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