Chinese companies involved in the electric vehicle industry invested more overseas than domestically for the first time in 2024, although foreign projects face higher costs, delays and risks. 

Firms along the supply chain invested around $16 billion overseas last year — mostly in battery production, and just ahead of the $15 billion spent at home, according to a report by research company Rhodium Group released on August 18. The figures represent an “historic shift” after years of directing around 80% of investment domestically, Rhodium said in the report. 

Chinese companies are being driven to expand globally as overcapacity and a long-running price war at home squeeze margins all along the supply chain. They are also seeking to skirt punishing tariffs in Europe and the U.S. by building production facilities there, and bowing to pressure from foreign customers for more localized production. 

“The fact that overseas investments now outpace domestic ones reflects a saturated Chinese market and the strategic appeal of expanding abroad for higher returns,” said Armand Meyer, senior research analyst at Rhodium and an author of the report.

About three-quarters of the outbound investment came from battery makers, reflecting the capital intensive nature of the industry. Major battery makers like Contemporary Amperex Technology Co. Ltd., Envision Group and Gotion High-Tech Co. have followed existing clients like Tesla Inc. and BMW AG abroad, driven by high transport costs and requests for localized supply, according to the report.

CATL, as the world’s biggest EV battery maker is known, in June said it is making overseas expansion its “No.1 priority” as intense competition in China’s domestic auto market threatens the industry’s health. BYD Co., China’s top-selling automaker, has factories in Brazil and Thailand, and is planning facilities in Turkey and Indonesia. Chery Automobile Co. has pledged to set up a $1 billion electric vehicle factory in Turkey, 

Overseas projects tend to be more expensive, take longer to build and face higher regulatory and political risks. Only 25% of EV manufacturing projects announced abroad have been finished, compared with a 45% completion rate at home, the report said. 

In July, BYD indefinitely shelved plans to build a major plant in Mexico over geopolitical tensions and uncertainty stemming from President Donald Trump’s trade policies.

Domestic projects are not only built faster but are also initiated sooner. Battery factories in China typically begin construction within three-to-12 months, compared to 10-to-24 months abroad, Rhodium said.

Svolt Energy Technology Co., a battery maker based in northern China, canceled 99% of its announced overseas investments, the report said.

The international expansion of Chinese EV companies and suppliers will need to contend with dynamics such as uneven global demand for battery cars, and pushback in markets such as the EU.

At the same time, Chinese firms need to manage Beijing’s increasing concern over technology transfer, job losses and industrial hollowing out that could lead to tighter controls on outbound investment.