China and the global expansion of green energy technologies EVs, batteries and lithium investments in Latin America.

Resumen

China has become a global leader in ion-lithium batteries and has used these capabilities to develop an important innovation ecosystem in electric vehicles, which are now expanding to the world. The key driver to China’s successful promotion of electric vehicles has been industrial policy. Green technologies can be seen as the new frontier for the global expansion of Chinese firms due to their innovation and technological capabilities and Latin America is one of the main destinations for FDI in EVs, lithium and batteries. The present article examines the landscape and trends of FDI conducted by Chinese firms in the region, aiming to analyze the possibility for Latin-American countries to integrate Chinese-led value chain in green energy as part of their developmental processes and industrial policies. The key findings are preliminary, but we infer that there is a new phase of Chinese engagement in Latin America post-Covid, with a change in the profile of FDI: 1) relevant investments are now conducted not only through state owned enterprises, but increasingly made by private firms, especially when seeing outside of legacy sectors; 2) sectors of destination are slowly changing from oil, gas and agriculture towards renewable energy sources, electric vehicles and mining of strategic minerals such as lithium and rare earth minerals; 3) the flows of investments are smaller in the total quantity, but there is a higher number of projects in the region overall; 4) the FDI projects are increasingly directed in knowledge/technologically intensive sectors, instead of capital intensive ones, as was the case in traditional (legacy) sectors (such as electricity generation and oil) of the pre 2019 phase, which was the year of transition with the first EV projects being rolled out and the post-Covid period being the consolidation of this new phase, which is also seeing a gradual increase of greenfield investments as a mode of entry, vis-a-vis a predominance of mergers and acquisitions in the early to mid-2010’s.