The Surge in Chinese Greenfield Investment in Europe

Recent estimates suggest the trend accelerated further in 2025, with greenfield investment approaching €9 billion, a record level and roughly 51% higher than the previous year.

Earlier data already showed the momentum building: greenfield investment reached about €5.9 billion after rising 21% year‑on‑year, making it the dominant form of Chinese investment in Europe.

The shift from acquisitions to new factories reflects tightening European scrutiny over takeovers of sensitive companies as well as Chinese firms’ desire to establish long‑term production bases inside the EU.

EV and Battery Manufacturing Are Leading the Boom

The surge is overwhelmingly concentrated in the electric‑vehicle and battery supply chain.

Chinese firms are global leaders in battery technology and EV manufacturing, and Europe’s transition to electric mobility has created a large market for these technologies. Chinese manufacturers now account for roughly a quarter of EV sales in the EU, highlighting their growing presence in the sector.

Battery production has become the centerpiece of Chinese investment because European automakers need reliable local battery suppliers to support EV production. Building plants inside Europe allows Chinese firms to:

• supply European carmakers directly
• reduce transportation costs and tariff risks
• integrate into regional automotive supply chains

Major battery and EV supply‑chain investments across Europe include projects from companies such as CATL, AESC and Huayou Cobalt, which have announced or built battery plants in countries including Hungary, Germany and France.

Flagship Project: CATL’s Debrecen Battery Megafactory

One of the most prominent examples is CATL’s massive battery factory in Debrecen, Hungary.

The project, valued at more than €7 billion, is designed to become one of Europe’s largest battery plants and supply major automakers including BMW and Mercedes‑Benz.

This facility illustrates the broader strategy: Chinese battery companies are embedding themselves within Europe’s automotive ecosystem by building local production capacity tied directly to European manufacturers.

Why Hungary Has Become the Main Destination

Among all European countries, Hungary has emerged as the primary hub for Chinese greenfield investment.

Data from MERICS and Rhodium Group shows Hungary accounted for around 31% of all Chinese foreign direct investment in Europe, the highest share of any country.

Several factors explain this concentration:

1. Existing automotive cluster
Central and Eastern Europe hosts major manufacturing operations for European automakers, making it an attractive location for battery suppliers.

2. Large EV‑related projects
Battery investments—including CATL and other Chinese energy‑technology companies—have created a dense EV supply chain presence in Hungary.

3. EU single‑market access
Factories in Hungary allow Chinese firms to manufacture inside the EU and sell freely across the bloc.

Together, these factors have positioned the country as a strategic gateway for Chinese manufacturers entering Europe’s EV ecosystem.

Europe’s Strategic Dilemma

The influx of Chinese investment presents both opportunities and risks for the European Union.

On one hand, Chinese investment can help Europe expand EV production capacity, create jobs and accelerate the transition to low‑carbon transport.

On the other hand, policymakers worry about several strategic issues:

• Subsidized competition: China’s EV sector has benefited from extensive state support, raising concerns about unfair market advantages.
• Industrial dependence: Europe risks relying heavily on foreign suppliers for key technologies such as batteries.
• Overcapacity: Large production capacity in China could lead to excess exports that pressure European manufacturers.

These concerns have prompted a wave of new policy debates across Brussels and EU member states.

How the EU Is Responding

European policymakers are responding in several ways.

1. Stronger investment screening
Europe has tightened foreign‑investment screening frameworks, particularly for strategic technologies and critical infrastructure.

2. Trade defense measures
The European Commission has launched investigations into subsidies supporting Chinese EV manufacturers and considered tariffs on imports to level the playing field.

3. Conditional openness to investment
Policy proposals increasingly suggest attaching conditions to foreign investments—such as ensuring local production, value creation or technology collaboration—while still welcoming capital that supports the green transition.

This approach reflects a broader European strategy: remain open to foreign investment while limiting strategic vulnerabilities.

The Bigger Picture

Chinese greenfield investment in Europe’s EV and battery sectors is likely to remain significant in the coming years. Europe needs large‑scale battery production to meet climate targets, while Chinese companies are among the world’s most advanced and cost‑competitive suppliers.

The challenge for Europe is managing that partnership carefully—capturing the economic benefits of new factories and supply chains while avoiding long‑term dependence on foreign‑controlled technologies.

In other words, Europe’s EV transition is increasingly tied to Chinese industrial investment—but the terms of that relationship are still being negotiated.