Morocco rises as an EV manufacturing hub

Morocco could soon emerge as a leading manufacturing hub for EV batteries in Africa. In June, Chinese electrolyte producer Guangzhou Tinci Materials Technology, revealed plans to erect a plant in the Kingdom. The firm’s Singapore division is set to invest as much as US$280m for the production of lithium-ion battery materials. This comes on the heels of another Chinese firm, Gotion High Tech, signing a memorandum of understanding with the Moroccan government for the development of a US$6.3bn, 100GWh EV battery facility. Once operational, the Moroccan facility is expected to surpass the current total installed capacity in the US. Gotion, which is listed on both the Shenzhen and Zurich stock exchanges, is among the world's top ten battery manufacturers and counts Volkswagen as a major shareholder. In further development, Yahua, a Chinese lithium producer, earlier this year entered into a preliminary agreement with South Korean EV battery manufacturer, LG Energy Solution. This strategic collaboration targets the production of battery-grade lithium hydroxide in Morocco, a key feedstock for the manufacture of cathodes, which are fundamental components in EV batteries.

LG foresees this alliance as an opportunity to fortify its supply chains for crucial battery materials while aligning with US sourcing regulations. Under the US Inflation Reduction Act, EV buyers benefit from tax credits if their vehicles are assembled in North America using minerals sourced either domestically or from countries with a US free trade agreement. The investment is also poised to gain from the EU’s Critical Raw Materials Act, a similar legislation concerning mineral supply chains. Morocco maintains free trade agreements with both the US and the EU.

Morocco’s massive phosphate reserves are a critical factor in its attractiveness as EV battery production hub. A growing trend in electric car industry is to replace NMC Li-ion batteries with lithium iron phosphate (LFP) batteries, substituting expensive cobalt and nickel as well as manganese for relatively cheaper phosphate and iron. While not providing the same longer driving ranges as NMC batteries, phosphate-based LFP batteries are less expensive, safer, and last longer than their cobalt-based counterparts. Although the kingdom does possess small nickel and manganese, and lithium reserves that could supply domestic NMC cathode manufacturing it is the production of LFP batteries that favours Morocco for EV battery production. The kingdom sits on over 70% of global phosphate rock reserves and is the world’s second-largest phosphate producer, after China. It offers manufacturers a cost advantage of up to 70% per kilogram. In 2022, the Moroccan Minister of Industry Ryad Mezzour announcement that it would soon sign an agreement with EV battery manufacturers for the construction of a “gigafactory” to make electric vehicle (EV), which some analysts believe is for the world’s leading EV carmaker, Tesla.

Morocco’s automotive manufacturing sector presents another advantage for EV battery manufacturers. In 2022, the sector led the country's industrial exports, earning about US$11.5bn, a 33% increase from the previous year. With an annual capacity of 700,000 vehicles and numerous car part suppliers, Morocco's auto industry hosts international manufacturers like Renault and Stellantis, maker of brands like Peugeot, Citroën, and Opel.

 

References

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‘LG Energy Solution signs deal with China's Yahua on lithium supply in Morocco’, The Korea Times, 05 April 2023

‘LGES sourcing lithium from Morocco’, Just Auto, 06 April 2023

‘China’s Yahua and LG Energy to produce EV battery materials in Morocco’, Caixin Global, 07 April 2023

‘The future of accessible electric cars may lie in Morocco’, New Thinking, 05 May 2023

‘China battery maker Gotion plugs into VW for global expansion’, Nikkei Asia, 31 March 2023

‘Chinese EV battery maker Gotion mulls factory in Morocco’, Reuters, 01 June 2023

‘When will Africa get its first gigantic battery factory?’, Bloomberg News, 05 June 2023

‘Gotion explores Africa’s first gigafactory in Morocco’, fDi Intelligence, 09 June 2023

‘China’s Tinci to build lithium battery material plants in US, Morocco’, Yicai Global, 28 June 2023

‘Will Morocco become a focus country for Chinese investment in electric batteries’, The Rio Times, 13 July 2023

Morocco’s green mobility revolution: The geo-economic factors driving its rise as an electric vehicle manufacturing hub, Michael Tanchum, Middle East Institute