89 FDI Shake-Up Q UA RT E R _ 0 2 _ 2 0 2 6 level, data centers are a small but increasing power draw: By 2030, their electricity demand could represent up to roughly 5 percent of the global total, and higher in locations where data center build-out is most concentrated. - - - - - - - - - - - - - - - EV VALUE CHAIN: NEW HUBS IN THE WEST AND GLOBAL SOUTH The EV value chain includes EV assembly plants as well as gigafactories to produce batteries. Batter ies power not only EVs but also a growing number of consumer electronics, robotics, drones, and energy- storage devices for homes as well as for electric grids, making the industry increasingly critical for the global economy. China is, by far, the lead ing manufacturer of EVs and batteries today. It is home to more than 70 percent of global EV-as sembly capacity; more than 80 percent of active material processing and global battery manufactur ing capacity; and about 90 percent of lithium iron phosphate (LFP) cells—a newer, rapidly growing battery technology. Until recently, China was also the top destination for announced FDI into EVs and batteries, receiving 20 percent of the global total during the 2015-to-2019 period. That was almost 50 percent more than the United States, the next largest recipient. Investments into the electric- vehicle value chain have been growing in value and reconfiguring. Since the pandemic, greenfield FDI announce ments into the EV value chain have been growing in value and reconfiguring. In aggregate, we see a shift away from China and a seeding of new hubs (Exhibit 4). Annual announced greenfield FDI into EVs and battery production since 2022 has totaled about $110 billion per year, roughly 40 percent higher than in the 2015-to-2019 period, and nearly all of it has flowed to economies out side China. If fully realized, these projects could more than quadruple battery capacity outside China and nearly double global capacity over 2022 levels. While many regions have homegrown businesses attempting to scale domestically, FDI-funded projects may provide important capa bilities and could account for most of the capacity growth in these regions. To a large extent, Chinese companies are shap ing investment patterns in this industry. China pivoted from being the industry’s top FDI recipient to becoming the leading FDI source, accounting for around one-quarter of industry announcement totals. At the same time, Chinese players con tinue to invest heavily at home. In fact, looking at announced investment totals in EVs and bat teries, Chinese-owned capacity is expected to remain high as Chinese firms retain ownership of factories in new locations, expanding their global footprint rapidly. Europe has been the largest destination of recent Chinese investment. While the continent historically relied on the strengths of its own auto motive sector, it is growing increasingly reliant on FDI flows. Europe receives roughly $28 billion in announced FDI annually. Of the $16 billion yearly announcements coming from outside the Euro pean Union since 2022, Chinese firms accounted for approximately $10 billion. Projects include some of the continent’s largest planned gigafac tories for LFP cells in Germany, Hungary, Portugal, and Spain, as well as new assembly lines in Slova kia. This expansion is substantial: A single Chinese manufacturer is currently developing gigafactories in Europe that could add 150 gigawatt-hours of capacity in 2026, roughly equal to Europe’s total capacity back in 2022. At the same time, Europe has reinforced its intraregional links, too, with roughly $12 billion in annual announcements com ing from within the European Union.