China endorses EV investments in Africa

November 11, 2024

From the newsletter

In an interview with the Chinese media outlet Global Times, Zambia's ambassador to China, Ivan Zyuulu, expressed his country's support for Chinese green investments. This happened during the commemoration of the 60th anniversary of China-Zambia diplomatic ties. He pointed out that Zambia is keen to tap into China's overcapacity in EVs.

  • He highlighted that China's so-called overcapacity is a blessing for Africa, especially now that it enables consumers to access products at relatively lower prices.

  • He also mentioned that Zambia is keen to collaborate with China on EV manufacturing, given the country's abundant lithium and cobalt resources essential for EV production.

More details

  • Chinese investments in Africa, spanning renewable energy and electric vehicles, have received widespread approval from both African nations and the Chinese government.

  • Recently, Chinese EV manufacturers have accelerated their expansion into Africa. Several EV manufacturers have established a presence on the continent. Some are partnering with distribution companies, setting up their own distribution channels, or constructing manufacturing plants.

  • BYD, the state-owned EV giant, has spearheaded this expansion. It currently operates in over 13 African countries. 

  • BYD's strategy involves both selling its own vehicles and partnering with local companies to provide technology and components.

  • Last week's partnership with Inchcape, an automotive distribution company, further expanded its reach, enabling the distribution of its EVs and hybrid cars in Ethiopia. 

  • BYD has also partnered with local distributors in Kenya, such as Loxea, and has established collaborations with five distributors in South Africa.

  • The company has launched its range of EVs, including the BYD ATTO 3, in 13 African countries. In the last three months alone, it launched in Kenya, Ethiopia, Madagascar, and South Africa. 

  • This expansion has proven successful, with the company selling 33,012 electric vehicles outside of China in September, a 17.74% year-on-year growth.

  • Another state-owned Chinese EV maker, BAIC, China's sixth-largest automobile manufacturer, entered the Egyptian market by partnering with Egypt's Alkan Auto, a few months after launching its range of EVs in May 2024. 

  • The partnership seeks to construct an EV factory in Egypt by the end of 2025 and targets to produce 20,000 EVs in its first year and 50,000 by the end of the fifth year.

  • Other brands like Xpeng and FAW have also entered the Egyptian market. FAW, the second-largest of China's "Big Four" state-owned car manufacturers, plans to build a local plant.

  • Privately-owned Geely Automobile Holdings has a presence in South Africa and has expressed interest in expanding into other African markets. Chinese state-owned

  • Dongfeng Motor Corporation has partnered with local companies in Egypt and Algeria to assemble and sell electric vehicles.

  • Neta Auto, a Chinese EV start-up, has made Kenya its entry point into Africa, with plans to expand into 20 countries. They aim to establish 100 stores and sell over 20,000 vehicles annually within three years.

Our take

  • Africa is a newcomer to the EV space and lacks proven technology. However, Africa possesses abundant critical minerals essential for EV manufacturing. This is an opportunity. Reports indicate that Morocco and Tanzania could produce batteries at competitive rates of $72/kWh and $68/kWh, respectively, aligning closely with Europe's $68/kWh.

  • China's expansion into Africa is undoubtedly a game-changer for EV adoption on the continent. Chinese EV makers benefit from substantial government support, enabling them to reduce production costs and mass produce. As a result, Africa can access affordable Chinese EVs.

  • Ultimately, Africa will participate in EV manufacturing, but it can’t do so alone. It needs partners and funders. Partnerships are already forming, and the tariffs imposed by Europe and the US on EVs have prompted China to shift its strategy. Africa is definitely a target market alternative, and we expect more Chinese EV manufacturers to expand into Africa.