Chinese EV makers continue Africa expansion

December 13, 2024

From the newsletter

Chinese automaker Dongfeng has launched in South Africa with an initial line-up of three models, two being fully electric. The first to arrive will be the Dongfeng Box, a small electric hatchback aimed at competitors like the BYD Dolphin. The Box will go on sale in the first half of 2025, with pricing to be announced next year.

  • The Dongfeng Box can reach a top speed of 140 km/h and travel 430 km on a single charge. It supports DC fast charging, reaching up to 80% charge in 30 minutes, with a reported 200 km of range available after just 8 minutes of charging.

  • Dongfeng already has a presence in South Africa in the heavy truck segment, and the entry of the Box marks its expansion into the passenger vehicle space. The vehicle will be distributed locally by a South African firm called E Auto Motor.

More details

  • Chinese EV makers are rapidly expanding their presence in Africa, establishing partnerships with local companies to set up manufacturing plants and distribution networks. BYD, for example, has launched its products in 13 African countries, including South Africa.

  • The South African market is one of the most mature, with a strong automotive industry and a growing demand for affordable vehicles. Early market entrants like Chery and Haval in the fuel vehicles segment are making progress, with their annual sales exceeding 15,000 annually. This growth is driven by South Africans seeking cheaper options amidst increasing financial pressures.

  • This shift in consumer preferences has impacted the entire automotive industry, with even traditional German luxury brands like BMW facing increased competition. In 2023, 66.3% of vehicles sold in South Africa were priced below $27,900, according to NAAMSA data. This price-sensitive segment is where Chinese EV makers are making significant inroads.

  • Several Chinese EV brands, such as BYD, Geely, GWM, Chery, and BAIC, now offer a variety of models in South Africa, ranging from compact city cars to SUVs. These EVs are often competitively priced, even compared to internal combustion engine vehicles, due to lower production costs and government subsidies in China.

  • For instance, the Dayun S5 is priced at $21,268, making it more affordable than the Volvo EX30, which starts at $42,124. Other competitively priced Chinese EVs include the BYD Dolphin ($28,708) and the GWM Ora ($36,524). This aggressive pricing strategy puts pressure on established brands like Mercedes and BMW, whose entry-level electric models start at $62,718 and $64,075, respectively.

  • Dongfeng’s first offering, the Dongfeng Box, a small electric hatchback, is set to go on sale in early 2025. The Box has a spacious interior, a 430 km range, and a suite of modern features and is expected to be priced below other South African brands, bringing more competition into the market.

  • The government plans to stimulate the EV market by introducing several incentives for EV manufacturers and buyers. From March 2026, companies will be able to claim a 150% tax deduction on investments in electric and hydrogen-powered vehicles.  Subsidies for EV purchases are also planned, which could significantly boost market growth. However, the impact of local manufacturing will take time to be felt in the market. Establishing production plants takes time and requires huge capital to set up the necessary infrastructure.

Our take

  • Dongfeng's entry into the South African market is poised to shake up pricing strategies in the EV sector. Chinese brands, with their focus on affordable EVs and mature technology, are well-positioned to compete effectively. However, their success hinges on more than just price. Factors like after-sales support and charging infrastructure availability will be crucial. Local South African brands have an existing advantage with their established distribution networks, but Chinese companies could overcome this by partnering with local players.

  • The availability of affordable Chinese EVs could drive faster adoption in South Africa, but it also puts pressure on the local industry. South Africa has a history of investment in vehicle manufacturing and will undoubtedly want to be a part of the EV market. This could lead to increased competition and innovation as South African companies strive to maintain their market share. The European and US bans on Chinese EVs give South Africa breathing room in its export market, allowing it to focus on exploring those opportunities fully with less competition.