Is China leading America in African mobility?

From the newsletter

In just one week, the presidents from the world's biggest economies, China and the USA, have visited Africa. One went to the north and the other to the south. Both have a common goal: to secure Africa's minerals critical for electric vehicles and renewable energy technologies. But China wants more than minerals.

• China views Africa not only as a source of minerals but also as a partner in EV manufacturing and a key market for its expanding used electric cars. Last month, it launched its first inspection point for used electric cars. It aims to export one million second-hand electric cars within the next two to three years.

• The United States, on the other hand, is more focused on securing critical minerals. Its largest transport-focused investment in Africa—the $4 billion Lobito Corridor railway—aims to export these minerals to meet its demand for EVs and renewable energy technologies.

More details

• China is as keen on these minerals as America and has been financing the refurbishment of a rival rail line from Zambia to Tanzania’s Indian Ocean coast. The railway was originally constructed in the 1970s with Chinese assistance but has deteriorated over the years and currently operates below capacity. China will spend $1 billion to divert mineral exports away from Western markets. The refurbished line will be under the control of a Chinese state-owned company.

• It is telling where each superpower leader travelled in Africa. While Mr. Biden went to Angola to promote a freight line, Mr. Xi visited Morocco, Africa’s largest car maker. The rivalry is not limited to railways but is equally evident on African roads. Most cars on the continent currently come from Europe, Japan, Southeast Asia, and the Middle East. But that’s about to change, and not only due to the influx of used Chinese EVs.

• Tesla, led by South African Elon Musk, this year became the biggest employer in the electric mobility space in Africa. The firm has 929 senior staff on the continent, up 177% in the past 12 months. Tesla came to Africa in 2021 when it installed the first Supercharger in Morocco.

• China’s BYD, the world’s largest EV maker, has only 88 senior staff based in Africa but is catching up fast. It opened showrooms in 12 African countries this year. Almost a third of BYD employees in Africa are salespeople; the comparable figure for Tesla is less than 20%.

• China is building local partnerships to expand sales, while America is not doing so as much. BYD allied itself with Pilatus in Zambia, Ampersand in Rwanda, and BasiGo in Kenya. BYD also tailors models to the African market, redesigning them for local conditions. Other Chinese EV makers are following suit, not least since new US and EU tariffs make Africa comparatively more attractive.

• China is also transferring technology and industrial production to the continent (something it never did with other export successes). State-owned automaker BAIC Group is building an assembly plant in Egypt, aiming to produce 20,000 electric vehicles annually from 2025. Chinese auto giants XPeng, Geely, Neta, Chery, JAC Motors, Dongfeng, and SAIC have all announced plans to assemble or manufacture vehicles in Africa.

• Mr. Xi's visit last week came soon after Gotion High-Tech announced that it will build Africa’s first gigafactory in Morocco at a cost of $1.3 billion. China is winning: America is falling behind when it comes to transport investments. The breadth of China’s engagement and its focus on end-consumers is unmatched. This assumes the trend of China not just selling but also making products in Africa. All of this would entail substantial benefits for Africa. May the elephants stampede.

Our take

• Africa is clearly the future, but it hasn't fully grasped its potential role in the EV transition, particularly how its mineral wealth can contribute. Some countries, like Morocco and South Africa, recognise this opportunity and are investing in becoming EV manufacturing hubs.

• The competition for Africa is a blessing. Well, when two elephants fight, it is the grass that suffers, but in this case, it is different. The grass is getting greener. The used EV car export inspection point is a significant game changer. Africa still relies on importing EVs, and this option will make them more affordable. We expect more shipping of used Chinese EV cars.

• The Chinese strategy is a triple bet. Investments in minerals, local manufacturing, and the export of used EV cars put them everywhere along the supply chain. They can't miss anything. But what Africa might consider pushing for is local EV battery manufacturing. Morocco is doing this in the north, and the south needs a strategic partner for this as well. The potential is vast, and Africa can produce EV batteries at competitive prices compared to European countries.