African governments welcome Chinese electric vehicle imports, production amid looming trade war

Summary

The script discusses China's significant role in the electric vehicle (EV) market, particularly its impact on African countries. While trade tensions between China and the West are on the rise, African governments are embracing Chinese EV imports and local production, transforming transportation with electric mopeds and contributing to reduced air pollution. Tanzania, for instance, has seen a surge in EVs, with over 5,000 on the roads. Chinese manufacturers benefit from government subsidies, allowing them to sell competitively in international markets. Despite challenges like short lifespan and infrastructure limitations, the African EV market is expected to grow, with implications for local economies and the global automotive industry.

Takeaways

• 🌏 China's dominance in electric vehicles (EVs) is leading to a significant global impact, with African countries particularly embracing Chinese EV imports and local production.
• 🚗 In Tanzania, Dar es Salaam's roads are seeing a transformation with the shift from traditional mopeds to electric versions, largely due to Chinese influence.
• 🛵 A food delivery company in Tanzania has reported healthier profit margins after transitioning to 32 electric mopeds imported from China in 2021.
• 💨 Challenges in adopting EVs include their relatively short lifespan, but the benefits in terms of reduced air pollution are driving the switch in East Africa.
• 📈 Tanzania is a leader in the region with over 5,000 EVs on the road, and the number is growing, supported by local ride-hailing apps offering EV options.
• 🏭 At least 10 companies have entered Tanzania's e-mobility market, with one company importing parts from China and assembling them locally, selling over 90 units.
• 📊 Despite tax-free incentives, the EV industry in Tanzania faces challenges such as limited funding, a shortage of technicians, and low consumer awareness.
• 💡 Since 2009, Chinese EV manufacturers have benefited from government subsidies, allowing them to sell overseas at competitive prices, including in Africa.
• 🤝 There is increasing interest for Chinese car makers to form local partnerships in Africa, leading to job creation and support for domestic EV industry development.
• 🌍 Western countries are debating the merits of opening their markets to Chinese manufacturers, while in Africa, the trade in EVs is dominated by component imports from China.
• 📊 The report from Alex Partners forecasts that by 2030, only about 19 of the 137 EV brands in China will have achieved sufficient scale to be viable and profitable, indicating a future of industry consolidation.

Q & A

What is the current situation of electric vehicles in China's market according to the transcript?

China has become the center of gravity for the automotive industry, especially electric vehicles, with more EVs sold in China than anywhere else in the world. They make up about 40% of all vehicle sales in China, and it's expected that by 2030, this will reach over 34%.

How is the African market responding to Chinese electric vehicles?

African governments are welcoming Chinese EV imports and local production by Chinese manufacturers. In Tanzania, for example, there is a surge in electric vehicles, particularly two and three-wheelers, which are rapidly replacing traditional mopeds.

What challenges are faced by the adoption of electric vehicles in Africa?

Challenges include the relatively short lifespan of the vehicles, limited funding, a shortage of technicians, and low consumer awareness. There is also a need to overcome the perception that electric vehicles cannot travel long distances without recharging.

What is the impact of Chinese subsidies on the global EV market?

Since 2009, Beijing has provided subsidies and tax breaks to Chinese EV manufacturers, allowing them to sell to overseas markets relatively cheaply, which has led to the creation of jobs and the development of a domestic EV industry in countries like Africa.

How does the report from Alex Partners view the future of the automotive industry, particularly in relation to China?

The report suggests that China is becoming the epicenter of the automotive industry, especially for electric vehicles. It is expected that by 2030, China will continue to dominate the EV market, with over 34% of vehicle sales being electric.

What is the significance of the number of EV brands in China mentioned in the transcript?

The report from Alex Partners highlights that there are over 37 brands of electric vehicles for sale in China, indicating a highly competitive and diverse market.

How does the adoption of electric vehicles in Africa compare to other regions?

Tanzania, for instance, is one of East Africa's leading countries in the switch to electric vehicles, with over 5,000 EVs on the road, the highest number in the region, and growing.

What are the implications of the trade war and slowing demand for Chinese EV manufacturers like BYD?

Despite the trade war and slowing demand, companies like BYD are expanding operations, which is seen as a sustainable move due to their unexpected growth and the potential for exports and overseas markets to bolster demand and sales volume.

What is the potential impact of new tariffs imposed by Europe on Chinese EVs?

The new tariffs, ranging from 28.7% to 48.7%, may limit the amount of exports to Europe, but some Chinese EV companies may still be able to export profitably by absorbing the tariffs without passing them on to consumers, due to the cost advantage of Chinese EVs.

How might the geopolitical battle over EV production affect the industry?

The geopolitical battle could lead to a shift towards local assembly operations by Chinese automakers in Europe and other regions, which could provide jobs and continue to build the EV ecosystem, despite the competition it brings to local automakers.

What is the long-term scenario for the EV market according to the insights shared by Stephen D from Alex Partners?

The long-term scenario suggests that automakers will want to make cars where they sell them, leading to the establishment of local assembly operations and the development of an automotive ecosystem, which is beneficial for the local economy and the EV industry as a whole.

Outlines

00:00

🌏 China's Influence on African EV Market

The script discusses how China's dominance in electric vehicles (EVs) has led to a significant presence in Africa, where governments are embracing Chinese EV imports and local production. Isaac Luko reports from Tanzania, highlighting the shift from conventional to electric mopeds, supported by Chinese companies. The food delivery sector has benefited from this change, with companies like Zakia importing electric mopeds, leading to healthier profit margins. Despite challenges such as the short lifespan of EVs, Tanzania is leading East Africa in EV adoption, motivated by reducing air pollution. The country now has over 5,000 EVs on the road, and local ride-hailing apps offer electric vehicle options. At least ten companies have entered Tanzania's e-mobility market, with 'Try' being one of them, importing parts from China and assembling them locally. Although there are incentives for EV imports, the industry faces challenges such as limited funding, a shortage of technicians, and low consumer awareness. Since 2009, Chinese EV manufacturers have been supported by subsidies and tax breaks, allowing them to sell overseas at competitive prices. There is also a growing interest in forming local partnerships, creating jobs and aiding the development of a domestic EV industry.

05:00

🚗 Opportunities and Challenges for Chinese EVs in Africa

The script explores the opportunities and challenges that the African market presents for Chinese EV manufacturers. With over 37 brands of electric vehicles for sale in China, the market is highly competitive, prompting Chinese automakers to look for opportunities abroad. Southeast Asia, Europe, Oceana, Africa, and the Middle East are target markets, although the demand for EVs has not yet reached the levels seen in China. This is attributed to the lack of government subsidies and charging infrastructure. As the cost of EVs decreases and becomes competitive with traditional gasoline-powered vehicles, these obstacles are expected to be overcome. The script also discusses the potential for Chinese EV makers to expand operations in Africa, with the possibility of local assembly operations and the development of an automotive ecosystem, similar to what has happened in Southeast Asia. The long-term goal is to produce cars where they are sold to support local economies and build the EV ecosystem.

10:01

🛠 Geopolitical Impacts on Chinese EV Expansion

The script addresses the geopolitical implications of Chinese EV manufacturers' expansion, particularly in the context of trade tensions and the need for access to critical materials. Europe, previously a significant export destination for Chinese EVs, has implemented new tariffs, which may limit exports but not deter all Chinese companies from profiting even after accounting for these tariffs. The cost advantage of Chinese EVs is significant compared to European-made EVs, suggesting that some companies may still find it viable to export to Europe. In the long term, these tariffs may accelerate Chinese automakers' plans to establish local assembly operations in Europe, potentially in Eastern Europe or Turkey, as announced by BYD. This move is expected to benefit the local economy by creating jobs and fostering the growth of the EV ecosystem, despite the initial competition it may introduce.

Keywords

💡Electric Vehicles (EVs)

Electric Vehicles, or EVs, are motor vehicles powered by electric motors and rechargeable batteries. They are a key focus of the video, highlighting China's dominance in the EV market and how African countries are embracing EV imports and local production. For example, the script mentions the transformation of African cities with the surge in electric two and three-wheelers, indicating a shift towards more sustainable transportation.

💡Trade Tensions

Trade tensions refer to conflicts or disagreements between countries over trade policies or practices. In the script, it is noted that there is no sign of growing trade tensions between Beijing and the West in Africa, suggesting a welcoming attitude towards Chinese EV imports, which contrasts with some political stances elsewhere.

💡African Governments

The term 'African Governments' is used in the context of the video to describe the supportive stance of various African nations towards Chinese EV imports and production. This is evident in the script where it discusses the welcoming of Chinese EV imports and the establishment of local partnerships, indicating a positive reception for Chinese investment in the EV sector.

💡Local Production

Local production refers to the manufacturing of goods within a specific region or country. The video script highlights the local production of EVs by Chinese manufacturers in Africa, such as the assembly of three-wheelers from imported parts, which contributes to job creation and the development of a domestic EV industry.

💡Food Delivery Driver

A food delivery driver is a person who transports food orders from restaurants to customers. In the script, the transition of a food delivery driver to using an electric moped is mentioned as an example of individuals and companies adopting EVs for economic and environmental benefits.

💡Profit Margins

Profit margins indicate the amount of profit a company makes relative to its sales, expressed as a percentage. The script cites the example of a company that imported electric mopeds from China and reported healthier profit margins, illustrating the economic advantages of adopting EVs.

💡Air Pollution

Air pollution refers to the presence of harmful substances in the air. The video discusses Tanzania's motivation to switch to EVs partly due to a desire to cut air pollution, emphasizing the environmental benefits of electric vehicles in reducing emissions.

💡Ride Hailing Apps

Ride hailing apps are mobile applications that allow users to request transportation services. The script mentions local ride hailing apps that offer the option to request an electric vehicle, providing a cheaper and more environmentally friendly alternative to traditional combustion engine cars.

💡Technicians

Technicians are skilled workers who service, repair, and maintain machinery or equipment. The script points out the shortage of technicians as one of the challenges faced by Tanzania's EV industry, indicating a need for skilled labor to support the growth of the sector.

💡Consumer Awareness

Consumer awareness refers to the level of knowledge or understanding that consumers have about a particular issue or product. The video script discusses the low consumer awareness about EVs as a challenge, suggesting that there is a need for education to increase acceptance and adoption of electric vehicles.

💡Subsidies and Tax Breaks

Subsidies and tax breaks are financial incentives provided by governments to support certain industries or activities. The script explains that since 2009, Beijing has provided such incentives to Chinese EV manufacturers, allowing them to sell their products overseas at competitive prices.

💡Geographical Expansion

Geographical expansion refers to the process of extending a company's operations into new regions or countries. The video discusses the ambitions of Chinese EV manufacturers to expand across Africa, indicating a strategic move to penetrate new markets and increase their global presence.

Highlights

China's dominance in electric vehicles has created a divide between countries that want EVs and politicians who don't.

African governments are welcoming Chinese EV imports and local production by Chinese manufacturers.

In Dar es Salaam, Tanzania, a surge in electric vehicles is transforming the city with electric mopeds replacing traditional ones.

Food delivery drivers like Zakia have transitioned to electric mopeds due to fuel cost savings.

Companies in Tanzania are importing electric mopeds from China, leading to healthier profit margins.

Tanzania is a leader in East Africa for electric vehicle adoption, motivated by a desire to cut air pollution.

Local ride-hailing apps in Tanzania now offer electric vehicle options, which are cheaper than combustion engine cars.

At least 10 companies have entered Tanzania's e-mobility market, including Try, which imports parts from China.

Try offers affordable vehicles to professional drivers through a lease-to-own scheme and aims to expand across Africa.

Tanzania's EV industry faces challenges such as limited funding, a shortage of technicians, and low consumer awareness.

Beijing has provided subsidies and tax breaks to Chinese EV manufacturers, allowing them to sell overseas at competitive prices.

There is increasing interest for Chinese car makers to form local partnerships in Africa, creating jobs and boosting the domestic EV industry.

Western countries are debating the merits of opening their markets to Chinese manufacturers.

Industry experts expect to see more EVs on African roads, which will boost economies and provide quieter experiences.

China has become the center of gravity for the automotive industry, especially electric vehicles.

Over 37 brands of electric vehicles are now for sale in China, with the market share expected to grow by 2030.

The Chinese market is highly competitive, driving automakers to look for markets outside of China for better margins.

The demand for EVs in Africa and other regions has not reached the level of China due to lack of subsidies and charging infrastructure.

As the cost of EVs comes down and reaches price parity with gasoline-powered vehicles, demand in markets like Africa is expected to increase.

The long-term strategy for automakers is to make cars where they sell them, which could lead to local assembly operations in Africa.

Chinese EV makers like BYD have experienced unexpected growth and are looking to expand operations despite trade wars and slowing demand.

Europe has adopted new tariffs on Chinese EVs, which may limit exports but could also accelerate local assembly plans by Chinese automakers.

The geopolitical battle over EV production and access to critical materials has direct implications for the industry.

Transcripts

now on East Asia tonight we've uh

previously covered how China's dominance

in electric vehicles has triggered a

widening Gulf between countries which

want them and politicians who don't but

in Africa there is no sign of the

growing trade tensions between Beijing

and the West instead a number of African

governments are welcoming Chinese EV

Imports and local production by Chinese

manufacturers Isaac luko reports from

Tanzania darus Salam a busy bus Ling

place is like many African cities being

transformed by a surge in electric

vehicles two and three wheelers dominate

the roads here and they're rapidly being

switched out for electric mopeds with

the help of China Zakia a food delivery

driver made the transition a couple of

years ago because she could no longer

afford the fuel why

the company Zakia works for p imported

32 electric mopeds from China in 2021

and says the move has resulted in

reporting healthier profit margins since

the move still adopting electric

vehicles has not been without its

challenges Chief among them is their

relatively short lifespan

Tania is one of East Africa's leading

countries in the switch to Electric

motivated among other reasons by a

desire to cut air pollution there are

over 5,000 EVS on the roads the highest

number in the region and

growing some local ride hailing apps now

let you request an electric vehicle like

this one which is a cheaper option

compared to regular cars with combustion

engines in the past few years at least

10 companies have entered tanzania's

e-mobility Market try is one of them

importing parts for three wheelers from

China and assembling them in its

factories it has sold over 90 units so

far offers affordable vehicles to

professional drivers through a least to

own scheme and has Ambitions to expand

across Africa we have uh suppliers

people interested in from different

countries like Malawi Congo

Ethiopia uh Zambia they're all inquiring

on how we can send them um shipments

directly to them despite tax-free

incentives on Imports tanzania's EV

industry faces other challenges to

growth limited funding a shortage of

technicians and low consumer awareness

it will take a minute for someone to

believe that you can charge a vehicle

for 2 hours and drive 100 km and they

always wonder what if I want to drive

110 km which is obvious like if your

phone die you know your phone is dying

you'll charge especially if you're using

it for work so it's the same thing but

adaptation is a process since 2009

Beijing has provided subsidies and tax

breaks to Chinese EV manufacturers thus

allowing them to sell to overseas

markets relatively cheaply in Africa

trade in EVS is dominated by the import

of components from China but there's

also increasing interest for Chinese car

makers to form local Partnerships this

has led to the creation of jobs and

given a leg up to budding efforts to

build a domestic EV industry as Western

countries debate the merits of opening

up their markets to Chinese

manufacturers industry experts here

expect to see more EVS on African roads

boosting economies and providing quieter

experiences on the road Isaac luk CNA

darus

Salam and for more insights Steven D

joins us from Shanghai he is a co-leader

of Alexis Partners greater China

business and he's also the head of the

firm's Asia automotive and Industrial

Consulting practice well thanks so much

for joining us this evening Stephen uh

first up perhaps you could help us

understand and share some of the key

findings uh from your firm's latest

report on the East Asian EV market and

and what what do they mean for the

industry well thanks tell um we recently

published an Alex par Partners Global

Automotive Outlook which is an annual uh

review of what's going on in the Auto

industry and again this year the story

really is China China's become the

center of gravity for the automotive

industry and particularly electric

vehicles there are more electric

vehicles sold in China than anywhere

else in the world made up about 40% of

all vehicle sales in China so far this

year we expect by 2030 it'll reach over

34s so uh that's been the result of uh

combination of government

subsidies to build the industry uh an

interest by Chinese consumers in in

intell intelligent technology and uh

just a proliferation of uh value for

money and attractive options for

vehicles over 37 brands of electric

vehicles are now for sale in China so we

we looked at the 70s and 80s as the

Advent of Japanese car makers around the

world maybe the the '90s for Korean

makers the 2010s for uh new EV startups

like Tesla uh it's possible now we're at

the Forefront of the Advent of the China

age in the automotive industry globally

yeah 137 Brands that's a pretty

impressive uh coming out of China but

let's just talk about um in terms of

challenges and opportunities I mean what

does the um the African market present

for uh Chinese EV man manufacturers and

I guess that that you know um these EVS

will also have to adapt to local needs

right right uh the Chinese market is

highly competitive we've undergone about

18 months of a price War in China so

that drives a lot of Chinese automakers

to look outside of China for markets in

which they can sell their vehicles at a

at a better margin so um southeast Asia

Europe um Oceana and of course Africa

and the Middle East are Target markets

for them um the demand for EVS in these

markets has not reached the level of

China's EV demand and that's because a

lot of the markets either lack the

government subsidies to make them cost

effective for consumers or uh the

charging infrastructure that's so

prolific in China but as the cost of e

EVS come down and there's price parity

with regular gasoline powered vehicles

um that will overcome one of those

obstacles and the next obstacle will

really be about is it easy to find a

charging station in those markets and

when those things converge then I think

you'll see a pickup in many markets

including Africa you're right so as the

cost of EVS uh come down can Africa

absorb uh say the spare capacity uh from

these Chinese EV makers and and what are

some of the implications for the local

industry yeah um the first the the rule

of thumb in the automotive industry

generally is longterm you want to make

cars where you sell them and so exports

of cars from from China recently and in

the past from Japan and Korea and

Germany uh typically have been short to

medium-term Solutions so as the market

grows uh to enough volume to support

local assembly operations we typically

see a step where exporters will then

begin um assembling what we call Semi

knockdown kits and then completely

knockdown kits and then later as the

volume reaches a certain scale you'll

see the local development of an

automotive ecosystem that's happened in

many places in Southeast Asia especially

in Thailand uh and it's beginning in

Vietnam uh I expect to see that in

Africa longer term but probably not in

the in the short CH and uh Stephen

what's your take on a Chinese EV makers

like byd they're expanding operations

You know despite the trade war and and

slowing demand I mean is it a

sustainable move at the rate of their

expansion well uh companies like byd

have undergone uh really

unexpected uh growth over the last

couple of years so byd is clearly a

success story from the Chinese uh stable

of automakers uh according to our recent

study of the 13 37 uh EV brands in China

we expect by 2030 only about 19 of them

will have achieved sufficient scale to

be viable profitable that doesn't mean

that you won't have more than that um in

the market because consolidation takes a

long time especially in China but it's

going to be a struggle so not all the

brands Will Survive some will be bought

some will be merged and some may uh

unfortunately leave the market so

certainly exports and looking overseas

out of China is one Avenue to to bolster

uh demand and sales volume to achieve

scale yeah so a lot of the brands out of

the 137 won't survive it it seems like

so how then do you see the um

geopolitical battle over EV production

and access to critical materials how do

you see that playing out and and

obviously the implications for the

industry

well it has a direct uh implication for

the industry so recently we've seen

Europe uh which had previously been a a

a a rapidly Rising export destination

for Chinese EVS adopt new tariffs uh

from anywhere from 28.7% to 48.7% on

Chinese EVS so that will limit the

amount of exports but uh some Chinese EV

companies will still be able to export

to Europe and and make profit even

eating uh the tariffs without passing

them on to Consumers there's that big of

a cost Advantage probably about a 35%

cost advantage of Chinese EVS versus a

European made uh European brand EV uh

that said the tariffs will probably in

the long term simply accelerate the

already existing plans of Chinese

automakers to set up local assembly

operations in Europe and that could be

anywhere from Eastern Europe to even

turkey which has uh recently bys

announced uh an assembly plant to be set

up in Turkey as well so in the end as I

said before uh automakers want to make

cars where they sell them and inevitably

that's not bad for the local economy

certainly it'll bring competition for

the automakers in Europe and uh but it

will provide jobs and continue to build

the EV ecosystem there so that's

probably the what the long-term scenario

will look like it's been great uh

chatting with you and thanks so much for

sharing your insights good to have you

in East Asia tonight Steven D there from

Alex partners