China is neglecting the American market and choosing to take its electric vehicles to Africa. Media reports suggest that Chinese EV automakers are not thinking of the American market. This comes amid sanctions imposed by the European Union.
Why China is neglecting America
According to a report by Commercial Times as they quoted South China Morning Post, China is not taking its electric vehicles to America. The publication says this is because of sanctions imposed by the United States and the European Union on Chinese electric vehicles (EVs).
This has now forced Chinese EV makers to shift their focus to the African continent and this accelerates efforts to establish flagship stores and assembly plants across the continent.
Growth in China EVs to Africa
Trendforce has it that in 2023, electric vehicles from Chinese automakers registered a massive growth in new energy vehicle exports to Africa – the car makers saw year-on-year growth of 291%.
At the same time, Chinese-made electric buses are becoming a common sight on roads in countries such as Ethiopia, Kenya, Rwanda, including South Africa.
Furthermore, the report points out that Egypt, located at the crossroads of Asia, Africa, and Europe, has become a key destination for Chinese investment, with companies like BAIC Group and Geely Auto’s premium EV maker Zeekr recently announcing plans to enter the market.
“For Chinese companies looking to expand into the Middle East and Africa, Egypt is a strategic location, as indicated by the report. By the end of 2025, BAIC Group’s assembly plant in Egypt is expected to produce 20,000 EVs annually,” it said.
“The report notes that this figure is projected to increase to 50,000 units annually within five years of operation, under the company’s agreement with Alkan Auto, a subsidiary of Egypt’s EIM Group.”
In addition to meeting domestic demand, BAIC’s plant will leverage the North African country, Egypt’s geographic position at the intersection of Asia, Africa, and Europe to export vehicles to other African nations and the Middle East.
This is also made possible by the fact that a key advantage is the Suez Canal, which handles over 10% of global trade annually, connecting the Mediterranean and the Red Sea, and providing the shortest maritime route between Asia and Europe.
Chinese EV brand to enter Egyptian market
Meanwhile, Zeekr, another Chinese EV brand, has announced plans to enter the Egyptian market by the end of 2024 and the company has signed a distribution agreement with EIM Group to establish a sales and service network in Egypt.
Considering Egypt as a strategic location, the country has low labor costs and that is a key advantage for the Chinese automaker.
“Wages in Egypt are approximately half those in Morocco and lower than in South Africa,” added the report.
“Moreover, Egypt’s abundant sunlight makes it an ideal site for renewable energy-focused assembly plants.
“Its inclusion in the African Continental Free Trade Area and its proximity to high-income markets in the Middle East and Europe further strengthen its appeal.”
Apart from the Egyptian market, Chinese electric carmakers are making significant inroads into African markets.
For example, Chery is planning to establish an assembly plant or a line in Kenya, a plan likely made before the EU’s announcement of additional tariffs on Chinese EVs in July.
Meanwhile, BYD and XPeng have expanded into countries such as Morocco, Kenya, Rwanda, and South Africa and the report highlights that in September, BYD introduced three EV models in Kenya, following recent launches in Zambia and Madagascar, expanding its footprint to 12 African markets.
With all these positives for the Egyptian market, it is mentioned that Morocco remains the big winner as it is strategically located at the crossroads of Africa and Europe.
On top of that, the country has free-trade agreements (FTAs) with both the EU and the US, which has attracted Chinese investment in electric vehicles and new energy.