The World’s Largest EV Maker Finds Footing In Africa

Chinese Electric Vehicle (EV) manufacturer and BYD seems to be taking bold steps to spread its wings across Africa where barely any EV maker has managed to penetrate the African market whose transport sector has been dominated by fuel-powered vehicles.

China’s BYD beat Tesla to become the world’s top-selling EV company in the fourth quarter of 2023 afterselling 3 million electric cars and plug-in hybrid models last year, up from 1.8 million in 2022.

The Chinese EV giant has been growing its footprint in Africa.

Last week, BYD announced entry into the Rwanda market through dealership with CFAO Mobility.

BYD’s entry into Rwanda allows the company to introduce its sleek design EV brand Atto 3 to the market, and this move makes the acquisition of these EVs easier given that clients won’t have to take on the burden of shipping costs.

BYD had already started signaling its aggressive push to expand across Africa when BasiGo, a mobility company, signed partnership with Rwanda last year to use BYD’s electric buses to address public transport shortage, modernize the sector and decarbonize road transport in the capital Kigali.

The government of Rwanda has incentivized not only the manufacture and import, but also the acquisition of EVs. This has in turn attracted investors who want to invest in EV production but also those who want to invest in import businesses.

In Rwanda, electric vehicles benefit from reduced electricity tariffs. Electric vehicles are treated as VAT zero rated products along side their spare parts, batteries and charging station equipment.

The government exempts EVs from import and excise duties, as well as 5 per cent of withholding tax at customs. This is in addition to rent free land for charging stations, free license and authorization for commercials EVs.

On the manufacturing and assembly level, firms in this line of business get 15 per cent corporate income tax and tax holiday.

This naturally makes sense why BYD is expanding to Rwanda. But BYD goes to the Rwandan market following Germany's Volkswagen, which has struggled to ensure adoption of its EVs since its launch.

VW was one of the first beneficiaries of the government strategy. It launched the e-Golf model in Rwanda in 2019. The pilot project started with four of the cars and two charging stations in Kigali.

VW's original plan was to expand the service to 50 cars and 15 charging stations, as part of its cab-hailing app called Move. Four years down the road, there are barely any e-Golf on Kigali roads.

VW blamed the unevenness in road infrastructure and the height of speed-bumps to the failure of e-Golf, which has a relatively low ground clearance. This particular concern was damaging the underside of the car, where the batteries are located.

VW’s e-Golf could have failed but BYD could make a testament given that its Atto 3 model is a high raised car, but it will take much more than just the model to successfully roll out their EV business.  

BYD has been operating in Kenya for sometime now.

In March 2023, Associated Vehicle Assemblers (AVA), an automobile company, announced it would assemble 130 electric vehicles in Kenya from BYD. In January of the same year, BasiGo partnered with AVA to assemble buses in Mombasa, a coastal city in Kenya.

In South Africa, BYD entered the market in July last year by introducing the Standard Range and Extended Range variants of its Atto 3 model. The company expanded from Gauteng and KwaZulu-Natal provinces to the Northern Cape in November the same year. 

The BYD Model

BYD has got it right that it has integrated all the production processes. The EV maker designs its car chips from in-house, and the company mines its lithium and other materials.

BYD is also known for its high performing and safe batteries, a key component required for EVs to make the highest driving range. EV battery technology has improved but EVs still struggle to make long distances and battery life has not improved significantly.

The other key element that makes BYD stand out is its aggressiveness to acquire subsidiaries at every step of the supply chain. For instance, BYD recently extended its business into sea freight, enabling the firm to assemble its car-carrier ships that will directly ship its EVs from factories in China to Africa, Europe, South America and other markets.

This week, BYD's first cargo ship, with capacity to transport 7,000 vehicles, set sail.

“The launch of EXPLORER NO. 1 further cements BYD's vertical integration and position as a global NEV manufacturing leader,” the company said on Twitter.

The company said plans for seven more ships, equipped with BYD energy storage batteries and generator systems, are under way.

This kind of model enables the company to keep its costs down and sell cars at more competitive prices. Compare the fact that BYD’s Atto 3 costs from about US$41,260 to US$44,860. Premium models from Mercedes-Benz, BMW and Audi start at well over US$53,720.

Still, compared to current acquisition costs of fuel-powered cars in Africa, EV markers such as BYD will need to bring their costs down to service the demand which is currently limited.

It will take sometime before EV makers can fully penetrate the African market. African roads are currently filled with second hand cars mostly from Asia and Europe.

For instance, 90 per cent of all vehicles brought into Kenya are used vehicles from Japan and the United Kingdom.

For now, BYD has shown its aggressive push to take on the African EV market.