Opinion Editorial
WHY YOUR FIRST ELECTRIC CAR MIGHT BE CHINESE
A few years ago, the cars produced in China were the objects of disdain in the global market. They were either copies of popular western makes or just looked outlandish. The CH Auto Lithia Sport looked exactly like the Audi R8 and the Land Wind X7 very similar to the Rover Evoque. The LI Shi Guang Ming the Book of Songs did not just have a silly name but the look of the model was not appealing at all.
Times have changed, and as with most areas of technology, China has caught up with the West’s automotive design abilities. In 2010, in a bid to spur growth, the Government of China leveraged a mix of policy, tax incentives, and manufacturer and consumer subsidies into promoting EV sales, driven in large part by its desire to cut pollution levels. China’s Central Government has deeply subsidized consumers’ EV purchases with more than $14.8 billion since 2010, providing up to $3,600 for battery electric vehicles (BEVs) with more than 400 km range.
In 2019, the government enforced a minimum of 10% of vehicle production to account for EV production for any company that manufactures or imports more than 30,000 vehicles in China. A year later, this quota was raised to 12 percent. Those who do not meet this quota pay a fee, and the money from the fee is awarded to those who succeed.
By 2019, some 500 manufacturers had registered to make EVs in China. With these incentives in place, Chinese automakers, such as BYD, NIO, and Geely, have been investing heavily in EV technology and have produced high-quality electric cars with competitive features at relatively affordable prices.
Driven by government support, the sales of EVs in the region have increased significantly in the past decade. Since 2019, China has been leading the race in EV production and has emerged as the top producer and seller globally. Chinese automaker BYD Auto, is the world’s largest electric vehicle manufacture and sells products to United States, Europe and Latin America. Going by this trend, as per a Statista report, China is projected in terms of electric vehicle production over the next few years to produce roughly 13 million battery electric vehicles by 2023.
China’s EV push has no doubt attracted global players as well. We have already seen that response with companies like Volkswagen, BMW and others agreeing to source batteries in China, for example, or even starting to think about using China as their lead market for the development of EVs. It is noteworthy that China’s estimated production level is also anticipated to exceed the combined output of other large markets, including the United States, Germany, and Japan.
In addition to this, the cost of batteries has significantly decreased in recent years. According to estimates by Bloomberg New Energy Finance, battery pack cost fell 80% in real terms from nearly $1,100/kWh in 2010 to $209/kWh by 2017, and further reduced to $137/kWh in 2020. The US Department of Energy (DOE) expects the cost of electric vehicle batteries reach less than $100/kWh and estimates that it will ultimately reach about $80/kWh. In China, EV batteries have hit the $ 100/kWh making EVs more affordable than competing markets.
Driven by government incentives, lower research and development costs, lower levels of capital spending and lower labor costs than its rivals, the Chinese have been able to produce EVs that are $10,000 cheaper than Europe and the US. While the average price of electric cars has risen in Europe since 2015 from $51,424 to $58,652 ― and $53,038 to $63,864 in the US ― it has dropped in China to $33,440 from $70,203, taking it below the price of petrol cars, according to a study by JATO Dynamics, which provides analysis on industry trends. You can now purchase an EV from China for as little as $ 20,000.
Furthermore, Chinese automakers, targeting the African market, have been investing heavily in the African market. This is driven by the fact that Africa is urbanizing faster than any other continent, at a rate of 4% every year, compared to the global average of 2%. As cities expand, oil demand grows and the problems of fuel scarcity and cost loom larger. Pollution from fuel-based transport is also a major contributor to growing air quality concerns in African cities, such as Nairobi. Rapidly growing urban population continues to provide opportunities for transport solutions and reduce reliance on fossil fuels. It is often overlooked that many African countries already rely on low-carbon technologies such as geothermal energy and hydropower. By 2017, 77% of Kenya’s electricity demand was met through renewable energy. Many African countries are looking to low-cost renewables with abundant potential, such as solar and wind, to grow grid capacity. One critical challenge is that these sources are inherently variable (or “intermittent”) and often do not coincide with times of highest electricity demand from consumers. Energy storage that allows electricity to be saved and used at different times of day is a key component for ensuring the viability of renewables in Africa. As a result, China have produced electric vehicles that are suitable for African driving conditions. These vehicles are built to handle the tough African terrain, and they often come with features such as high ground clearance and rugged suspension systems.
Due to the relatively lower acquisition costs coupled with low operating costs, Chinese electric vehicles will increasingly become popular in Africa. With rising fuel prices and concerns about air pollution, many Africans are looking for alternatives to traditional combustion engines. To protect consumers from ever increasing fuel prices, African governments, including Kenya, heavily subsidize fuels, at an average cost of 1.4% GDP. Electric vehicles provide a cost-effective solution that can help people save money on fuel costs while reducing their carbon footprint. For African Governments this will stave off the growing burden of foreign currency, fuel dependency and subsidies. We have already seen uptick of EVs on African Roads. Various electric vehicle dealers such as East Africa’s Go Electric Limited through its brand dubbed UTU have partnered with various Chinese original equipment manufacturers (OEMs) to supply affordable EVs for Kenya, Uganda, Tanzania and Rwanda.
All these factors combined make Chinese electric vehicles an attractive option for many African consumers, and it’s no surprise that you will consider a Chinese made EV for your first EV purchase.
The writer, Ms. Eve Maina, is the Managing Director of Go Electric Ltd an Electric Vehicle (EV) dealer that provides e-mobility solutions to the African market.
ABOUT GO ELECTRIC LTD
Go Electric Ltd is an Electric Vehicle (EV) dealer that provides e-mobility solutions to the African market. It offers a wide range of products from electric cars, tricycles, buses, motorcycles, and electric charging solutions. Go Electric Ltd is the sole dealer of Electric vehicles and solar vehicles dubbed Utu. Utu EVs are designed for African roads as they are designed in Kenya and manufactured in China hence offering a unique combination of local innovation and global manufacturing. The brand is currently available in Uganda, Kenya, Tanzania, Rwanda, Malawi, and Mozambique among other African countries.
It was recently recognized awarded in an attentional award dubbed Pacesetters Awards East Africa as the Pacesetter in Electric mobility in East Africa. The company has been at the forefront of spurring the uptake of EVs through its various initiatives such as the establishment of various solar and electric vehicle charging hubs.
www.utucars.africa
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