• CHINA
• AFRICA

Beijing’s green new deal pledges factories in Africa

With its domestic market almost saturated and western tariffs biting, China is planning to make more electric vehicles in Africa

A string of investment announcements for electric vehicle production across Africa are expected at the Forum on China-Africa Cooperation summit in Beijing from 4-6 September. Previous FOCACs have focused on compelling numbers, such as the US$60 billion in new financing announced in 2018 and the $40bn pledge in 2021. This time manufacturing and Africa’s green energy transition will be in the spotlight. Beijing has renounced overseas investment in coal-fired power stations and is shaping a commercial strategy to maximise its advantages in renewable energy technology.

‘Joining hands to promote modernisation,’ is a tagline of the summit, which Lin Jian, a Chinese foreign ministry spokesman, pledges will ‘open up new vistas for China-Africa relations’. Part of the shift to Africa is because in China, whose companies now account for 51% of global EV sales, production has outpaced demand.

Yunnan Chen, a researcher at London-based global affairs think-tank ODI, points out that there are ‘significant parallels between the excess capacity China faces now in its clean technology sectors, [and] the excess capacity a decade ago in heavy industry and infrastructure, which was when the BRI [Belt and Road Initiative] was initially launched.’

EV exports from China – including foreign brands, such as Elon Musk’s Tesla – have increased 160-fold from 2019 to 2023. The global market share of China’s EV exports increased from 21% in 2019 to 41% in 2023.

Gregor Sebastian, a senior analyst at United States-based consulting firm Rhodium Group, points out that Chinese EVs are sold at ‘extremely low prices’ to attract domestic customers, but there is a limit on how many EVs the domestic market ‘can absorb’.

The other main reason lies in the tariffs that the European Union, US and, on 27 August, Canada have announced on China-made EVs. In July, the EU Commission imposed tariffs of up to 38% on Chinese EVs, citing unfair subsidies by Beijing, while the US and Canada have imposed 100% tariffs, in effect cutting off Chinese imports (AC Vol 65 No 16, Imagination deficit limits continental ties).

Last September, President of the European Commission Ursula von der Leyen championed Europe's 'Green New Deal' to achieve net zero by 2050 but criticised Chinese EV manufacturers, who she accused of having ‘flooded’ the world market with ‘cheaper electric cars … their price is kept artificially low by huge state subsidies’ (AC Special Report, China, Europe and the US mull tariff war amid scramble for Africa's green minerals).

Chinese manufacturer Neta Auto views the western tariffs as a ‘temporary setback’ that will incentivise Chinese companies to explore other markets, such as Africa. Beijing argues the tariffs are protectionist and breach World Trade Organization rules.

Wu Peng, China’s ambassador to South Africa, told the EU and US to ‘catch up’ on EV production. At a South African Institute of International Affairs meeting in August, Peng said African ambassadors in Beijing were coordinating ahead of the summit. ‘They said green development must be in the theme [of FOCAC’s agenda], and we totally agree with that.’

China has stepped up its EV production in Morocco and other African states to circumvent the US levies. Ryad Mezzour, Industry Minister for Morocco, which now produces more vehicles than South Africa, has targeted 60% of the 700,000 annual vehicle production capacity to be electric by 2030, most of which would be exported to Europe.

Chinese carmaker BYD, which has a 21% EV market share – the world’s largest – launched the company’s new Seal U DM-i model in Casablanca in July. Morocco has free trade deals with the US and the EU, giving them tariff-free exports. BYD and others are also looking to step up production in Turkey, which is part of the EU’s customs union.

The African EV market currently amounts to around 20,000 electric vehicles and fewer than a thousand charging stations across the continent. But Chinese companies have set up or are in the process of setting up production plants in 21 African countries, with a flurry of deals concluded in recent months.

Egypt will assemble and then manufacture the Bestune E05 vehicle made by Shanghai’s FAW; in June, BYD announced a partnership with Rwandan EV manufacturer Ampersand to build 40,000 electric motorbikes a year in Rwanda and Kenya by the end of 2026. Botswana recently announced that it had secured a $26 million funding package to produce EV batteries.

EV production and access to the minerals needed to make them will be a geopolitical battle in the coming decades as the US, EU and China seek to accelerate their transitions from fossil fuel to clean energy transport. The EU has set itself a target of ‘net zero’ carbon emissions by 2050.

African leaders are asking how and whether they can link EV manufacturing to access to their supplies of the critical minerals used in clean energy technologies. The International Energy Agency predicts that global demand for lithium, copper, cobalt, and nickel for EV batteries will more than double by 2030. China controls more than half of the world’s processing for lithium, nickel, cobalt and graphite.

To counter that, the EU and US are trying to strike their own access deals with African states. The EU’s Critical Raw Materials Act offers supply deals with African states in return for investment in the green transition and industrialisation. It has been the basis for agreements with Congo-Kinshasa, Rwanda, Zambia and Namibia over the past year (AC Vol 65 No 6, How Brussels was caught out by the Kivu war).

Several African countries – including Zimbabwe, Ghana, and Nigeria – have banned the export of raw critical materials, insisting these resources should be refined domestically. That could set the stage for deeper collaboration between Chinese mining and renewables companies. But Chinese companies are getting more risk averse. Much will depend on the reliability of the power and transport logistics infrastructure in Africa.

David Monyae, director of the Centre for Africa-China Studies at the University of Johannesburg Confucius Institute, is urging African governments to use critical minerals reserves to integrate supply chains and develop the manufacturing of environmental goods.

Local analysts argue that Africa should demand more than just the right to produce Chinese goods. China is the continent’s biggest trade partner but it exports much more to Africa than it imports. Chinese manufacturing investment plans are being considered in the tax incentives offered to EV production in African states. But there are vast differences in the tax regimes across the continent.

The South African government announced earlier this year that, from 2026, companies that invest in EV production can claim a 150% tax deduction. It still imposes a 25 percent tax on electric vehicle imports, partly to encourage local EV manufacturing.

Ahead of the FOCAC summit, South Africa's Cyril Ramaphosa and China's Xi Jinping held talks, saying afterwards that they planned to expand cooperation in renewable energy, energy storage and power transmission and distribution. They also committed to increase their manufacturing bases close to sources of raw materials to enable the transfer of skills technology. Ramaphosa had urged Xi to make good on China’s promise in 2021 to increase imports of African goods. Ethiopia banned non-electric car imports in 2023 and introduced tax breaks for electric vehicles.

But there are plenty of inconsistencies in regional policies. In its latest finance bill, Uganda reinstated a 25% import duty on fully electric vehicles, hybrid vehicles, and electric motorcycles. In Kenya, the finance bill abandoned by President William Ruto in June following public protests, included plans to impose 16% VAT on EVs (AC Vol 65 No 14, Youth revolt wins after Ruto scraps finance bill and pledges talks).

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