Chinese firms ink $230m deal for EV assembly in East Africa

From the newsletter

Three Chinese companies have signed agreements with partners from Rwanda, Kenya and Nigeria totalling $230 million. The partnership will focus on the assembly of motorcycles and cars, as well as the manufacture of spare parts. The agreements were signed during the 7th Western China International Fair for Investment and Trade, held in Chongqing.

• While the specific partners were not disclosed, Mobility Rising anticipates that the investment will also involve electric motorcycle assembly. This is largely due to the African EV ecosystem's strong reliance on Chinese technology, which has been widely adopted by electric mobility companies across the region.

• In East Africa, the local electric vehicle supply chain remains in its early stages, and electric motorcycle assembly is still limited. This development is expected to significantly improve access to spare parts, which the market currently sources predominantly from China.

More details

• Africa has emerged as a key market for Chinese motorcycle exports, ranking as the second-largest continental destination. In the first quarter of 2024 alone, Chinese exports to Africa reached 1.21 million units, marking a significant 63% year-on-year growth. Companies based in Chongqing contributed between 15% and 20% of this total, underscoring the city’s growing role in the sector.

• Chongqing’s exports to Africa saw extraordinary growth in 2024, with car exports increasing by over 550% to approximately $332.64 million. Meanwhile, motorcycle exports from the city rose by nearly 20%, reaching a total value of around $361.2 million. This reflects both strong demand and expanding export capacity from China’s manufacturing hubs.

• China-Africa trade reached record-breaking levels in 2024, totalling about $294 billion. Electric vehicle exports grew by an impressive 104%, while motorcycle exports also rose by 21%. Looking ahead, analysts at the Chongqing Institute of Open Modern Economy Research forecast that the city’s vehicle exports to Africa could surpass $4.9 billion by 2027, with motorcycle exports expected to reach $420 million.

• East Africa’s electric motorcycle assembly capacity remains modest but is growing steadily. Mobility Rising’s current annual capacity figures show Dodai in Ethiopia produces 2,400 units, Ampersand in Kenya 17,280, Spiro in Kenya 50,000, Spiro in Uganda 50,000, and Roam in Kenya 50,000 units. While this reflects a promising foundation, it still falls short of the region’s growing demand. However, with increasing investments and technology transfer from China, these numbers are expected to rise significantly over the next 2–3 years, potentially doubling as local supply chains mature and regional integration improves.

• There is a large and ready market for electric motorcycles in East Africa, particularly within the informal transport sector. Kenya is home to over 1.2 million boda boda riders, Uganda has around 1 million, and Rwanda hosts approximately 45,000–60,000 riders. This sizable market provides a strong demand base for EV manufacturers and financiers, ensuring that locally assembled electric motorcycles will have consistent uptake as production scales.

• Government policies across East Africa are increasingly geared towards promoting local assembly of electric motorcycles. Many governments are offering incentives such as reduced import duties on EV components, VAT exemptions for locally assembled electric vehicles, and land or infrastructure support for manufacturers. These policy shifts are aimed at reducing reliance on imports, creating jobs, and positioning the region as a manufacturing hub for affordable, clean transportation.

• The influx of electric motorcycles in East Africa is being driven by a mix of financial innovation and consumer readiness. Financiers like M-KOPA, Watu Credit, and other asset financiers have created accessible Pay-As-You-Go models and lease-to-own options that eliminate the barrier of high upfront costs. Coupled with increasing fuel prices and rising awareness of climate-friendly transport, consumers, especially boda boda operators, are embracing electric motorcycles at scale.

Our take

• Local assembly would reduce import duties, shipping costs, and delays linked to bringing in fully built units, thereby making electric motorcycles more affordable for end-users. This cost reduction could accelerate adoption among boda boda riders, many of whom operate on slim margins. Improved affordability would also enhance access to financing, as lower vehicle prices mean reduced down payments and shorter loan terms.

• Assembling electric motorcycles locally would boost demand for technical training and vocational education, fostering the development of a skilled workforce to support industrialisation. Over time, this could lessen dependence on imported labour and open up employment opportunities for youth in both urban and peri-urban areas.

• Furthermore, local EV assembly would decrease reliance on single-source imports, particularly from China, shielding the industry from global supply chain disruptions. A robust local ecosystem could also position East Africa as a manufacturing and export hub for electric motorcycles across the continent.