Egypt woos BYD to create local electric car factory

From the newsletter 

Egyptian authorities have visited China’s BYD to establish a local electric car manufacturing factory in Egypt. During the visit, the two sides discussed the possibility of establishing an integrated industrial complex that includes EV manufacturing, electric battery production, and solar panel manufacturing. BYD has this year become Egypt’s best-selling EV company.

• The Suez Canal Economic Zone woos investors with low taxes, full repatriation of profits and subsidised electricity, water and land lease rates. 

• Electric car assembly is still in its infancy in Egypt. State-owned El Nasr Automotive is working on the country’s first ever locally-produced car, while private firms assemble cars from components. 

More details

• The Suez Canal Economic Zone Authority's chairman said the industrial hub represents an ideal platform for BYD to access markets in Africa and the Middle East, highlighting its unique location linking the Red Sea and the Mediterranean, and its network of trade agreements that provide free access to more than two billion consumers. 

• Egypt has been working on measures to promote EVs in the country, including introduction of a subsidy to buyers who purchase locally-made electric cars. This month, the country announced it is working on a pricing structure for charging services based on consumption patterns across different EV categories. 

• The North African country is one of Africa’s leading EV markets but currently relies on imports of electric cars, mainly from China. While German brands like Volkswagen, BMW, Porsche and Mercedes-Benz have been dominating the industry in recent years, Chinese brands especially BYD, Zeekr, Dongfeng and Xpeng have quickly become some of the biggest sellers. 

• BYD is however unlikely to establish a factory in Egypt and Africa at large at this point in time. Outside of China, BYD only has manufacturing plants in Brazil, Hungary, and Thailand, locations chosen strategically in locations near the company’s major markets. Further, any electric car factory in Africa would primarily serve other markets as demand on the continent remains low. 

• In Africa, only Morocco does full-scale manufacturing of electric cars, making microcars for Stellantis and Renault. The majority of global firms with ambitions to establish plants in Africa are beginning with small assembly plants in partnership with local companies to test the market. For instance, China’s GAC plans to launch local assembly of electric cars in Ethiopia in partnership with Huajian Group. 

• Countries with robust automotive industries, especially South Africa and Morocco, will play a pivotal role in creating an electric car manufacturing industry in Africa. These countries have existing auto manufacturing ecosystems that can be retooled to make EVs. However, for EV electric car manufacturing to be viable in Africa, major support will be needed from governments through subsidies, tax cuts and other incentives.

Our take

• Egypt needs consistency in policies to grow its EV industry. The country recently banned Chinese charging protocols despite Chinese EVs increasingly dominating the local market. Such decisions could derail Egypt’s attractiveness to manufacturers, especially those from China. 

• Rather than a full factory, BYD is more likely to begin with semi-knocked down (SKD) or completely knocked down (CKD) assembly in Egypt—possibly within the Suez Canal Economic Zone—allowing them to test market demand while benefiting from Egypt’s incentives and trade access. 

• While Egypt is a leading EV market in Africa, demand across the continent remains too low to justify large-scale factories. Any full-scale EV manufacturing would likely prioritize Middle East and Europe exports, with domestic markets served via assembly or imports in the near term.