Locally-made EVs face market test as import prices plummet

From the newsletter

Egypt’s first locally-made electric car will cost an estimated $20,000, leading critics to voice concern that its quality does not measure up to the price. Especially unfavourable comparisons are drawn with similarly-priced electric cars from China. The Nasr E70 is made in Egypt by El Nasr Automotive Manufacturing Company, a state-owned manufacturer.  

• Should El Nasr cut prices, the project would be economically unviable. This dilemma highlights the tough balancing act that African countries are facing as they try to promote their automotive manufacturing industries. 

• It could lead to Egypt further restrict electric car imports to cushion its local industry. The North African country has already limited individuals to importing just one car every five years. 

More details

• The Nasr E70 is based on the Dongfeng E70, adapting an existing EV platform for local production. It is expected to have motor power of between 110-120 kW, a top speed of around 145-150 km/h with a range of around 400 km on a single charge. The battery capacity is expected to vary across trim levels, with some sources mentioning around 49 kWh or 52.99 kWh.

• Egypt’s initial target was for the car to be made using 50% local components, including seats, sheet metal, and glass, with plans to increase this percentage over time. Critical components like the control unit, tires, motor, and battery are typically imported initially. El Nasr Automotive aims for an annual output of 25,000 cars per year, with plans to increase based on demand. 

• The $20,000 price tag for the Nasr E70 is significantly higher than the initially reported cost of between $10,000 and $15,000. Local automotive experts however believe that the announced price of the electric car, made in partnership with China’s Dongfeng Motor Industry Import and Export Company, needs to be revised to ensure adequate sales and wider adoption. 

• Egyptian industry stakeholders emphasize that the success of the locally-made electric car depends on achieving a balance between quality and price, while offering buyers real incentives such as customs exemptions, installment facilities, and government support, in addition to providing a robust charging infrastructure. 

• The price of the car, which is expected to be made available for sale this year, raises questions about whether Africa can create a viable electric car manufacturing industry without protectionism. Egypt believes that making the cars locally will create thousands of jobs across the value chain, especially as the share of locally-made components is expected to increase over time.

• On the other hand, the country cannot compete with cheap imports, especially from China. Chinese electric cars from the likes of BYD, Xpeng and Zeekr are dominating the Egyptian market. In a free market environment, customers will opt for the cheaper, higher quality Chinese electric cars.

• The North African country however hopes to use subsidies and import restrictions to make the Nasr E70 a success. However, this will slow down the pace of EV adoption in the country. This will be detrimental for the country, which continues to have a huge oil import bill. 

• China continues to wage a fierce EV price war against its competitors. BYD for instance recently announced a 30% price cut for its cars, dealing a major blow to its competitors. This will significantly reduce the cost of electric cars globally, which will continue to make local electric car manufacturing in Africa unviable. 

Our take

• Egypt will likely intensify protectionist measures, but at the cost of slower EV adoption. Faced with the unviability of the Nasr E70 at a competitive price, Egypt could deepen existing import restrictions and potentially introduce new tariffs or non-tariff barriers on imported EVs, particularly from China.

• Without a competitive market price, the success of Egypt’s pioneer electric car will become heavily reliant on the Egyptian government's willingness and ability to provide substantial and long-term subsidies directly to the manufacturer or as incentives for buyers.

• To address criticisms about quality not measuring up to the price, El Nasr will be under immense pressure to rapidly improve the perceived and actual quality of the Nasr E70. However, achieving significant quality improvements will require substantial investment.