Emerging Markets Look To Get In On The Global Electric Vehicle Boom

With electric vehicles (EVs) proliferating and becoming more accessible to drivers around the world, some emerging markets are looking for ways to expand their EV production.

Once a luxury segment of the automotive industry, EVs have become popular with both consumers and companies in recent years, with solid growth trends attracting public and private investment.

EV uptake is crucial to the global energy transition as transportation remains the sector that relies the most on fossil fuels, producing an estimated 37% of CO2 emissions from end-use sectors in 2021.

According to BloombergNEF, the number of passenger EVs on the roads is expected to triple globally in the next decade to over 77 million.

Brands debuting in MENA

While China currently dominates electric vehicle production, accounting for 57% of global production in 2021, some emerging markets, particularly in the Middle East and North Africa, have announced plans to quickly launch domestic production.

In March 2022, Al Nasr Automotive Manufacturing Company (NASCO) signed a shareholders’ agreement with the National Automotive Company to establish the country’s first EV distributor, with the first NASCO-manufactured EVs coming to market in 2023.

That same month, NASCO signed a memorandum of understanding with Valeo Egypt, a subsidiary of the French automotive supplier of the same name, to design, develop and manufacture EV components. As of December 2021, the project was seeking investment of approximately $127 million and was targeting annual production of 20,000 units over a three-year period.

Private players are also trying to support the EV goals of North Africa’s most populous country. Egyptian billionaire Mohamed Mansour, who has shifted his investments from social media to green projects, announced in November 2022 that he plans to produce 15,000 EVs in Egypt over the next three to five years through his company Al Mansour Automotive. The company also plans to import and market five Cadillac EV models by 2025.

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Meanwhile, Brightskies, an Egyptian company specializing in EVs and power systems, signed an agreement with NASCO and Engineering Automotive Manufacturing Company in February 2021 to produce the country’s first electric buses by localizing and manufacturing technological components in Egypt.

Elsewhere in the MENA, in November 2022 Saudi Arabia’s Public Investment Fund, the country’s state wealth fund, announced that it has partnered with Taiwan-based technology firm Foxconn to produce the Kingdom’s first EVs by 2025. The brand known as Ceer is expected to attract more. It contributes more than $150 million in foreign direct investment and $8 billion to the Kingdom’s GDP by 2034.

In May 2022, the Ministry of Industry and Mineral Resources of Saudi Arabia said that construction has already begun on a $2 billion EV battery metal plant, which is an integral part of the Kingdom’s EV production plans and aims to attract $32 billion in investment in its own investment. the mining sector as part of ongoing economic diversification efforts.

Turkey has also participated in regional electric vehicle production, with the first SUV models of locally produced Togg EVs reaching the local market at the end of the third quarter of 2023. The country’s Automobile Joint Venture Group, the consortium behind the project, plans to export the vehicles within 15 to 18 months of their initial domestic sales.

Attracting investment in Southeast Asia

In addition to the proliferation of domestic brands, some countries – particularly in Southeast Asia – are working to attract investment for EV production and technology acquisition from more mature markets.

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Thailand, currently the region’s largest auto manufacturing hub, has implemented policies to attract EV manufacturers and increase production, including a cash subsidy for passenger EVs and a planned subsidy for batteries.

The country aims for EV production to account for 30% of total automobile production by 2030.

As OBG reported in April 2022, As the world’s two largest EV battery manufacturers prepare to invest in projects, Indonesia is poised to become a major EV player. in the country.

The country released its EV Roadmap in September 2020, which includes plans to produce 600,000 four-wheeled EVs and 2.45 million two-wheeled EVs per year by 2030, as well as complementary metal refining and battery production targets.

A South Korean consortium led by China’s Contemporary Amperex Technology – the world’s largest EV battery manufacturer – and LG Energy Solution, has also signed related agreements with Indonesian partners worth $6 billion and $9 billion for EV projects from mines to production.

infrastructure upgrade

Expansion of ridesharing services and Micromobility options like electric scooters could help boost EV uptake in emerging marketsas an alternative to car ownership, especially in urban environments. For example, as of April, 46% of three-wheeled vehicles sold in India as of early 2022 were electric, bringing EVs’ share of total car sales to 2.6%.

Launched by Drive Electric, a global philanthropic campaign promoting clean energy-powered transportation solutions, Leapfrogging to E-mobility Acceleration Partnership has donated US$1 million to 10 projects to increase adoption of electric vehicles in emerging markets, with the goal of eventually raising US$1 billion. for reason

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Subsidies or tax exemptions have proven to be useful tools to encourage the adoption of EVs. In some states of Mexico, EV drivers are exempt from annual tax based on car value. In Vietnam, the government has exempted EVs from registration fees for three years, in addition to reducing the excise duty on smaller EVs to 3%.

As governments promote the construction of EV infrastructure and sign large-scale contracts, the global charging industry is poised to grow at a CAGR of 34.5% from 2022 to 2030.

The UAE, which has one of the largest charging station-to-vehicle ratios in the world, plans to increase the number of electric vehicles on the street to 42,000 by 2030.

Dubai’s EV Green Charger initiative, ongoing since 2015, aims to increase the number of charging stations in the UAE to meet expected demand, with the number of chargers in the country standing at 325 as of August 2022.

In March 2022, the first EV and battery logistics center in MENA opened in Dubai’s Jebel Ali Free Zone. It is designed to support the regional circular economy for EVs by providing a space where batteries can be stored, repaired, recycled or processed.

Meanwhile, Egypt is offering private sector players a 40% stake in a new company set up to oversee pay-as-you-go charging stations, with a total of 3,000 charging stations, the first of which will open in Alexandria. and Cairo.

With Oxford Business Group

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