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Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

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

  • The number of passenger electric vehicles (EVs) is set to triple over the coming decade.
  • Domestic production of EVs dovetails with MENA economic diversification strategies.
  • Subsidies, tax incentives and micromobility EVs are supporting uptake.
  • Charging stations, mining infrastructure and battery production key to expansion.

With electric vehicles (EVs) set to proliferate and become more accessible to drivers around the world, several emerging markets are looking to expand their EV manufacturing.

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

EV uptake is essential to the global energy transition, as transport remains the sector with the highest reliance on fossil fuels, producing an estimated 37% of CO2 emissions from end-use sectors in 2021.

The number of passenger EVs on the road is expected to triple globally in the next decade to over 77m, according to BloombergNEF.

Debuting brands in MENA

Although China currently dominates EV manufacturing, accounting for 57% of global output in 2021, several emerging markets – especially in MENA – have announced plans to jump-start domestic production.

In March 2022 El 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 EVs produced by NASCO hitting the market in 2023.

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

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

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

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Elsewhere in MENA, in November 2022 Saudi Arabia’s Public Investment Fund, the country’s sovereign wealth fund, announced a partnership with Taiwan-based tech company Foxconn to manufacture the Kingdom’s first EVs by 2025. The brand, known as Ceer, is expected to draw more than $150m in foreign direct investment and contribute $8bn to the Kingdom’s GDP by 2034.

In May 2022 Saudi Arabia’s Ministry of Industry and Mineral Resources said the construction of a $2bn EV battery metals plant was already under way, an integral component in the Kingdom’s EV manufacturing plans and in line with its aim of attracting $32bn in investment in its mining sector as part of ongoing economic diversification efforts.

Turkey has also joined the regional push into EV manufacturing, with the first SUV models of its domestically produced Togg EVs set to reach the local market at the end of the third quarter of 2023. The country’s Automobile Joint Venture Group, the consortium behind the project, is planning to export the vehicles within 15 to 18 months of their first domestic sales.

Attracting investment in South-East Asia

In addition to the proliferation of domestic brands, some countries – most notably in South-east Asia – are working to attract investment for EV manufacturing and technology uptake from more mature markets.

Already the region’s top auto-manufacturing centre, Thailand has implemented policies to bring in EV manufacturers and boost output, 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 output by 2030.

As OBG reported in April 2022, Indonesia is also set to become a major EV player, as the world’s two-largest EV battery producers are preparing to invest in projects in the country.

The country released its EV Roadmap in September 2020, which includes plans to produce 600,000 four-wheeled EVs and 2.45m two-wheeled EVs annually by 2030, along with complementary metals-refining and battery-production targets.

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China’s Contemporary Amperex Technology – the world’s biggest EV battery maker – and a South Korean consortium headed by LG Energy Solution have also signed respective agreements with Indonesian partners on mines-to-manufacturing EV projects worth $6bn and $9bn.  

Upgrading infrastructure

The expansion of ride-sharing services and micromobility options such as electric scooters could help drive EV uptake in emerging markets, especially in urban environments as an alternative to car ownership. For example, 46% of three-wheelers sold from the start of 2022 in India as of April were electric, pushing the share of EVs in overall automobile sales to 2.6%.

Launched by Drive Electric, a global philanthropic campaign supporting transport solutions powered by clean energy, the Leapfrogging to E-mobility Acceleration Partnership has committed $1m in grants to 10 projects to boost EV adoption in emerging markets, with the target to eventually raise $1bn for the cause.

Subsidies or tax exemptions have proven to be useful tools for encouraging the adoption of EVs. In some states of Mexico, EV drivers are exempt from an 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 tax on smaller EVs to 3%.

The global charging industry is set to grow at a compound annual growth rate of 34.5% from 2022 to 2030, as governments encourage the construction of EV infrastructure and award large-scale contracts.

The UAE, which boasts one of the biggest charging station-to-vehicle ratios in the world, plans to increase the number of EVs on the street to 42,000 by 2030.

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

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

Egypt, meanwhile, is offering private sector players a 40% share in a new company established to oversee pay-to-use charging stations, with a total of 3000 charging stations in the works, the first of which are set to be launched in Alexandria and Cairo.

By Oxford Business Group

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