Chinese Firm Seals Sh2.6 Billion Electric Vehicle Assembly Deal in Kenya

In a significant boost to Kenya’s burgeoning electric vehicle (EV) sector, Chinese automotive giant Chery has inked a deal worth Sh2.62 billion to establish a local EV assembly plant in partnership with Kenyan firm Afrigreen Automobile Limited. This landmark agreement, formalized on July 27, 2024, in Nairobi, is expected to significantly impact both the economy and the environment.

The assembly plant, set to be operational within a month, is projected to create over 3,000 direct and indirect jobs. This development comes at a crucial time as Kenya aims to increase the adoption of electric vehicles, which are seen as a sustainable alternative to traditional gasoline-powered cars. With the current number of registered EVs in Kenya standing at 3,753 by the end of 2023, the new plant will contribute to making these vehicles more accessible and affordable for the general populace.

Nishant Mishra, the Global Head of Future Mobility at Afrigreen Automobile Limited, expressed optimism about the new venture. “We anticipate producing between 5,000 and 6,000 EVs annually,” Mishra stated. The initial production will focus on the Omoda sport utility vehicle, designed to cater to both urban and rural terrains, with plans to expand to pickup models in the following year. This approach underscores the commitment of both companies to addressing the diverse needs of Kenyan consumers while contributing to a greener transport sector.

The agreement, witnessed by key figures including Hai Wei, Director of Chery International Central Africa Region, and Shan Xiangqian, Vice Governor of Anhui Province, China, highlights the strategic partnership between Kenya and China. Hai Wei noted that Kenya was selected for this investment due to its skilled workforce and its status as an economic hub in Africa. The collaboration is also a testament to the longstanding and cordial relations between the two nations, which have paved the way for this significant investment.

From a broader perspective, this development aligns with the global trend of increasing EV adoption. According to the SkyQuest Electric Car Market Insight Report for 2023, the global electric car market was valued at approximately $388 billion in 2023, up from $341.34 billion in 2022. This growth is driven by advancements in technology and increasing awareness of environmental sustainability.

Kenya’s efforts to promote electric vehicles are reflected in recent regulatory changes. The Energy and Petroleum Regulatory Authority (EPRA) reports a surge in the registration of electric vehicles, with 2,694 new EVs added in 2023 alone, up from 475 units in 2022. This increase is attributed to favorable government policies, including the introduction of the e-mobility tariff and the reduction of excise duty on EVs from 20% to 10%. Additionally, fully electric vehicles are now exempt from value-added tax, further incentivizing their adoption.

The new assembly plant is poised to enhance Kenya’s reputation as a center for e-mobility in Africa. By localizing the production of electric vehicles, the country is not only fostering job creation but also making strides towards reducing its carbon footprint. The investment by Chery and Afrigreen Automobile Limited represents a significant step forward in the drive towards a greener and more sustainable transport sector in Kenya.

As the world shifts towards more sustainable transportation solutions, Kenya’s strategic move to embrace electric vehicles positions it as a key player in the African market. The establishment of the assembly plant is expected to accelerate the growth of the EV sector in the country, setting a precedent for future investments and developments in green technology.