Over the past year, the Egyptian government has developed several future policies and plans aimed at establishing rules for receiving and operating electric cars in the Egyptian market. This will see their conversion, whether at the governmental or consumer level, and in line with global trends, to reduce environmental pollution caused by car exhaust emissions and to ensure a clean environment.
The move is also to reduce the consumption costs of these cars and to provide hard currency, as well as to eliminate subsidies on current fuel. As electric cars are not subject to frequent breakdowns, the move can also prevent long-term customers from being exposed to fluctuating fuel prices.
The government has taken the right steps to stimulate demand, by providing conditional customs exemptions on imports of new and used electric cars. Companies and dealers are focusing on importing used cars and selling them at a very competitive price, to find a market and demand for them despite the current challenges, as once the cost is reduced within the two years, demand will start to grow faster.
For its part, the Ministry of Finance is also trying to support the transition towards electric cars, by facilitating and reducing the cost of licences and taxes. Moreover, the Ministry of Public Enterprises Sector decided to encourage local electric cars, by requiring public entities, economic bodies and public sector companies to replace 5% of its fleet each year with electric cars. It is a way of making the market more attractive, with the government pledging to support the costs of the first 100,000 locally assembled cars worth EGP 50,000 for the car, provided that these cars are able to cover more than 400km each time they are charged.
And it looks as though the government has planned to cooperate with China, which is the largest market for electric cars in the world, in building a national base to assemble these cars as a strategic partner. Darshal Egypt, the local distributor of Chinese-made Dong Feng cars, announced in 2018 its intention to inject investments worth $53m in assembling electric cars in Egypt, in cooperation with the Ministry of Public Enterprises Sector at El-Nasr Automotive Manufacturing Company (NASCO) factories.
In September 2019, the Ministry of State for Military Production signed a Memorandum of Understanding (MoU) with China’s Geely Auto Group to assemble electric cars for domestic consumption. But those agreements have been stalled by the world’s preoccupation with fighting the coronavirus (COVID-19) pandemic and the economic repercussions that followed.
They have also been affected by the impacts on the Chinese economy which has completely halted from late last year until recently. Global sales also fell by 45% in January and February 2020, and thus activation of the pillars of the partnership that were planned has also stalled until further notice.
In Egypt, we are still at a very early stage in developing this industry, and we have a long way to go before we see a thriving market for electric cars in the country, as the number of electric cars on the streets of Egypt is not more than several hundred. The modesty of this number is due to four basic factors:
- The scarcity of demand for these cars, given the high prices and the lack of consumer confidence in ownership.
- Incomplete licensing procedures and legislation.
- The lack of appropriate advertising to promote these cars.
- Lack of wide distribution of charging stations, which prevents the market from growing.
It is worth noting that the international prices of electric cars are still much higher than those of cars powered by current fuels. Prices of cars in the Egyptian market gradually start from about EGP 200,000, while electric cars start from approximately EGP 600,000 to EGP 2m.
I would like to point out that obtaining a licence for an electric car is another challenge, as there is still no fixed legislation for this. It has, in fact, been in preparation since December 2018, knowing that the procedures for importing and licensing cars in Egypt are related to its literage capacity, which is lacking in electric vehicles.
To solve this crisis, the Ministry of Interior has resorted to granting electric cars a temporary licence, which takes a very long time of about a month. Added to this, it takes about six hours for electric cars to charge using regular/household electrical sources, while it takes only 25 minutes to charge from fast charging stations.
The cost and place of maintenance and charging the battery are the main factors for buying electric cars. Here is where the private sector enters the circle of attention as follows:
- Revolta Egypt is the first national company specialised in electric car batteries, with the company so far distributing 87 charging stations in several places around the country. The company is planning to raise the number to 690 stations during the next stage.
- We also have Infinity Energy, which has received $60m in investments from the European Bank for Reconstruction and Development (EBRD), part of which has been allocated to electric vehicle charging stations. Since then, the company has established 25 stations, mostly in Cairo and Giza, and plans to increase the number to 100 charging stations as well during the coming period, and it has opened its first stations in Alexandria.
Within two years, the two companies have succeeded in spreading over 100 charging stations across Egypt, although most of them are in Cairo and Giza. There are, however, other stations in Alexandria, the Delta, Sinai, and the Red Sea coast. In turn, the government is following developments. The Ministry of Public Enterprises Sector has decided to study the construction of electric car charging stations in Cairo, and the Ministry of State for Military Production signed a MoU with China’s SSE International and International Marathon United Technology Company to start operating the charging stations locally.
The government plans to build 1,000 fast charging stations over the next three years, and the Ministry of Electricity and Renewable Energy is working to develop the infrastructure to supply power to the charging stations, as well as to determine the charging charges.
The government will not be able to support charging electric cars, but it can at least provide more stable energy. Although the road is still long for the Egyptian market to be ready to receive electric cars as required, correct steps are being taken to accelerate the development of this promising market by both the government and the private sector.
Once an acceptable and economically viable number of users is reached within two years, the costs of owning electric cars will be less than the costs of owning the current cars. This in turn will reduce the cost of investment in those cars, while banks are encouraged to sell in instalments or lease finance, in addition to after-sales services and the work of appropriate incentive advertising, to be available to more customers in Egypt.
Yasser Sabry is a research and Business Development Consultant -Automotive Sector.