China and America have never seen eye to eye. One might even go so far as to call them mortal enemies. The electric vehicle has brought that silent conflict to the surface. As China leads the world in EV production and sales, the US and EU are struggling to keep up with China’s pace of innovation and production. The United States has, at times, forgotten the immense automotive market that exists outside of its borders. China, however, has not forgotten about the rest of the world and has laid out its plans to invest heavily in other continents.
What has led to China investing so heavily in other sectors outside the US?
When Tesla unveiled their Model S, the automotive world flocked to the EV like teenagers to the newest iPhone(ironically, also made in China). Tesla experienced huge sales(particularly in America at first) that propelled the US-based company to the top of the automotive world. That position at the top was not to last, as other EV manufacturers have emerged from all over the world.
One such company has been BYD or Build Your Dreams(an ambitious name for a company). BYD has led the way for China to challenge the dominance that Tesla has in the automotive market. The geopolitical environment in the United States has become more volatile for Chinese companies aiming to make an impact on the EV sector.
The Donald Trump administration has implemented huge tariffs on any Chinese goods coming into the country, setting the stage for the silent war over EVs in the United States. With a resolution nowhere in sight for the troublesome position that China has found itself in, the Asian giant has now teamed up with Africa in an attempt to circumvent the effects of tariffs in the US and EU.
What is China’s plan for EV production outside the United States?
By investing in emerging markets all around the globe, China has indeed sent a message to the United States. They are not stepping down from their lofty position as the world’s largest EV producer. The silent war of the electric vehicle has had a disastrous effect on global trade. In response to the tariffs, China has invested heavily in one particular country that could have massive implications for the global sales of EVs.
The Asian-African partnership has come to fruition from an investment by the Chinese in Egypt. The nation of Egypt has a strategic advantage as it controls the Suez Canal, which sees approximately 12% of global trade, representing over $1 trillion in goods annually, pass through the canal on its way to Europe and Asia. This, along with low wages, gives a competitive production advantage to Egypt.
Chinese company BAIC Group has opened a manufacturing plant in Egypt and is expected to produce 20,000 EVs annually by the end of 2025. Egypt is seen as a gateway to the world as it offers easy access to the African and Middle Eastern markets. The Chinese are exploring alternative fuel sources in order to produce even more alternatively powered vehicles, which will surely be assembled in Egypt.
Can the Asia-Africa team challenge the American dominance in the EV sector?
America has pioneered the changes we see in the automotive sector up until now. This new partnership between the Chinese and Egyptians has the potential to shift the focus away from America. The tariffs and overall disdain that the US has shown towards China have forced the Chinese to expand their reach into the global automotive manufacturing sector. Can Egypt become the gateway for the Chinese EV to become the norm on the roads of the world? After some less than fruitful negotiations between China and the US, a change in the EV production sector is coming soon.
