Chinese EVs Price Wars Domino Effect on Africa's Nascent EV Market
A BYD Seal which is available in Kenya and other African countries. If the price war in China intensifies, a lot of the progress with EV adoption in East Africa could be at risk.
Faced with rising fuel costs, vehicle buyers in Kenya and Ethiopia are turning to affordable electric alternatives from Chinese manufacturers such as Changan, Neta, Wuling, and Xiaohu. These compact EVs, well-suited for taxi services and short-distance travel, are gaining ground as practical replacements for traditional internal combustion engine vehicles.
However, a fierce price war in China, sparked by Tesla and accelerated by market leader BYD, is now putting smaller electric vehicle makers at risk, a trend that could have significant consequences in emerging markets like Kenya, where the shift to electric mobility is still in its early stages.
Lei Xing, a veteran analyst of China's auto industry and co-host of the China EVs & More Podcast, says the current electric vehicle price war is unprecedented not only in its intensity, but also in the fact that it has prompted rare warnings from Chinese regulators.
He adds that the price war began in early 2023 when Tesla initiated cuts, but BYD escalated it this year by rolling out steep discounts across its lineup. In May, BYD shocked the market by dropping prices again just months after its last reduction in January.
"This is unheard of," Lei said. "We're seeing cars with advanced features selling for prices that were unimaginable a few years ago."
Since Ethiopia imposed a ban on the import of internal combustion engine vehicles in February 2024, demand for gasoline-powered cars has declined sharply.
Sarah Assefa, a journalist based in Addis Ababa who covers EV and climate change trends, observes a shift in the value of cars. She notes that owners who held onto their internal combustion engine (ICE) vehicles in the hope that they would appreciate are now being forced to sell them at the purchase price to avoid losses. In contrast, she says, electric vehicles are gaining value.