LEGAL AND POLICY CONSIDERATIONS FOR PROMOTING THE LOCALIZATION OF ELECTRIC VEHICLES MANUFACTURING IN AFRICA

INTRODUCTION

The automotive industry has undergone a significant transformation in recent years, with electric vehicles (EVs) gaining traction as a sustainable alternative to traditional gasoline-powered cars. According to Mordor Intelligence, Africa’s electric vehicle market was valued at $11.94 billion in 2021. The market is projected to reach $21.39 billion by 2027. Africa, a continent known for its natural resource wealth, presents an untapped opportunity for the localization of EV manufacturing. While the global automotive sector is increasingly pivoting towards electric mobility, Africa as a continent is yet to fully capitalize on this shift. However, localizing the production of electric vehicles in Africa holds immense potential to drive economic growth, create jobs, and address environmental challenges. Localizing EV manufacturing in Africa involves the establishment of domestic production capabilities for electric vehicles, and the associated infrastructure to support the growing demand for electric mobility.?

PROMOTING THE LOCALIZATION OF ELECTRIC VEHICLES MANUFACTURING IN AFRICA

Globally, a well-functioning transport sector is fundamental to socio-economic progress and daily human activities. However, as the sector has expanded over the years, it has also become the world’s second-largest source of greenhouse gas (GHG) emissions. Road transport alone now accounts for at least 90% of the sector's emissions. Electric vehicles (EVs) have gained worldwide traction because they are a cleaner alternative to traditional internal combustion engine (ICE) vehicles. The shift to EVs presents a significant opportunity to cut greenhouse gas (GHG) emissions from the transport sector. For instance, a recent study in South Africa suggests that electric cars could reduce baseline GHG emissions from motorcars by 19% by 2050, whereas conventional vehicles are expected to contribute 63%. As the world moves towards low or zero-carbon transport systems, adopting EVs in Sub-Saharan Africa is becoming essential.

Africa, despite its abundant raw materials, is not widely recognized as a manufacturing hub, due to challenges such as inadequate industrial infrastructure and limited skilled labor. In 2022, Sub-Saharan Africa contributed only $229 billion (1.4%) to the global manufacturing output of $16,291 billion. To meet the United Nations Sustainable Development Goals—particularly SDG 7, Africa must work to decarbonize its transport sector, where transportation accounts for 24% of global CO2 emissions.

Africa’s importance in the global EV market is projected to grow from $7 trillion to $57 trillion by 2050, due? to Africa’s significant reserves of green materials vital for EV production. However, to fully leverage this potential, Africa needs substantial investment to build its EV fleet and develop a comprehensive EV manufacturing value chain. Relying solely on imports or basic assembly would strain African economies, emphasizing the need for a localized, sustainable approach to EV production.

South Africa has traditionally led as a fuel-powered car manufacturing hub in Africa, producing over 500,000 vehicles annually, employing 100,000 people, and contributing 5% to the nation’s GDP. However, the country is now shifting from internal combustion engines towards greener alternatives. Ford has invested $281 million in a facility for hybrid vehicles, aiming to produce 44,000 cars this year, while Stellantis is committing $158 million to establish an electric Jeep plant starting this month. Meanwhile, Morocco is experiencing the fastest automotive growth on the continent, now outpacing South Africa in vehicle production. With 220,000 jobs, Morocco's auto industry contributes 22% to the GDP and $14 billion in exports. Strategic infrastructure investments and proximity to Spain have enabled Morocco to surpass China, India, and Japan in car exports to Europe.?

Nigeria is actively working to localize electric vehicle (EV) manufacturing as part of its broader strategy for economic growth, job creation, and environmental sustainability. Through the National Automotive Design and Development Council (NADDC), the Nigerian government is spearheading efforts to develop the country’s local EV production capabilities. A recent partnership with Morocco’s E-move Vehicles Company is central to this initiative, with plans for manufacturing electric motorcycles, tricycles, and energy storage systems. The goal is to establish a robust local supply chain for EV components, creating new jobs and reducing reliance on imported vehicles.

Despite the efforts being made, several countries still rely heavily on imports of electric vehicles, with manufacturing capabilities remaining limited. The primary challenge to localization as earlier stated is the high cost of production due to a lack of infrastructure, skilled labor, and local supply chains. For instance, the cost of establishing EV manufacturing plants in Africa is substantial, as it involves creating a local supply chain for critical components such as batteries, electric motors, and charging systems, much of which still require imports from outside the continent. Additionally, many African countries still lack the technological expertise required to manufacture high-quality EVs and their components at scale.

A key issue is also the continent's limited access to the raw materials essential for EV manufacturing. While Africa is rich in minerals like cobalt, lithium, and nickel, which are critical for EV batteries, much of this raw material is exported in its unprocessed form. Localizing the production of EVs could drive the development of processing industries, creating jobs and adding value to these resources. However, this requires substantial investments in mining and processing technology, which many African countries currently lack.

LEGAL AND POLICY CONSIDERATIONS FOR PROMOTING THE LOCALIZATION OF ELECTRIC VEHICLES MANUFACTURING IN AFRICA

The localization of electric vehicle (EV) manufacturing in Africa presents an opportunity to shift from traditional internal combustion engine (ICE) vehicles to cleaner, more sustainable transportation options. Key legal and policy considerations for promoting EV manufacturing in Africa Include:

• Establishment of Incentives and Support for Local Manufacturing: Governments should introduce policies like reduced import duties on essential raw materials for battery components and corporate tax breaks to reduce the initial cost burden on manufacturers. Additionally, providing subsidies or rebates to consumers can stimulate demand for EVs, which in turn encourages manufacturers to set up production facilities locally. Countries like South Africa have provided tax rebates to encourage consumers to purchase electric vehicles, and similar models could be adopted across the continent to boost local EV markets. These financial mechanisms will not only lower the cost barrier(s) for both manufacturers and consumers, but will also make the EV market more attractive and competitive.

• Investment in Research, Development, and Technology Transfer: To localize EV manufacturing effectively, African countries must focus on investment in research and development (R&D) and technology transfer. The local automotive industry must develop its own technical expertise in EV design and manufacturing, In addition to battery production, to reduce dependence on foreign technology and build a self-sustaining industry. Governments can provide R&D incentives by offering tax credits, grants, and co-investment schemes for research projects focused on developing EV technologies. Moreover, forging technology transfer agreements with global EV manufacturers and technology providers remains essential. These agreements allow African manufacturers to acquire the necessary knowledge and tools to build electric vehicles locally.?

• Establishment of Local Supply Chains and Raw Material Processing: Africa is rich in critical raw materials required for EV manufacturing, particularly in the production of batteries. Key minerals such as cobalt, lithium, and nickel are abundant in African countries, including the Democratic Republic of Congo (DRC), Zambia, and Zimbabwe. However, the majority of these materials are currently exported in raw form, with limited domestic processing. Legal mechanisms should incentivize investments in local processing facilities, including tax exemptions for companies investing in refining and manufacturing battery components. The African Union’s efforts to encourage regional cooperation in the mining sector could also promote cross-border collaboration for raw material processing, facilitating the development of regional supply chains that benefit the wider EV industry

• Infrastructure Development of Charging Stations and Grid Capacity: A critical policy area is the development of infrastructure to support the adoption of electric vehicles. This includes the establishment of a widespread network of EV charging stations and upgrading the electricity grid to handle the increased demand. Legal frameworks should encourage both public and private investments in charging infrastructure, ensuring that it is accessible across urban and rural areas. In parallel, the national grid must be enhanced to accommodate the increased load from electric vehicles. Governments should incentivize the integration of renewable energy sources like solar and wind into the grid, which aligns with the environmental goals of EV adoption.?

• Implementing Environmental and Safety Regulations: To ensure the sustainable growth of the EV sector, African countries must establish robust environmental and safety regulations. These regulations should address the lifecycle of electric vehicles, from production to disposal. For example, the extraction of minerals for EV batteries must be managed to minimize environmental harm. Additionally, laws should promote the recycling of batteries and the responsible disposal of electric vehicles once they reach the end of their life cycle. On the safety front, African governments should establish safety standards for EVs, which are in line with international norms. These standards would not only ensure the safety of consumers, but will also help African-made EVs gain access to global markets. Regulatory agencies should be tasked with monitoring the safety of EVs and ensuring compliance with environmental standards.?

• Public-Private Partnerships (PPPs) for Infrastructure and Production Development: Given the capital-intensive nature of EV manufacturing and infrastructure development, public-private partnerships (PPPs) are vital in driving the localization of EV manufacturing in Africa. Governments should establish legal frameworks that enable efficient PPPs, by clearly defining the roles and responsibilities of both public and private entities. PPPs can help bridge the funding gap for large-scale infrastructure projects like the construction of EV manufacturing plants and the installation of charging stations. Implementing favorable legal frameworks, can attract private sector investments and accelerate the development of both manufacturing and charging infrastructure. Additionally, these partnerships can help ensure that the long-term sustainability of these projects are maintained once the initial investment phase is complete.?

CONCLUSION

The localization of electric vehicle manufacturing in Africa offers immense potential for sustainable economic development, job creation, and environmental protection. While challenges such as high production costs, lack of infrastructure, and regulatory hurdles persist, several African countries are already making strides in establishing a foundation for EV manufacturing. To fully realize this potential, African governments must invest in the development of local supply chains, infrastructure, and legal frameworks that support the growth of the EV sector. By harnessing its natural resources, fostering innovation, and creating a favorable business environment, Africa will only meet its transportation needs, but will also drive the global shift towards electric mobility.?