{"id":555694,"date":"2021-11-23T04:00:06","date_gmt":"2021-11-23T04:00:06","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/egypts-plans-to-locally-assemble-evs-are-moving-forward-without-dongfeng\/"},"modified":"2021-11-23T04:00:06","modified_gmt":"2021-11-23T04:00:06","slug":"egypts-plans-to-locally-assemble-evs-are-moving-forward-without-dongfeng","status":"publish","type":"goinggreen","link":"https:\/\/enterpriseam.com\/egypt\/goinggreens\/egypts-plans-to-locally-assemble-evs-are-moving-forward-without-dongfeng\/","title":{"rendered":"Egypt\u2019s plans to locally assemble EVs are moving forward without Dongfeng"},"content":{"rendered":"

<\/a> Egypt\u2019s EV plans post-Dongfeng:<\/strong> Egypt\u2019s EV assembly plans haven\u2019t been derailed by the recent collapse<\/a> in negotiations with China\u2019s Dongfeng, representatives of state-owned El Nasr Automotive<\/a> and renewable energy industry leader Infinity<\/a> tell Enterprise. El Nasr has received over 13 proposals submitted by prospective partners since the talks with Dongfeng fell through and anticipates having a new partner by the end of the month, Managing Director Hany El Kholy tells Enterprise.<\/p>\n

Why did the talks fall apart?<\/strong> El Nasr had signed an agreement with Dongfeng in January to locally assemble EVs in El Nasr\u2019s factory through one of the Chinese group\u2019s subsidiaries. Talks with Dongfeng to locally assemble its E70 electric vehicles came to a halt due to an import pricing dispute with the automaker, according to a Public Enterprises Ministry statement (pdf)<\/a> released earlier this month<\/a>.<\/p>\n

The rising cost of imported materials was the most significant factor in the negotiation breakdown<\/strong>, says El Kholy. The CNY has strengthened maybe 3% in the past year, but the cost of transporting materials to Egypt from China is up 4x this year, El Kholy says.<\/p>\n

Price hikes affect whether fairly-priced vehicles and a good service can be offered<\/strong>, says El Kholy. This kind of partnership should be based on a long-term agreement, with the risk and burden of material cost increases shared between partners, he adds. Otherwise, it would be impossible for El Nasr to sell the EVs at the price point they want to target or provide after-sales service of the quality they want, he adds.<\/p>\n

But other issues \u2014 including payment terms and the knowledge transfer process \u2014 also determine partnership success or failure<\/strong>, El Kholy adds. Important details that need to be finalized in the contracts include the warranties for vehicles and spare parts. \u201cAll these things affect the end price and value of the service the consumer receives,\u201d he says.<\/p>\n

So what happens now? The search for a new partner: <\/strong>El Nasr is actively looking for a new partner, El Kholy says. Since the collapse of Dongfeng negotiations, it\u2019s received over 13 proposals from other Chinese and European EV manufacturing companies, he says.<\/p>\n

The breakdown in negotiations with Dongfeng will likely delay our EV plans \u2014 but not <\/strong>significantly: <\/strong>The breakdown in negotiations between El Nasr and Dongfeng will likely only cause only a slight delay in the rollout of the project, Shams Abdel Ghaffar, managing director of Infinity EV, which is working with the government to install EV charging stations around the country. El Nasr had planned to begin locally assembling the Dongfeng E70 vehicles<\/a> next year, and was aiming to have the first 100 ready by July-August 2022, a target which will now be pushed while the government finds a new partner.<\/p>\n

On the bright side:<\/strong> \u201cThis could be a chance to bring a brand that\u2019s even stronger than Dongfeng to the Egyptian market,\u201d Ghaffar said. Certain other brands have more of a global presence than Dongfeng when it comes to EVs, he adds.<\/p>\n

Slightly increased investment: <\/strong>Price hikes in importing materials are likely to drive a slight increase in El Nasr\u2019s investment in this EV project, El Kholy notes: \u201cWe were planning to invest EGP 2.7 bn and now it could go into the EGP 3 bn bracket in the coming period.\u201d<\/p>\n

And more EV research: <\/strong>El Nasr won\u2019t be returning the 13 E70 electric vehicles that it imported in June from China and began road-testing<\/a> in collaboration with Uber in August, says El Kholy. Its engineers and mechanics are being trained on how the EVs work, and taking one apart to better understand its inner workings, he adds. \u201cThese vehicles are ours. Now we\u2019re learning from them, and how being exposed to Egypt\u2019s environment affects them.\u201d<\/p>\n

An El Nasr subsidiary is already moving forward with plans to manufacture EV microbuses domestically: <\/strong>The Engineering Automotive Manufacturing Company, an El Nasr subsidiary, last week<\/a> signed a cooperation agreement with private Egyptian tech firm BrightSkies for the two firms to manufacture key components for Egypt\u2019s first locally-assembled electric microbuses, according to a Public Enterprises Ministry statement (pdf)<\/a>.<\/p>\n

Meanwhile, we\u2019re waiting for EV charging tariffs \u2014 which have been <\/strong>approved by cabinet<\/a><\/strong> \u2014 to be officially announced by the Electricity Ministry<\/strong>, says Abdel Ghaffar. The tariffs have been set at 1.69 EGP\/kWh for public charging stations and 1.89 EGP\/kWh for charging stations within privately-owned establishments, says Abdel Ghaffar. The fast-charging tariff is set at 3.75 EGP\/kWh for public and private establishments. \u201cFor fast-charging, the CAPEX is very high, so the tariff has to be higher to make up for that,\u201d he adds. Infinity is waiting for the Electricity Ministry to officially announce the tariffs so it can launch its customer payment platform for EV charging.<\/p>\n

These tariffs are due to be revised annually: <\/strong>The electricity and public enterprises ministries have promised to revise the tariffs on an annual basis, allowing stakeholders to assess their gains and whether they make sense financially for operators like Infinity, says Abdel Ghaffar. \u201cAt Infinity, we accepted this tariff to encourage people to make the change to EVs and for the electrification process to start.\u201d While the company doesn\u2019t feel the tariffs are all that lucrative, it\u2019s willing to see how well they work over the coming year, he says. \u201cIf they\u2019re insufficient, we were promised they\u2019d be reviewed.\u201d<\/p>\n

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