Kenya throws out 100,000 duty-free electric vehicles: Africa's window for new energy has really opened

This is not a joke made up by China's own media, but an official statement made by President Ruto in Mombasa.

On May 20, Kenyan President William Ruto threw out a piece of news that made the entire China automobile circle seething in a public speech at the Mombasa State Parliament Building--

The first batch of 100,000 electric vehicles imported into Kenya, whether for public services or private use, are exempt from import duties.

At the same time, the Ministry of the Interior has officially placed an order for 3000 electric vehicles for priority distribution to national security and administrative officials.

As soon as the news came out, the exporters in the circle of friends went into a rage. Some people have begun to settle accounts, some have begun to find the source of the car, and some have begun to book air tickets to Mombasa.

But what I want to say is: Calm down.

The real value of this policy is not in the word tax exemption, but the signal behind it-Kenya, and even the entire East Africa, are using administrative power to forcibly leverage a market that has been dominated by Japanese second-hand fuel vehicles for decades.

This is the opening of a strategic window for China's automobile exports.

1. Why Kenya? First look at three sets of data

To understand the ins and outs of this policy, we must first look at three sets of data.

Group 1: Kenya does not produce a drop of oil.

East Africa's largest economy relies on imports for 100% of its fuel. Whenever international oil prices fluctuate, Nairobi gas stations queue up, transportation costs soar, supermarkets increase prices, and taxi drivers go on strike. In the past few years, the most sensitive thing for Kenyan people is not housing prices, but oil prices. Because oil prices rise, corn flour will rise, buses will rise, vegetables will rise, and rents will rise-the entire social chain will be ignited.

The situation in the Middle East has continued to be tense recently, and the East African market has once again felt the burning of the fuel crisis. Demonstrations on the streets of Kenya are becoming more and more frequent, and you can imagine the pressure on the Ruto government.

Group 2: Kenya has no shortage of electricity.

Unlike most African countries, Kenya's power structure is mainly geothermal, hydropower, and wind power-geothermal power generation is at the leading level in Africa. Especially at night, surplus electricity has always existed. Logically speaking, replacing oil with electricity has natural strategic adaptability to Kenya.

Group 3: The market is still in its infancy, but the ceilings are extremely high.

Currently, there are about 10,000 pure electric electric vehicles in Kenya, and there are about 2 million commonly used private cars. You can occasionally see BYD, Nezha, and some China low-speed electric vehicles and electric motorcycles on the road, but the overall penetration rate is negligible.

What dominates this market are Japanese second-hand fuel vehicles-Toyota Fielder, Premio, Wish, Vitz, Probox... For decades, the car repair system, parts market, bank loans, insurance system, port customs clearance, and maintenance worker training have all been established around Japanese fuel vehicles.

A widely circulated joke: Kenyans buy a car instead of looking at the brand. First, do they have accessories for this car in Grogon? Grogon is Nairobi's famous auto parts market.

This is the reality Ruto faces: in a market with a stock of 2 million units and is deeply locked in by Japanese second-hand fuel vehicles, the penetration rate of new energy is less than 0.5%. Without strong policy push and spontaneous market evolution, Africa's electrification may have to wait another decade.

2. The real big move: Kenya wants to become a new energy hub in East Africa

If you only see duty-free car sales, the pattern will be smaller.

In his speech, Ruto also revealed that the government is working with private investors to promote the establishment of electric vehicle manufacturing facilities in Kenya, with the goal of turning Kenya into a regional clean energy travel center.

This is the core of the whole game of chess.

Kenya is a hub node of the East African Community (EAC), and zero tariffs can radiate to neighboring markets such as Uganda, Tanzania, Rwanda, and South Sudan. This is not a market of 50 million people, but a regional market of 200 million people.

What is even more intriguing is that Kenya is doing two things at the same time: promoting new energy and developing local oil and gas. Ruto clearly mentioned that Kenya plans to cooperate with East African partners to promote the commercialization of petroleum resources in Turkana and East Africa and build regional refineries.

Walking on two legs-reducing dependence on external energy supply chains is the real strategic background.

What does this mean for China companies?

Vehicle export is the first opportunity

● Competition

Local assembly of CKD is a second opportunity

● Whoever can build an assembly factory first will receive long-term ticket

Industrial chain extension is the third opportunity

● Charging piles, battery warehouses, battery recycling, electric vehicle finance, electric and motorcycle production lines-these supporting industries will be the first to break out after the tax exemption policy is implemented

Especially in the takeout, Uber, Bolt, and logistics industries. The biggest cost in these industries is fuel. A Bolt driver's daily gas bill can eat up more than one-third of his income. If electric vehicle operating costs fall by 30%-40%, the economic model of the entire travel industry will be rewritten.

Africa is likely to skip the era of traditional fuel industry and directly enter the era of new energy. Just like skipping landline phones and entering mobile payments directly.

Source: Xiong Yu, digital automobile export

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