The electric vehicle (EV) market is expanding at an exponential rate as the world shifts towards sustainable transportation solutions. Africa, which has vast mineral resources necessary for the production of EV batteries, is eager to capitalise on this burgeoning global industry. South Africa, Morocco, Zambia, and Mozambique are among the countries eyeing the EV market, each with their own approach. Experts advise African nations to consider forming regional value chains, leveraging the power of the African Continental Free Trade Agreement (AfCFTA), and developing robust policy frameworks in order to compete in the global EV arena.
South Africa and Morocco, two key African auto hubs, are making significant strides towards establishing mega and giga factories for electric vehicles. These efforts are intended not only to foster sustainability, but also to ensure their continued relevance in the global automotive industry.
Morocco, in particular, has made significant strides. The world’s second-largest EV battery manufacturer, South Korean LG Energy Solution, recently signed a Memorandum of Understanding (MoU) with a Chinese lithium compound manufacturer, Yahua. This collaboration aims to produce lithium hydroxide in Morocco, a critical component of high-nickel, high-capacity EV batteries. Such developments demonstrate Morocco’s intention to increase its production capacity from 700,000 to a million units by 2030, with a mix of combustion engines and electric vehicles.
The National Association of Automobile Manufacturers in South Africa has emphasised the need for “mega battery factories” to maintain global competitiveness. To that end, the South African Industrial Development Corporation and the Department of Trade, Industry, and Competition signed an MoU with Stellantis, the parent company of Chrysler, Jeep, Fiat, and Peugeot. This collaboration aims to establish a manufacturing facility in South Africa to complement the country’s existing lithium-ion battery precursor pilot plant.
While South Africa and Morocco have taken significant steps, industry experts are increasingly concerned that individual country-based efforts may not be sufficient for Africa to secure a significant share of the global EV market. Cross-border collaboration is essential. According to Eric Mwangi, an economic advisor to Kenya’s energy cabinet secretary, African countries should position themselves as a regional market in order to attract investments from global Original Equipment Manufacturers (OEMs). He emphasises that OEMs frequently view locations as regions rather than individual countries, which makes regional blocs such as Southern, Eastern, or Western Africa more appealing to potential investors.
Margo-Ann Werner, Cliffe Dekker Hofmyer’s Director of Corporate and Commercial Practise, agrees. She emphasises that Africa’s mineral-rich landscape, combined with collaboration and AfCFTA leverage, could result in cost-effective EV battery production. Establishing manufacturing nodes across the continent and cultivating regional relationships among countries may result in collective benefits for all parties involved.
The appeal of Africa in the EV industry extends beyond collaboration; it is based on its vast mineral resources. As major suppliers of EV batteries, the Democratic Republic of the Congo (DRC), Zambia, Mozambique, and other mineral-rich countries are eyeing the market. For example, the DRC alone accounts for approximately 70% of global cobalt production and more than 51% of global reserves. Zambia is the continent’s second-largest producer of cobalt, and South Africa is home to more than 70% of the world’s manganese reserves.
Furthermore, Namibia has significant graphite reserves, and Zimbabwe is one of the top five lithium-producing countries in the world. These green minerals are critical in the manufacture of EV batteries, strengthening Africa’s position in the global supply chain.
Experts, however, emphasise that Africa must move beyond the primary level of the battery and EV value chain in order to realise its full potential. Robust policy frameworks that prioritise industrialization and value addition in the mining and resource sectors are required to achieve this transformation.
Despite the enormous potential, obstacles stand in the way of Africa becoming a formidable player in the EV industry. One significant impediment is the need to align policies and regulations with the rapidly changing EV landscape. According to Eric Mwangi, transitioning to the EV sector may present political challenges because it frequently involves disinvestment in traditional industries. Nonetheless, he contends that a well-designed policy and regulatory framework can mitigate these challenges and ensure that the advantages of the EV industry far outweigh the disadvantages.
Furthermore, the African Continental Free Trade Agreement (AfCFTA) offers more than just the facilitation of cross-border mineral trade. It can be used as a platform for countries to collaborate on the development of laws and policies relating to Environmental, Social, and Governance (ESG) standards, thereby improving sustainability in the EV supply chain.
