BYD’s Plan for Japan is Good for Africa

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BYD has some big plans for the Japanese market, according to reports from Tokyo. The reports say BYD wants to sell at least 30,000 EVs per year in Japan though a network of about one hundred dealers. This can be quite a good development for several countries in Africa that get most of their vehicles from Japan.

In East and Southern Africa (excluding South Africa), about 90% of vehicles imported per year come from Japan as used vehicles. Most of them land on the continent when they are over 8 years old. This is due to the lower salaries, lower disposable incomes, and a general lack of advanced vehicle financing channels. Very few consumers can afford to buy brand new vehicles. The buyers of brand new vehicles tend to be corporations and other fleet operators, such as telecommunication firms, mining companies, and other fleet operators. A lot of corporates also give company cars to senior management as part of other employee retention incentives.

For most people, it is just easier for to buy a $9,000 to $20,000 used vehicle than to buy the brand new versions of the equivalent vehicle for, say, $30,000 to $50,000, or even more, depending on the type of vehicle. In Zimbabwe, for example, about 76,000 light duty vehicles were registered last year and 95% of them were used vehicles from Japan. Vehicles under 2,300 kg are classified as light duty vehicles in Zimbabwe. In Kenya, about 80,000 light duty vehicles were registered last year, with about 90% also coming from Japan.

There is therefore an already established and well organised supply chain feeding used vehicles from Japan to East and Southern African countries that has been active for about 25 years. This means there is a very strong relationship between the Japanese vehicle market and these African regions. This relationship dictates the vehicle trends in the East and Southern African market, with a 5- to 8-year lag time. This relationship is so strong that the effects of Japan’s focus on plugless hybrids is already showing up in a big way on the African continent, as the share of plugless hybrids on the East and Southern African market is growing in a big way now. The Japanese market also had an early effect on the flow of BEVs to that region, as Nissan LEAFs began to reach these markets as well about 7 or 8 years ago, even though the first-gen LEAF is not the ideal BEV for Africa given its lack of active thermal management.

A lot of consumers buy their vehicles directly online from platforms such as Be Forward. One can also find some nice used Teslas on Be Forward. You can get a 2020 Model 3 with about 62,000 km on the odometer on there for $24,000 — coming from Yokohama, Japan. A good EV like the Model 3 with a mileage of 62,000 for $24,000 is a decent deal. After import duties, taxes, and shipping costs, you could buy this in Zimbabwe for about $43,000 if you import it directly, or a for a bit more with importer markups if you use one of the importers. But the main problem is that EV sales in Japan have been pretty slow, so the selection of EVs is not that great on platforms like Be Forward compared to the plethora of ICE options.

The entry of BYD into the Japanese market with the ATTO 3, the Dolphin, and also the Seal that is on the way adds more to the mix. In 5 years or so, maybe even earlier, these EVs will start finding their way to East and Southern Africa via well-established channels. Add the new Nissan Ariya and Nissan Sakura Kei electric vehicles to the mix, and the supply of used EVs to Africa will be looking good in the not too distant future. These vehicles will land as 5- to 8-year-old EVs at prices that will be more affordable for most consumers. Of course, this generation of BEVs has much better battery packs, so the issue of rapid degradation even after 5 years will not be a big deal. Of course, it is always best to see these BEVs being assembled locally in Africa, but the supply chain of used vehicles is so huge that it will probably be here for a while. Why not displace a lot of those used ICE vehicles with some nice BEVs?