By Omnia Farrag
The Egyptian electric car market has witnessed significant developments in 2018. In February, the country’s first electric vehicle charging station opened at a state-owned Wataniya gas station on the Cairo-Suez highway. Two months later, BMW distributor Bavarian Auto presented the BMWi, the first electric car to be exhibited in Egypt. The car will be available in the Egyptian market in less than a year, Mohammad El Ghazaly Harb, Marketing and Product Manager at BMW Egypt, told Egypt Oil & Gas.
BMWi is not the only electric vehicle that is expected to enter the Egyptian market over the next year. Volkswagen will export one of its electric cars to Egypt in January 2019, Hyundai will introduce one of its electric models within 2018, while KIA and Nissan models are expected to be available soon, Mohamed Badawi, Revolta Egypt’s CEO, told Egypt Oil & Gas.
The electric vehicles technology company Revolta Egypt owns the Wataneya charging station. The company now has 17 charging stations in the country, according to Badawi. Revolta Egypt has ambitious plans to cover almost all of Egypt within the coming two years. “By the end of 2018, we aim to have 65 charging units in seven governorates, including Cairo, Giza, Alexandria, Port Said, Ismailia, Suez, and the Red Sea. Then, in 2019, we will cover the whole Delta and, in 2020, we will cover Upper Egypt and South Sinai,” he explained. Badawi further disclosed that “The first batch of e-cars will be available for purchase by the end of June or the beginning of July,” and the company plans to sell at least 250 cars within 2018.
Charging vs. Filling
The charging cost is the main competitive edge of electric cars when compared with the gas-powered vehicles, especially at a time when the Egyptian government is gradually removing fuel subsidies. The government plans to lift fuel subsidies completely by 2020 following its loan agreement with the International Monetary Fund (IMF). A few days before signing the agreement in November 2016, the government raised the prices of all fuel types. Over the following seven months, the price of 92-octane benzene, the most common car fuel for household cars in Egypt, increased by almost 100%: from EGP 2.6 to EGP 5 per liter. Fuel prices will further increase within fiscal year (FY) 2018/19, since the Egyptian government is planning to decrease the value of fuel subsidies by a quarter, according to the government’s draft 2018/19 financial budget.
Household and commercial electricity prices also increased in July 2017, and, according to government, plans prices will increase further in FY 2018/19 after the government halves electricity subsidies. While it is not yet clear how the cuts will be apportioned between the household and commercial sectors, private sector companies – such as charging station operators – are likely to pass any electricity price increases onto the consumer, making it more expensive to charge an electric car.
Badawi said that the cost of fully charging the battery of an electric vehicle depends on its model, but the average is currently EGP 50. “How long the battery lasts varies from a model to another, but it ranges from 150 km to 600 km,” Badawi explained. He added that Revolta will offer two years of free charging to all its new customers. The price quoted by Badawi is significantly cheaper than gas-powered cars. It costs an average EGP 225 to fill a car running on 92-octane benzene in comparison.
Although comparing charging/filling costs favors electric cars, comparing the vehicles prices favors gas-powered cars. Badawi admitted that electric cars are expensive. “The cheapest brand new electric car costs around EGP 750,000. This price is not affordable for everyone in Egypt,” Badawi said.
The only ways to have affordable electric autos in the Egyptian market are either to manufacture them or to import used ones. Since Egypt does not have the infrastructure to produce electric cars, importing used electric cars remains the only available option. This option was illegal until March 2018, when the Minister of Trade and Industry, Tarek Kabil, issued a decree to allow importing used electric cars that are less than three years old. “Imports of used vehicles are not allowed according to general rules, but an exception has been made to promote the use of environment-friendly cars in Egypt,” Kabil said.
Badawi supports this decision saying, “A used electric car costs EGP 300,000. This is the same price of an average brand new gas-powered car in Egypt nowadays like the Chinese brands.” Kabil’s decision will help to make electric cars more accessible to consumers. “This is how most of the countries worldwide started to import electric cars. For example, 70% of electric cars in Eastern Europe are used cars imported from the US and the rest of Europe. Our neighbor Jordan, during the last two years imported around 10,000 used cars from Europe and US,” Badawi explained.
Customers usually prefer buying new cars. Used cars are more likely to breakdown and need more money for maintenance than new ones. However, Badawi says that this is not the case with used electric cars. “Electric cars have longer time spans than gas-powered cars. So, if you buy a used electric car, it will be as good as the brand new ones as they do not breakdown as often as the used gas-powered cars,” he explained.
The cost of electric car ownership is less than owning a gas-powered car. The latter requires frequently replacing parts such as fan belts, air filters, timing belts, head gaskets, cylinder heads, and spark plugs, in addition to changing its motor’s oil. This is not the case in electric cars, as they do not need many components to operate, according to Constance Douris, Vice President of the US-based think tank The Lexington Institute. “Electric motors only have one moving part, while engines in traditional automobiles contain dozens,” Douris wrote for Forbes. Electric cars still need maintenance, such as replacing windshield wipers, suspension, and tire rotation. Yet, the maintenance is less often than that required for gas-powered cars and less costly, Douris added.
Challenges in Adopting E-Cars
Introducing electric cars in Egypt is not an easy task. “It needs your effort to educate everyone about what is unique about e-cars and why should we switch to them. It is not another car with different options. It is the whole concept of convincing customers of why they should shift to electric,” Harb said.
He advised the government to give incentives to electric cars users, assemblers, and importers to encourage spreading them, which is the case in many other countries. “We can follow the scheme of countries such as UAE, Morocco, or European countries… In these countries electric cars users are given certain taxation, certain incentives, and certain discounts. Some countries even offer money back value if you purchase an electric car,” he explained.
Manufacturers of electric cars and electric charging units faced logistical challenges bringing the products in Egypt. “The electric car for example doesn’t have a category in Egyptian customs. When they arrived in the country, even the importers will tell us that they don’t know which ministry has to certify the car,” said Naji Jreijiri, Managing Director of ABB Group in North & Central Africa. “I think the institutions need to be as fast as the development of the technology so that they can facilitate, instead of being a barrier,” Jreijiri commented.
Harb echoed Jreijiri regarding facing challenges to get the cars and charging units in Egypt. Harb said that it took BMW two years to get its electric car model BMWi into the country. “We started this project in 2016 with training and preparation in order to bring the car here. We still have challenges such as registration, incentives, taxes, because these aspects are not settled,” he added.
Revolta as well faced similar challenges. “The first cargo [of electric chargers] was kept in the port for two months and a half because they were the first electric charging units to arrive in Egypt. But things became smoother for next cargos, because we contacted the Ministry of Trade,” Badawi stated.
Disadvantages of E-vehicles
Electric cars are known to be environmentally-friendly because they cause less air pollution and produce less greenhouse gas. A report by the Ricardo consultancy firm cited by The Guardian shows that electric cars emit 20% less greenhouse gas during their live cycle when compared with petrol cars. Nonetheless, electric cars still have bad environmental effects. The same study by Ricardo consultancy pointed out that the production of an average electric vehicle will involve emissions amounting to the equivalent of 8.8 tons of CO2, while the production of its gas-powered counterpart produces 5.6 tons of CO2. Evidence about electric cars’ overall carbon footprints is inconclusive. In contrast, a study by the Institute for Energy and Environmental Research (IFEU) cited by Deutsche Welle found that the overall carbon footprint of electric cars is similar to that of petrol ones.
Electric cars also have other harmful effects beyond CO2 emissions. The batteries are made from minerals such as copper and cobalt, and rare earths like neodymium. These minerals are imported from countries like China and Congo, where mining activities are accompanied by both human rights violations and ecological devastation.
These studies demonstrate that, while electric cars may provide environmental benefits on the road, their production involves questionable processes that also harm the environment in their own ways.
Welcome to Egypt
Promoting electric vehicles in Egypt will help reduce the consumption of petroleum products, a process which goes hand-in-hand with the government’s plan to decrease its petroleum imports 10% by 2019. At the microeconomic level, the availability of inexpensive used electric cars will make consumers consider them a budget-friendly option in terms of cheaper charging and ownership costs. There is evidence to suggest that the production of electric cars may also harm the environment – although to what degree is not yet known. What is undeniable is that electric cars produce less greenhouse gas during usage than their petroleum counterparts. Buying used cars produced overseas is therefore a cost-effective and environmentally-friendly way of introducing electric cars to Egypt in a big way.