Controversy about readiness of local market for manufacturing electric cars

Ahmed Amer
7 Min Read

Drshal Industrial and Trading Company, in cooperation with SMG Engineering Automotive and Chinese Dongfang, launched the first electrical car of Chinese origin in Egypt, the DFLZ M5, a few days ago. The car will be locally assembled in the factories of the Engineering Automotive Company in late 2019.

This project will open new industrial and trade horizons for the field of local cars, especially that these cars will effectively contribute in achieving sustainable development and will create new investment horizons, represented in electric charging stations, in addition to many other supporting services of the promising electric cars sector in the Egyptian market.

Hassan Desouky, the chairperson of Drshal, told Daily News Egypt that the first achievement made by his company is increasing the total investments and initial capital of the company to EGP 500m after an elongated study by the Chinese side of the Egyptian market and factory. A Chinese delegation recently visited Egypt and was present during the launching ceremony a few days ago.

The first step taken by the company is introducing the models of electric Chinese Dongfang cars in Egypt, in addition to the model S5 of the category of multi-purpose sport cars that operate with gasoline, and then a production line of a special kind will be launched near the end of this year. The factory will have three Chinese engineers who are constantly present in the factory for a period of six months, in order to train and support Egyptian workers.

The factory will start assembling SKD cars only in the beginning, and then manufacturing will be turned into CKD, but only after ensuring the success of the first phase, which is the assembling phase.

Meanwhile, Drshal will work on developing and supporting feeding industries that support the manufacturing of cars in Egypt.

The company plans on entering into a partnership with one of the Chinese companies to open a factory for regular engines, and another for electric engines; however, the project is still under discussion.

The production capacity of the chargers factory is supposed to reach 1,000 chargers by the end of this year. These chargers will provide up to 3,000 jobs for young people. The electric car factory will also produce a capacity of 200 cars annually, taking the number up to 3,000 cars per year within a few years.

Major General Hussein Moustafa, the former executive manager of the Egyptian Automobile Manufacturers Association (EAMA) and expert in the automotive sector, said that the electric cars, which are planned to be manufactured in the local market, require developing and providing a proper infrastructure, which may ensure the chances of their success in the market, especially since these cars require a large number of electricity charging stations on roads, which is not the case currently.

Moustafa pointed out in a statement to Daily News Egypt the challenges currently standing in the way of spreading electric cars in the local market, as consumers still lack the culture to rely on these cars, which requires more effort to raise awareness about the importance of electric cars and shedding light on their positive role to reduce the operational cost by a third, compared to normal cars, that operate with gasoline. Additionally, they reduce carbon emissions resulting from burning fuel.

Also, he praised the initiatives of the local private sector to launch these electric cars in the local market. They include a memorandum of understanding (MoU) signed between Drshal and SMG Engineering Automotive, which resulted in operating a local production, manufacturing, and assembling line for cars, and electric chargers.

Engineer Raffat Masrouga, the former chairperson of SMG Engineering Automotive, said that the issue of launching electric cars in Egypt is not difficult at all. What is more important is building a full partnership with the parent company in China and finding ways for real cooperation between them.

Masrouga added that Drshal’s parent company must provide proper capabilities, in order to provide high-quality manufacturing operations through providing equipment, components, marketing services, and after-sale services. This will contribute to transferring foreign expertise to the local market, in a way that allows expanding these modern industrial concepts.

Moreover, Masrouga believes that outsourcing the manufacturing operation management to foreign experts is necessary to ensure the success of this ambitious experiment.

The price of the new Drshal electric car, the DFLZ M5, is estimated at EGP 585,000.

Alaa El Saba, the head of the automotive division in the Cairo Commercial Chamber and chairperson of Saba Automotive, said that there will not be a demand on an electric car if there is another model of it that operates with gasoline at an average price of EGP 200,000.

“How could I convince consumers to buy a car that is three times more expensive than gasoline-operating cars?” El Saba wondered.

He explained that it would be very difficult for the new car to compete locally given the price difference of 25%, noting that, with time, the more the car is produced, the less expensive it will be; however, this is not expected to happen anytime soon.

Regarding the pricing of the DFLZ M5, he said that it is unfair to compare it to much lower-priced categories. When that happens, it will be found that the price of the cheapest car in the category exceeds EGP 500,000. 

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