VW’s Accra Factory Starts Production, & Toyota & Nissan Also Set To Open Plants This Year. We Hope They Add EVs Soon!
Ghana’s new Automotive Development Policy has encouraged VW, Toyota, and Nissan to look into opening assembly plants in the country. The Ghana Automotive Development Policy provides the necessary framework to establish assembly and manufacturing capacity in Ghana. The initial focus will be on new passenger cars, SUVs, and light commercial vehicles which would include pickups, minibuses, and cargo vans. VW Ghana’s new vehicle assembly plant has already started production in Accra’s North Industrial Area.
The plant will assemble ICE versions of the Tiguan and Tremont SUVs ,the Passat, Polo, and the Amarok pickup. They are targeting to produce around 5 000 vehicles in the first year, ramping up production based on demand.
VW also has plants in Kenya, Rwanda, and South Africa. Toyota and Nissan, two of the most popular brands in Africa, are also set to enter the Ghanaian vehicle assembly sector. Like in most markets in Africa, Toyota is the most popular brand and it is important for it to expand its manufacturing and assembly plant footprint on the continent.
The majority of vehicles sold in Ghana are used vehicles. Salvaged vehicles were also a popular segment. Importers brought in accident-damaged vehicles, fixed them up, and sold them in Ghana at prices that would be more affordable for consumers. As part of the measures to encourage the local assembly industry, Ghana has now banned the import of salvaged vehicles. This ban kicks in this October. Ghana has also now capped the age of used vehicles that can be imported into Ghana at 10 years.
The new vehicle import duties also favor the local vehicle production industry as shown in this summary from AfricanEV. Used vehicles in Ghana will attract an effective import tax of about 64%, whereas firms importing semi-complete knocked down kits face an effective tax of only 5%. They also get a 5-year tax holiday. These initiatives will cause an increase in the price of used vehicles, making new locally assembled vehicles more competitive. The Automotive Development Policy will also establish an asset-based vehicle financing scheme for locally manufactured vehicles to ensure vehicle are more affordable for consumers.
The policy also seeks to improve vehicle safety and environmental standards and to transform the quality of the national road transport and to protect the natural environment. To really do that, Ghana needs to encourage and incentivize the OEMs to add BEVs to the lineup of models being rolled out in Ghana. They could start with PHEVs such as the Passat GTE in the interim.
But we hope they read this article on the Osborne effect as they “gauge” demand and plan to expand production at these new plants across Africa. They really need to swiftly look to offering BEVs. Motorization rates in most parts of Africa are generally low compared to other parts of the world.
In Ghana this number is less than 50 passenger cars per 1 000 people. These low rates present an opportunity for another “leapfrog” event similar to what happened in the telecom industry where consumers jumped straight into mobile phones, bypassing the fixed line network phase.
Ghana has recently found itself in this admirable position of having excess generation capacity. Ghana’s installed electricity generation capacity available for grid power supply is 4,990 megawatts (MW). The peak load, however, is just 2,612 MW and that’s why Ghana’s Energy Commission is pushing hard for adoption of EVs.
Some Ghanaian startups, like SolarTaxi, are taking advantage of the favorable taxes for semi knocked down kits and are assembling electric motorcycles. SolarTaxi is also looking to start assembling larger EVs, including a range of sedans and small SUVs.
VW, Toyota, and Nissan need to seriously explore some right sized EVs for these markets and beyond. Something like a VW Polo-sized ID.1 would be great. With these encouraging policies for vehicle plants in Ghana, some NEV brands from China could also be tempted to jump in on the action.
Our list of potential ICE killers could bring some very nice affordable EV options to this market. China and Ghana drive on the same side of the road. Ghana could be a quick entry market for these new energy vehicle manufacturers.
Many thanks to Gad Ashaigbor of AfricaNEV for some insights into the Ghana vehicle market.
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