In 2022, China produced almost 60% of the world’s electric vehicles (EVs). This dominance extends to Central Asia, where the market for EVs is small but growing, and Chinese companies are particularly influential, The Diplomat reports.
Rise of Chinese EVs in Uzbekistan
While imports from China accounted for only 3% of Europe’s EV sales in 2022, over 90% of EVs sold in Uzbekistan that year came from China. Brands like BYD are shifting perceptions of “Made in China” products. In 2022, Uzbekistan imported 2,180 EVs, amounting to $69.8mn. This is a significant increase compared to previous years, indicating a growing demand for EVs in the country.
Kyrgyzstan: hub for Chinese EV re-exports
Chinese brands also dominate EV imports to Kyrgyzstan. However, unlike in Uzbekistan, where local demand is driving sales, few EVs from China can be seen on the streets of Bishkek or Osh. Instead, Kyrgyzstan serves as a convenient base for re-export to Russia.
From January to August 2023, Kyrgyzstan imported 4,085 EVs from China — almost six times more than the same period last year. This increase in imports is primarily driven by the re-export business to Russia.
Tackling pollution through EV adoption
Bishkek consistently ranks as one of the most polluted cities in the world. To tackle this issue, Kyrgyzstan is encouraging the use of EVs through preferences such as a zero import tax rate. However, the current state of electric charging station infrastructure in Kyrgyzstan leaves much to be desired. There are only about 30 charging points across the country, most of which are located in the capital, Bishkek.
Appeal of Chinese EVs
Given Kyrgyzstan’s geographical distance from Europe and ongoing sanctions against Russia, China is a major supplier of vehicles. Although Chinese cars were associated with low quality just three to five years ago, today their popularity is rapidly gaining momentum.
Chinese EV manufacturers have several significant advantages compared to Western ones: Geographical proximity and the “absence of restrictive conditions” due to sanctions; rock-bottom prices due to “the dumping of Chinese manufacturers” and most importantly, Chinese companies are “ready to declare an official price in documents that is much lower than the actual price”.
Kyrgyzstan’s EV market: opportunities and challenges
Since 2019, Kyrgyzstan has been actively encouraging Chinese EV companies to establish manufacturing plants within its borders. The government’s efforts are aimed at transitioning from mere announcements to practical implementation. However, the primary hurdle to a burgeoning EV market is the country’s energy deficit, estimated at 3.2 bn kilowatt-hours in 2023.
Kyrgyzstan’s energy deficit is driven by insufficient generation, especially in winter when demand is 2.5-3 times higher than in summer. The total losses in the sector are about 20% of net generation, more than twice as high as commercial and technical losses in high- and some middle-income countries.
Uzbekistan’s EV market: success story
In contrast to Kyrgyzstan, Uzbekistan’s government has introduced several benefits to encourage the adoption of EVs, yielding greater results. From January 1, 2019, a zero customs and excise tax rate has been applied to the import of EVs. In September 2021, Uzbek President Shavkat Mirziyoyev exempted EVs from road transportation fees.
When these import exemptions for EVs first became effective in 2019, only 20 units were imported, and up until 2021, the number of imported EVs totalled only 200. However, from 2021 onward, the situation began to change dramatically. In 2021, the value of imported EVs reached $16.9mn – six times higher than in 2020. Almost 90% of these EVs came from China. In 2022, Uzbekistan imported 2,180 EVs worth $69.8mn, with 92% coming from China.
Charging infrastructure: key to EV adoption
The explosion in EV imports coincided with the roll-out of charging infrastructure. Before 2020, EVs lacked adequate infrastructure: The first powering station in Tashkent was installed by Uzbekistani company Makro only in October 2020.
By early 2022, 36 charging stations had been established across the country, most of them built by private sector companies Makro, TokBor, and Megawatt Motors. In December 2022, Mirziyoyev signed an ambitious decree to increase the number of electric charging stations to 2,500 by the end of 2024.
Despite having only 66 operational stations at the time of the decree, the government hopes to achieve their goal through incentivizing and mandating stations. Earlier this year, businesses gained the right to sell electricity at independently set prices and on January 1, 2024, new shopping malls, hotels, gas stations, business centres, and infrastructure facilities along highways will be required to install electric charging stations.
Chinese companies: shifting perceptions and building trust
Chinese companies are also moving EV manufacturing to Uzbekistan. On September 26, Chinese automaker BYD agreed with Uzavtosanoat to establish a factory in Uzbekistan. Uzbekistan has made plans to establish its production of EVs in the past, but many of these plans have not yet materialized.
BYD may be different as it already has a strong customer base in Uzbekistan. Although many Uzbek consumers are still sceptical of Chinese products, which are associated with low prices and cheap quality, brands such as BYD may be shifting these perceptions.
Olesya, 21, who bought a BYD Song Plus Flagship in January 2023, describes her BYD car as meeting the standards of luxury cars. She stresses that the purchase of an EV is becoming more relevant against the background of problems with high-quality gasoline in Uzbekistan.
Shokhrukh, 43, claims that thanks to the purchase of an EV, his monthly expenses have decreased by 30 times — from $300 to $10. Another BYD owner, Olimkh, 24, also justifies his purchase in terms of savings on gasoline and says that in terms of comfort, quality, design, and layout, the Chinese EV is ahead of local competitors.
High cost of energy: potential threat
Despite government support and various incentives, the development of the Electric Vehicle (EV) market in Uzbekistan may still be threatened by high energy prices, a problem also faced by its neighbour, Kyrgyzstan. According to the Ministry of Energy, electricity subsidies cost the budget $1bn annually. Furthermore, Uzbekistan’s national electricity company is the country’s most unprofitable state-owned company.
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