Eurasianet

Eurasianet is an impartial information group that covers information from and in regards to the South Caucasus and Central Asia, offering on-the-ground reporting and important views on…

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• Chinese language producers have captured a major share of Azerbaijan’s electrical automobile market, pushed by aggressive pricing and authorities incentives that favor EV adoption.
• Main Chinese language corporations like BYD are investing closely in Azerbaijan to ascertain native electrical bus manufacturing and provide chains, aiming to make Azerbaijan a regional hub for EV distribution.
• Whereas the partnership with China affords financial and environmental advantages, Azerbaijan faces dangers of dependence and seeks to diversify its EV suppliers to make sure a balanced and sustainable market.

China has carved out a dominating function in Central Asia’s digital automobile market. Now, Beijing is seeking to replicate its success within the Caucasus. Azerbaijan is rising as Beijing’s level of entry for the area.

In the course of the first 10 months of 2024, Azerbaijan imported 2,592 electrical autos, with Chinese language-manufactured fashions accounting for a 77 p.c share. The development towards electrification is evident: final 12 months, Azerbaijan imported 15,471 hybrid and electrical autos from China valued at $396 million, an enormous improve over the 4,636 autos value $154 million delivered in 2023. The rising presence of EVs shouldn’t be restricted to passenger autos: Baku has additionally imported electrical buses from Chinese language producers Yutong and BYD.

The rise in exports to Azerbaijan is a mirrored image of China’s rising dominance within the world EV market; Chinese language fashions now command a staggering 76 p.c share of worldwide EV and plug-in hybrid gross sales, due to aggressive growth into new markets. 

In Azerbaijan, favorable insurance policies have inspired EV adoption. Since 2019, imported electrical autos have been exempt from value-added tax, and since 2022, customs duties on batteries and charging tools imports have been eradicated. These insurance policies have inspired shoppers to shift their focus from standard automobiles to Chinese language electrical autos.

The tempo of Azerbaijan’s importation of Chinese language EVs is able to speed up. Final July, Electrify Azerbaijan LLC, a subsidiary of Baku-based SARDA Group, signed an settlement with China’s BYD protecting the acquisition of electrical buses and the institution of electrical bus manufacturing in Azerbaijan. Below the settlement, 160 electrical buses outfitted with BYD motors had been delivered to Azerbaijan to launch a pilot program, with some buses in operation throughout final November’s COP29 environmental convention.

The BYD deal includes an general funding of $60 million, with an preliminary $17.1 million used to ascertain a three way partnership for electrical bus manufacturing on the Sumgayit Chemical Industrial Park, creating 600 jobs. BYD can be anticipated to start native manufacturing of spare elements in Azerbaijan this 12 months, with regionally made elements projected to cowl 40 p.c of the overall bus-assembly prices by 2030. In the end, the corporate plans to extend annual manufacturing capability on the Sumgayit facility to 500 buses. 

On the sidelines of COP29, one other Chinese language electrical automobile producer, Nio, made a deal with Azerbaijan-based Inexperienced Automobile LLC. Below that settlement, Inexperienced Automobile will function Nio’s distributor in Azerbaijan, and the Chinese language automaker is predicted to start out delivering autos throughout the second quarter of 2025.

China is relying on Azerbaijan to function a beachhead, enabling the growth of Chinese language-made EV gross sales in neighboring markets throughout the area. For Azerbaijan, the rising presence of China’s EVs affords a number of advantages, serving to to decrease its carbon footprint and meet its goal for the discount of dangerous emissions. EVs additionally match properly into the federal government’s plans to ramp up renewable-energy energy era.

Economically, Chinese language EVs are extra inexpensive for Azerbaijani shoppers than competing Western-made fashions. As well as, it’s roughly 5 occasions cheaper for an EV to function than a gasoline-powered automobile. Reductions in home demand, in flip, can probably assist Azerbaijan export further volumes of power.

The rising partnership with China within the EV sector entails danger for Baku. Primarily, the rising importation of Chinese language EVs might depart China with a stranglehold on the Azerbaijani market that could possibly be probably leveraged in a wide range of methods to Azerbaijan’s drawback, in addition to create a trade-deficit entice. Some trade observers level out there’s a probability that Azerbaijan might find yourself serving as an meeting and distribution hub with out considerably creating high-value-added manufacturing capabilities of its personal, producing superior battery programs and different digital elements.

To protect in opposition to this risk, Azerbaijan must press China at this comparatively early stage to increase the localization of manufacturing for EV elements and safe partial know-how transfers. Officers in Baku additionally ought to set up native analysis facilities to facilitate information sharing and constructing native capability. Most of all, Azerbaijan ought to promote the diversification of its EV market. Cultivating bilateral relationships with totally different EV producers in Europe and South Korea might cut back the danger of dependence on China and set up extra balanced EV market situations in the long run.

By Yunis Sharifli by way of Eurasianet.org

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