Africa's $114M Battery Bet: How Development Finance Is Reshaping EV Manufacturing

Africa’s battery manufacturing race has a clear frontrunner, and it is backed by $114 million in development finance. The African Development Bank’s loan approval for Gotion High-Tech’s gigafactory in Morocco stands as one of the largest development finance commitments to a battery manufacturing project on the continent, a milestone that signals development finance institutions are now willing to fund production, not just deployment or charging infrastructure.

The move reflects a broader expansion of China’s EV footprint in Africa beyond vehicle exports and assembly. Chinese companies are investing in battery manufacturing and battery materials production, building integrated industrial ecosystems that connect raw materials, components and finished vehicles. Morocco has become the clearest example of this model working at scale, having secured development finance, Chinese capital and factory deals that together constitute a bankable, integrated battery manufacturing ecosystem.

The investments are stacking up quickly. Falcon Energy Materials, an Abu Dhabi-headquartered company, is already commissioning its 25,000-tonnes-per-year anode materials pilot project in Jorf Lasfar near Casablanca, supported by technical and strategic partnerships with Chinese firms Shanghai Shanshan New Material Co. and Hensen. In 2024, Morocco signed a $300 million agreement with China’s BTR New Material Group to build a cathode materials plant in Tangier. A Chinese-Moroccan joint venture called Cobco has also opened a battery components factory expected to produce materials for nearly one million electric vehicles annually once fully operational.

These investments create reinforcing industrial advantages. Battery materials, components and vehicle production increasingly work together, even indirectly, to strengthen Morocco’s position as Africa’s leading destination for battery capital. The country combined Chinese industrial investment with government support and development finance to build this advantage in the years following the COVID-19 pandemic.

By contrast, South Africa is pursuing a different entry point into the battery value chain. Rather than following rivals into local vehicle assembly, BYD, the world’s largest producer of battery electric and plug-in hybrid vehicles, is exploring battery manufacturing in the country. The company’s ambitions became clearer during the July launch of its BYD Finance joint venture with South African banking group Absa, when executives outlined plans extending well beyond vehicle sales.

BYD built its global business on battery technology long before becoming a major EV maker. Manufacturing batteries in South Africa would allow the company to leverage that expertise while supplying electric vehicles, energy storage systems and potentially other industrial applications. The approach represents a distinct bet on the country’s potential as a battery production hub rather than simply another assembly location.

South Africa’s policy framework is moving in directions that could support such investment. The government has updated its Critical Minerals and Metals Strategy and proposed expanding automotive incentives so that half the value of critical minerals sourced from Southern Africa can count as local value addition in EV battery production. These measures are designed to encourage regional mineral processing while attracting battery manufacturers. If BYD proceeds with local battery production, it could reduce reliance on imported components while benefiting from existing and future incentive programs.

The contrast between Morocco’s established battery ecosystem and South Africa’s emerging policy framework reveals a critical lesson for other African countries seeking to move beyond vehicle assembly. Mineral resources alone are unlikely to be sufficient. Building a functional battery industry requires coordinated and stable industrial policy capable of attracting investors and creating avenues to access long-term financing.

The ADB’s backing of Gotion’s factory suggests that development finance institutions are opening doors to battery manufacturing capital across the continent. That shift could improve the bankability of future projects and ultimately determine which African countries attract industrial activity in the EV value chain, and which are left waiting.