Morocco’s thriving auto industry braces for challenges ahead

The industry for electric vehicles and their related infrastructure counts the North African country as a crucial hub, but legislative, social, and political changes may shake things up.

A worker assembles vehicle parts on a production line inside the Renault factory, on the outskirts of Tangier, Morocco, which has grown to become a giant in automobile manufacturing over the past 15 years, April 29, 2024.
A worker assembles vehicle parts on a production line inside the Renault factory, on the outskirts of Tangier, Morocco, which has grown to become a giant in automobile manufacturing over the past 15 years, April 29, 2024.

Morocco’s thriving auto industry braces for challenges ahead

There is much debate about who invented the first electric car. In the early 1800s, innovators in Hungary, the Netherlands and the United States created some of the first small-scale battery-powered vehicles. In the 1830s, Scotsman Robert Anderson built a motorised carriage, but only in 1859 did batteries become rechargeable.

In 1884, English inventor Thomas Parker built prototype electric cars in England, and by 1890, a Scottish-born chemist living in Iowa (William Morrison) applied for a patent on the electric carriage that had appeared in a city parade in 1888. It boasted four horsepower, had a top speed of 20mph, and had 24 battery cells that needed recharging every 50 miles. Things have come a long way since then. Indeed, things have come south: to Morocco.

The EV industry today

At the International Automotive Exhibition in Beijing last week, attended by all the major global manufacturers, much talk was of China’s investment in the development of solid-state batteries, which it expects will replace today’s lithium-ion batteries. Despite their slow start, with sporadic developmental jumps across the 19th and 20th centuries, electric vehicles (EVs) are now big business, and Morocco has a big slice. The industry accounts for up to 22% of the country’s gross domestic product (GDP), with annual exports topping $14bn. It supplies more cars to Europe than China.

Back in Beijing, competition is fierce, as car makers queued up to show off their latest advanced technology, most of it now using Artificial Intelligence (AI) software coupled with lightweight, affordable batteries. Around the world, millions are already buying electric or hybrid vehicles, while millions more are deciding whether to switch from their traditional combustion engines. EVs are not just being bought in the rich world, either.

While Morocco exports EVs, it also produces millions of motors that run on petrol and diesel. Some dealers there feel that petrol engines still have a long life ahead, arguing that many countries would lack the battery-charging infrastructure before 2040. As legislation often prompts business changes, some believe that the European Union will not be able to ban diesel cars as of 2035 for economic and social reasons.

New Porsche electric cars are prepared at the German company's factory in Leipzig, eastern Germany, May 6, 2024.

Questioning the future

In Beijing, an industry admirer of the Chinese 5 Series EV praised its aesthetics and environmentally friendly technology but felt the selling price of $65,000 (12 times the average annual income in North Africa) made it inaccessible to most. Concerns about high prices and insufficient charging stations have led to Volkswagen, Mercedes, and Audi postponing the development of some EVs and retaining internal combustion engines for the luxury car owners who have not yet switched. Others feel China’s creep. Stellantis, the world’s fourth-largest automaker whose brands include Peugeot, Citroën, Fiat, Opel, Jeep, and Chrysler, is lobbying Brussels to slow the rapid transition to EVs and block Chinese manufacturers from EU markets.

This affects Morocco, given that Beijing is a major auto investor in the Kingdom, with Chinese cars, parts, and batteries shipped across the Mediterranean from the North African coast. It could also affect French automaker Renault, which opened a 300-hectare factory in Tangier, Morocco, in 2012.

Morocco’s government offers firms subsidies of up to 35% if they open factories in this rural hinterland. Renault’s zero-carbon facility employs 6,200 people and mainly produces the Dacia Sandero using robotics and AI. Most of those are shipped to Europe. The country aims to produce three million EVs or semi-EVs per year by 2030.

Impact on Europe

Stellantis chief executive Carlos Tavares, whose company has a big plant in Spain, said he would cut back on factories in any country that opens without approval to assemble Chinese electric cars. Italian Prime Minister Giorgia Meloni also weighed in on the Chinese influx, citing Italy’s “long and historical experience in manufacturing luxury models such as Lamborghini, Maserati, and Ferrari”. Her government agrees with Italian trade unions that the preservation of skills and workers’ rights in the auto industry falls far behind the interests of companies’ boards of directors chasing profits.

Stellantis operates Italy’s only big auto factory while neighbouring European countries such as Germany and France boast up to half a dozen. Elsewhere, in mainland Europe, it looks like a game of musical chairs. Germany is to stop producing the Volkswagen SEAT. Renault’s Nissan is withdrawing from Spain, replacing China’s Chery, one of Beijing’s three big EV makers, while Ford brands are also looking there.

Costs and productivity in mainland Europe differ greatly from those in countries like Morocco, where average incomes are significantly less. Tavares is among those pressing to move production to nearby countries with lower labour costs or risk losing market share to Chinese manufacturers, which would result in factory closures and redundancies. Belgians know this too well after big vehicle assembly plants closed in 2006 (Volkswagen), 2010 (Opel), and 2014 (Ford).

Electric cars prepared for export at the international container terminal at Taicang Port in Suzhou, east China's Jiangsu Province, on April 16, 2024.

Following the money

Europeans disagree on the future. Wealthier nations seem keener than poorer nations to move to EVs. The former cites the environment; the latter cites cost. Morocco benefits from low labour costs, geographical location, its ‘privileged partner’ status with the European Union, and its infrastructure, which includes giant ports, highways, and free trade zones.

Stellantis makes Peugeots, Opels, and Fiats at its plant in Kenitra, while Chinese, American, Japanese, and Korean companies make car parts such as seats, wheels, engines, and shock absorbers in Tangiers. China’s BYD, another of Beijing’s big EV trio, had also been looking to open a factory in Tangier but may opt to do so on Europe’s mainland instead. This is because some European countries, like France, have been passing tax credits and incentives for consumers to buy EVs made in Europe.

There was talk of BYD manufacturing electric buses in Morocco as Europe’s cities look to go green, but some reports suggest that France pressed Rabat on the subject, fearing a Chinese expansion in Morocco and the termination of local work contracts. Europe’s car-makers are big earners, but EU Commission President Ursula von der Leyen has warned that Beijing is “flooding global markets with cheap EVs, thanks to Chinese government subsidies, which harm the competitiveness of EU cars”.

With Brussels now demanding higher tariffs on Chinese imports and reviewing auto projects with Beijing, EV sales in some parts of the EU have fallen as a percentage of the total, yet sales remain high in Scandinavia and the Netherlands. To bypass EU restrictions, Chinese companies rely on North Africa, specifically Tangier on the Mediterranean, where an enormous industrial complex takes advantage of its proximity to Europe and to the port and global maritime trade hub of Tangier Med.

The EV industry accounts for up to 22% of Morocco's gross domestic product (GDP), with annual exports topping $14bn.

When ministers meet

Chinese trade minister Wang Wentao visited Morocco in March, meeting Moroccan trade minister Ryad Mezzour, after which they said they wanted to "consolidate and strengthen bilateral relations... to deepen cooperation in various fields". Wentao said Beijing "attaches special importance to the Kingdom and aspires to develop trilateral cooperation between China, Morocco, and the rest of the continent within the Belt and Road Initiative to enhance competitiveness and prosperity".

To support the manufacture of EVs in Morocco, Shinzoom, a Chinese lithium battery producer, announced a $500mn 30-hectare plant in Tangier, while China's Aeolon said it would build a factory in the Moroccan coastal city of Nador to make solar panels. They appear to be choosing Morocco for its political stability, geographical location, economic development, labour costs, and productivity, with easy onward exports to Europe, Africa, and the Middle East.

Mezzour said the country's automotive sector "will enter a new phase of industrial development" with a view to "taking advantage of the momentum in the international automotive industry and its promising prospects".

Morocco excels in certain automotive and aerospace systems, such as electrical wiring, mechanics, batteries, seats, tyres, engine parts, and plates. This technological know-how led European engine maker Airbus to open a new hub in Casablanca to produce incubator parts, proving that, for Morocco, the sky is the limit.

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