Kenya launches $150M EV plant in Olkaria backed by UAE-based Alsayegh Group

In a groundbreaking ceremony that could reshape East Africa’s industrial landscape, Aquilastar Corporate Investment has broken ground on a $150 million electric vehicle manufacturing facility at KenGen’s Green Energy Park in Olkaria, Naivasha. Backed by UAE-based Alsayegh Group, the ambitious project positions Kenya at the forefront of Africa’s electric mobility revolution.

The Olkaria EV Plant represents more than just another manufacturing facility—it embodies Kenya’s strategic vision to leverage its abundant geothermal resources for industrial transformation while addressing the continent’s twin challenges of energy security and sustainable mobility.

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A Strategic Location: Where Geology Meets Industry

The choice of Olkaria is no accident. Located approximately 120 kilometers northwest of Nairobi within Hell’s Gate National Park, the site sits atop one of the world’s most productive geothermal fields. The Greater Olkaria Geothermal Area lies within the central Kenya segment of the East African Great Rift Valley, where tectonic plates are actively pulling apart, bringing hot magma bodies to within 6 kilometers of the surface.

KenGen’s Green Energy Park, spanning 845 acres (342 hectares), has been purpose-designed to host both industrial and non-industrial activities. The park accommodates offices, data centers, research and development hubs, hospitality amenities, visitor experience facilities, and commercial services—creating a comprehensive ecosystem for green industrialization.

“This EV plant project is not just unveiling a new product but lighting up a bold vision for the future of mobility, sustainability, and innovation in Kenya,” declared Barbara Modani Alwena, Aquilastar’s Managing Director and CEO, during the groundbreaking ceremony.

The Geothermal Advantage: Clean Power as Competitive Edge

What sets the Olkaria EV Plant apart from competitors globally is its direct connection to baseload geothermal renewable energy. Aquilastar is negotiating long-term power contracts with KenGen to be tethered directly to the geothermal supply—potentially making it one of the world’s few EV manufacturing plants powered exclusively by consistent, carbon-free energy.

This arrangement offers profound economic implications. Unlike solar or wind power, which fluctuate with weather conditions, geothermal energy provides 24/7 baseload power with predictable costs. For energy-intensive manufacturing operations like EV production, this consistency translates directly into cost advantages over competitors relying on fossil fuels or intermittent renewables.

Kenya currently operates multiple geothermal power stations at Olkaria, with total installed capacity exceeding 850 MW. The Olkaria I facility, Africa’s first geothermal power plant, was commissioned between 1981 and 1984 and maintains an availability factor exceeding 95%. Subsequent expansions—including Olkaria II, III, IV, and V—have progressively increased generation capacity.

KenGen CEO Peter Njenga announced ambitious plans to revamp installations targeting 1,500 MW generation by 2034, with 834 MW specifically from geothermal sources. The Olkaria VII project, recently approved by the Kenyan government, will add another 80.3 MW by mid-2027.

“This is not just breaking ground on a new plant. We are breaking ground on a new chapter of industrialization in the continent,” Njenga emphasized. “It is a chapter powered by clean energy, durable jobs, and local innovations.”

Production Capacity and Employment Impact

According to Mr. Alsayegh, the plant will produce up to 50,000 electric vehicle units annually once fully operational. This production target positions Aquilastar as a significant regional player, though modest compared to global EV manufacturing giants producing millions of units.

The employment impact, however, extends far beyond the factory floor. The project promises to create 3,000 direct jobs and generate another 10,000 indirect employment opportunities while developing a local supply chain for EV accessories in Kenya. This multiplier effect—13,000 total jobs from a $150 million investment—demonstrates how strategic industrial policy can leverage foreign capital for broad-based economic development.

The indirect employment encompasses everything from parts suppliers and logistics providers to retail networks and maintenance facilities. As the EV ecosystem matures, additional opportunities will emerge in charging infrastructure, battery recycling, and specialized services.

Kenya’s Electric Mobility Market: Context and Potential

The Olkaria plant enters a Kenyan EV market experiencing rapid growth from a small base. According to market data, electric vehicle sales in Kenya reached 2,694 units in 2023—double the 1,059 units sold in 2022. By year-end 2023, Kenya’s total EV fleet stood at 3,753 units, representing 1.62% of the country’s total annual vehicle sales of 165,913 units.

The Kenyan government has set an ambitious target: electric vehicles should account for 5% of all new vehicle sales by 2025. To support this goal, authorities reduced the excise duty rate for fully electric vehicles from 20% to 10% and established a preferential retail electricity tariff of 17 KSh/kWh (approximately $0.13) for EV charging.

McKinsey analysis with the Shell Foundation projects that Kenya, Ethiopia, Nigeria, Uganda, and Rwanda combined could see EV and electric motorcycle sales between 340,000 and 820,000 units by 2025, growing to 3.8-4.9 million units by 2040. Kenya’s first-mover advantage in local manufacturing could position it to capture significant regional market share.

The broader African context is equally promising. The continent’s automotive market remains heavily dependent on imports, with used vehicles dominating. Local EV manufacturing offers the opportunity to leapfrog legacy internal combustion engine technology while building modern industrial capacity.

The Fossil Fuel Import Challenge

Alwena highlighted that EV adoption offers Kenya an opportunity to reduce its dependence on fossil fuel imports, which cost between Ksh 600 billion and Ksh 700 billion (approximately $4.6-5.4 billion) annually. This massive capital outflow represents a significant drag on Kenya’s economy and balance of payments.

<p>Kenya, like most African nations, lacks domestic petroleum production and must import virtually all transportation fuels. Global oil price volatility creates economic uncertainty, while the hard currency requirements for fuel imports strain foreign exchange reserves. Every gallon of gasoline consumed represents money flowing out of the Kenyan economy rather than circulating domestically.</p>

Electric vehicles powered by domestic renewable energy reverse this dynamic. The “fuel” cost becomes an internal transaction—Kenyan shillings paid to Kenyan power companies—keeping money within the national economy. Over time, as EV adoption scales, the cumulative savings from avoided fuel imports could redirect billions toward productive investment.

Moreover, geothermal energy’s fixed-cost nature provides protection against the price volatility that plagues petroleum markets. While oil prices fluctuate with geopolitical tensions and global supply-demand dynamics, the marginal cost of geothermal electricity remains stable once infrastructure is in place.

The UAE Connection: Alsayegh Group’s Strategic Interest

The partnership with Alsayegh Group represents a fascinating case of Gulf capital seeking opportunities in African manufacturing. Established in 1980 by Abdul Jabbar Al Sayegh, the conglomerate has built a diversified portfolio spanning technology, financial services, education, automotive, and oil and gas.

Alsayegh Group’s automotive division, ALSA Automotive Engineering, operates state-of-the-art facilities in Abu Dhabi providing research and development, prototyping, and hot weather testing for high-end vehicles. This technical expertise in automotive engineering provides valuable capabilities for the Kenyan EV venture.

The investment reflects broader trends of UAE capital seeking diversification beyond petroleum. As Gulf states pursue their own energy transitions and economic diversification strategies, African manufacturing represents an attractive opportunity—offering growing markets, improving business environments, and the potential to establish regional production hubs.

For Alsayegh Group specifically, the Olkaria investment aligns with global automotive industry trends. Traditional automakers and new entrants alike are pivoting aggressively toward electric mobility. Establishing manufacturing presence in emerging markets ahead of competitors could yield significant first-mover advantages.

The Broader Industrial Context: Kenya’s Manufacturing Push

The Olkaria EV plant joins other major investments positioning Kenya as East Africa’s industrial hub. In a parallel development announced at the same sustainable energy conference, technology giants Microsoft and G42 signed a $1 billion deal for a state-of-the-art data center at the Green Energy Park—dubbed the Olkaria Eco-Cloud Data Center.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi emphasized that these investments validate Kenya’s strategy of leveraging clean energy to attract global capital. “By tapping clean energy, investors will accelerate the government’s sustainable development agenda at the established Special Economic Zones,” Wandayi stated.

Kenya has designated the Olkaria area as a Special Economic Zone, offering tax incentives and streamlined regulations to attract manufacturers. This policy framework, combined with reliable renewable energy and improving infrastructure, creates compelling conditions for industrial development.

Prime Cabinet Secretary Musalia Mudavadi announced additional support through a landmark Statement of Intent with Japan for a 25 billion Yen (approximately Ksh 22 billion or $170 million) Samurai financing facility. Under this structure, the Ministry of Investment, Trade and Industry will receive 15 billion Yen (approximately $115 million) specifically to support local vehicle assemblers and parts manufacturers, scale up electric vehicle production, and reduce importation of used vehicles and spare parts.

“This unique Samurai financing facility will promote our transformative program to stimulate the entire automotive value chain, foster linkages with other sectors and promote innovation, research and development,” Mudavadi explained.

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Competitive Landscape: African EV Manufacturing

Aquilastar enters an emerging but increasingly competitive African EV manufacturing landscape. Roam, a Kenyan startup, completed a $24 million Series A funding round in February 2024, focused on research, development, and large-scale production of electric vehicles and motorcycles. The company has already begun commercial operations producing electric buses and motorcycles for Kenya’s gig economy.

Opibus, another Kenyan company, has converted over 170 vehicles from internal combustion to electric powertrains, serving clients including mining companies and tour operators. The firm emphasizes localized production tailored to African conditions—crucial given infrastructure limitations and usage patterns that differ markedly from developed markets.

Beyond Kenya, South Africa hosts more established automotive manufacturing, including electric vehicle assembly operations. Nigeria’s massive market represents another key opportunity, though political and economic instability have hindered consistent industrial development.

The critical question is whether African EV manufacturers can achieve competitive costs despite smaller production volumes compared to global giants. China’s BYD, Tesla, and traditional automakers all benefit from economies of scale that African startups cannot match.

However, several factors could enable African manufacturers to compete:

Tariff Protection: Import duties on vehicles provide natural protection for local manufacturers. Kenya’s 10% excise duty on EVs, though reduced from 20%, still adds significant cost to imported vehicles.

Localized Design: African-specific design addressing poor road conditions, extreme heat, and intermittent charging infrastructure creates differentiation opportunities.

Government Procurement: Public sector vehicle purchases for government fleets, public transport, and parastatals can provide anchor demand for local manufacturers.

Regional Trade: The African Continental Free Trade Area (AfCFTA) creates potential for regional exports without tariff barriers, enabling manufacturers to achieve greater scale across multiple markets.

Infrastructure Challenges and Opportunities

Despite Kenya’s renewable energy leadership, significant infrastructure gaps remain. Charging station networks are sparse outside major urban centers. Kenya Power Corporation announced a $1.93 million investment over three years specifically to promote EV use, including purchasing electric vehicles and motorcycles while supporting charging station establishment nationwide.

Power transmission and distribution losses currently average 23% of national output—among the highest rates globally. The Japanese Samurai financing facility includes provisions to reduce these losses, improving grid efficiency. Without addressing transmission losses, even abundant generation capacity cannot reliably power industrial operations.

Road infrastructure presents another challenge. While major highways connecting Nairobi to other cities have improved, rural road networks remain poor. Heavy vehicles, including commercial EVs, require robust road surfaces that much of Kenya’s rural infrastructure lacks.

However, these challenges also represent opportunities. Building charging networks, upgrading transmission infrastructure, and improving roads creates immediate employment while establishing the foundation for long-term economic growth. The multiplier effects of infrastructure investment often exceed the direct construction jobs.

Policy and Regulatory Environment

Kenya’s policy framework for EVs remains under development. The Draft National Energy Policy 2025-2034 emphasizes establishing an enabling environment to spur local manufacturing hubs for renewable energy technologies and ancillary components, including batteries and EVs. This policy aims to reduce import reliance and build backward linkages to critical minerals.

However, analysts note that Kenya’s 5% EV sales target by 2025 lacks ambition compared to leading markets. More aggressive targets would provide manufacturers greater confidence to scale operations. Current policies focus primarily on import duty reductions rather than comprehensive incentives including purchase subsidies, registration fee waivers, or preferential financing.

Regulatory clarity regarding battery safety standards, disposal and recycling protocols, and grid interconnection requirements remains incomplete. As the EV ecosystem matures, comprehensive regulations will prove essential to ensure safety, environmental protection, and consumer confidence.

The Kenya Association of Manufacturers advocates for policies supporting local content requirements, ensuring that vehicles assembled in Kenya incorporate minimum percentages of locally-produced components. Such requirements can stimulate domestic supply chain development but must be balanced against cost competitiveness and quality standards.

Skills Development and Technology Transfer

The Olkaria EV plant’s success depends critically on availability of skilled workforce. The Japanese Samurai financing package includes technical education and training provisions to prepare Kenyan youth for jobs in the emerging green automotive industry.

Kenya’s technical and vocational education and training (TVET) system must rapidly adapt curricula to address EV-specific skills including battery technology, electric powertrains, charging infrastructure, and automotive software systems. These competencies differ substantially from traditional internal combustion engine mechanic skills.

Technology transfer arrangements with Alsayegh Group and other partners will prove crucial. Beyond assembly operations, Kenya must develop capabilities in component manufacturing, quality control, and eventually engineering design. Moving up the value chain from simple assembly to higher-value activities determines whether the industry generates lasting economic benefits or merely provides low-wage assembly jobs.

Research institutions including Jomo Kenyatta University of Agriculture and Technology (JKUAT) and the University of Nairobi are establishing EV research centers, but these initiatives remain small-scale. Substantial investment in research and development infrastructure is required to build indigenous innovation capacity.

Environmental and Social Considerations

While EVs offer clear environmental benefits through zero tailpipe emissions, the complete lifecycle environmental impact requires scrutiny. Battery production, particularly lithium-ion batteries, involves mining operations with significant environmental and social impacts. Kenya’s mineral deposits include some materials used in battery production, but large-scale mining development raises concerns about environmental degradation and community displacement.

<p>The Olkaria plant’s location within Hell’s Gate National Park proximity creates environmental sensitivity. The park hosts diverse wildlife including leopards, baboons, and over 100 bird species. Industrial operations must implement robust environmental management systems to prevent pollution and habitat disruption.</p>

Water usage represents another consideration. Electric vehicle manufacturing requires substantial water for battery production and cooling systems. Kenya’s Lake Naivasha, adjacent to Olkaria, is a Ramsar site—internationally recognized wetland requiring protection. Industrial water consumption must be carefully managed to avoid depleting this critical ecosystem.

On the positive side, reduced air pollution from EV adoption offers significant health benefits. Nairobi and other Kenyan cities experience severe air quality problems from vehicle emissions. Transitioning public transport and commercial fleets to electric power could substantially improve urban air quality, reducing respiratory diseases and healthcare costs.

Financial Viability and Investment Returns

The $150 million investment by Aquilastar and Alsayegh Group represents substantial capital commitment. Achieving financial viability requires reaching production scales where unit costs become competitive with imports while maintaining quality standards that satisfy safety-conscious consumers.

Initial production costs will likely exceed those of established manufacturers benefiting from decades of experience and massive scale economies. However, several factors could enable profitability:

Premium Pricing: Early adopters willing to pay premium prices for locally-produced EVs can subsidize initial production while brand recognition builds.

Government Contracts: Public sector vehicle procurement at negotiated prices can provide stable revenue during scale-up.

Export Markets: Regional exports to Uganda, Tanzania, Rwanda, and beyond expand the addressable market, enabling higher production volumes.

Ancillary Revenue: Services including vehicle financing, charging infrastructure operation, and maintenance contracts can supplement manufacturing margins.

The geothermal power advantage reduces operating costs compared to manufacturers relying on expensive diesel generation or unreliable grid power common across Africa. This cost advantage becomes more pronounced as production scales increase energy consumption.

Regional and Global Implications

Kenya’s EV manufacturing ambitions occur amid dramatic global automotive industry transformation. International Energy Agency data shows global electric car sales exceeded 17 million units in 2024, reaching over 20% market share. 2025 sales are projected to surpass 20 million units, representing more than a quarter of global car sales.

China dominates global EV production, accounting for nearly 60% of new electric car registrations. Chinese manufacturers like BYD increasingly target developing markets with affordable models, creating both competition and potential partnership opportunities for African manufacturers.

The African Continental Free Trade Area framework could enable Kenyan manufacturers to access a market exceeding 1.3 billion people. However, realizing this potential requires addressing non-tariff barriers including varying technical standards, customs procedures, and infrastructure limitations that fragment the continental market.

Africa’s role in global EV supply chains extends beyond manufacturing. The continent possesses significant reserves of critical minerals including cobalt, lithium, graphite, and rare earth elements essential for battery production. Value addition through local processing and component manufacturing could generate far greater economic returns than raw material exports.

The Path Forward: Challenges and Opportunities

As the Olkaria EV plant progresses from groundbreaking to production, multiple challenges must be navigated:

Supply Chain Development: Building reliable networks of component suppliers requires coordination, investment, and time. Initial reliance on imported components will gradually transition to local sourcing as capacity develops.

Quality Assurance: Establishing a reputation for quality and reliability is essential for market acceptance. Rigorous testing and quality control systems must be implemented from the outset.

Market Development: Consumer education about EV benefits, addressing range anxiety, and building confidence in new technology requires sustained marketing investment.

Infrastructure Coordination: Charging networks, grid upgrades, and service facilities must expand in parallel with vehicle sales, requiring coordination across public and private sectors.

Policy Stability: Manufacturers require confidence that supportive policies including duty structures, incentives, and regulations will remain stable through the multi-year investment horizon.

Despite these challenges, the opportunity is substantial. Kenya has demonstrated leadership in mobile money innovation, renewable energy deployment, and digital connectivity. Applying similar innovation capacity to electric mobility manufacturing could position the country as East Africa’s automotive hub, generating employment, reducing import dependency, and demonstrating the viability of African manufacturing.

Conclusion: A Pivotal Moment

The groundbreaking of Aquilastar’s $150 million Olkaria EV Plant represents more than a single factory opening. It symbolizes Africa’s potential to participate not merely as a consumer market for global manufacturers but as a producer of the technologies that will define 21st-century mobility.

Kenya’s combination of renewable energy abundance, improving business environment, strategic location, and demonstrated innovation capacity creates conditions for success. The partnership with UAE’s Alsayegh Group brings capital, technical expertise, and regional networks that can accelerate development.

Challenges remain substantial—infrastructure gaps, skills shortages, small initial market size, and competition from established global manufacturers. However, these obstacles are surmountable with sustained commitment from government, investors, and industry.

For the 13,000 Kenyans who will find employment through the Olkaria plant, for the thousands of businesses that will supply components and services, and for the millions of consumers who will benefit from reduced transportation costs and cleaner air, the groundbreaking represents tangible hope for a more prosperous, sustainable future.

As Peter Njenga eloquently stated, Kenya is indeed breaking ground on a new chapter of industrialization—one powered by the earth’s heat, human innovation, and the determination to build Africa’s manufacturing renaissance.

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By: Montel Kamau

Serrari Financial Analyst

30th September, 2025