Kazakhstan has long courted electric vehicle makers to localize passenger car production, hoping to follow in Uzbekistan’s footsteps. Yet the real breakthrough may come from a different direction. Chinese electric vehicle manufacturing giant BYD’s plan to start with buses—rather than cars—marks a subtle but strategic shift that reveals much about how Chinese manufacturers are reading the Central Asian market.
Instead of rushing into a fragmented and underdeveloped EV ecosystem, BYD is betting on a sector where government incentives are stronger, infrastructure challenges are easier to manage, and competition is relatively thin.
By beginning cautiously with semi-knockdown (SKD) assembly of its B12 model, BYD is not just hedging risk; it is carving out a first-mover advantage in a segment where public contracts, policy frameworks, and financing guarantees make the rewards far more predictable than private car sales.
Key factors driving this plan include strategic alignment with government policy incentives, the availability of operational and logistical support, and relatively low competition in the electric bus segment. By entering through buses, BYD is positioning itself at the intersection of public transport modernization and regional industrial development, where its influence could extend well beyond the automotive sector.
Policy and Market Alignment
One of the key drivers behind BYD’s decision is its ability to align with government priorities while also tapping into existing financial opportunities. The government of Kazakhstan has already articulated a clear strategic vision for a green economy, with the “Kazakhstan 2050 Strategy” emphasizing the modernization of urban services and the reduction of private car use.
The country’s largest business hubs are facing an acute air pollution crisis, with transportation responsible for as much as 10-11% of total emissions. Addressing this challenge has made the promotion of green transport a central policy objective. BYD’s plan to localize electric bus production fits neatly within this framework, directly supporting Kazakhstan’s efforts to reduce carbon emissions in its cities.
Yet BYD’s choice is not only about policy alignment—it is also about leveraging financial opportunities. Kazakhstan has actively cooperated with international financial institutions to secure funding for the modernization of its bus fleet. For instance, the European Bank for Reconstruction and Development has extended a senior loan of up to EUR 50 million to City Transportation Systems LLP, a municipally owned company in Astana.
The financing supports the procurement of up to 100 electric buses, part of broader efforts to expand clean and reliable urban mobility. By localizing production, BYD strengthens its strategic position to capture these opportunities, positioning itself as a natural partner for both the government and international lenders in advancing Kazakhstan’s green transport agenda.
Moreover, the public transport sector offers BYD a more stable and secure market compared to the private EV segment. Unlike individual buyers of electric cars, the primary stakeholders in the bus market are governments and municipal authorities, who typically operate through long-term public contracts spanning five to ten years.
These contracts provide manufacturers with predictable revenue streams and significantly reduce investment risks. For BYD, this creates a strong incentive that government-led demand, backed by policy frameworks and guaranteed procurement, makes large-scale projects far more attractive and sustainable than relying solely on consumer markets.
Operational and Logistical Viability
A second important driver behind BYD’s decision relates to the logistical advantages of electric buses, which help bypass many of the systemic challenges faced by private electric vehicle owners. Unlike passenger EVs, which require a widespread and fragmented public charging network, electric bus fleets operate from central depots. This allows for the installation of centralized, high-capacity charging systems capable of servicing multiple buses simultaneously.
Such a model directly addresses one of the biggest barriers to EV adoption in Kazakhstan: the lack of reliable public charging infrastructure. By focusing on buses, BYD can sidestep this challenge altogether. Moreover, depot-based charging reduces strain on Kazakhstan’s aging power grid. Buses can be charged overnight, during periods of low electricity demand, which minimizes grid stress during peak hours.
Low Competition in the Bus Segment
The final critical factor shaping BYD’s decision is the relatively low level of competition in Kazakhstan’s electric bus market. In the electric car segment, several Chinese companies—including Geely, JAC Motors, and even BYD itself—have already established a presence.
This makes the market more crowded and raises the risks associated with localizing production. Moreover, despite the recent surge in EV imports, electric cars still account for less than 1% of Kazakhstan’s total car fleet, which further limits the immediate return on large-scale investment.
By contrast, the bus segment remains far less competitive. Although another Chinese manufacturer, Yutong, is already active in the market, government commitments to green public transport create strong demand that exceeds the current supply.
This relative openness gives BYD an opportunity to enter early, secure long-term municipal contracts, and strengthen its foothold in Kazakhstan. Importantly, success in the bus sector could also serve as a strategic stepping stone, enabling BYD to gradually expand into the car segment once infrastructure, consumer adoption, and market conditions mature.
BYD’s decision to begin with a SKD localization plan also reflects its cautious, phased approach. Unlike Completely Knocked Down (CKD) assembly—where vehicles are imported as individual parts and require advanced local facilities for welding, painting, and full integration—SKD involves importing large pre-assembled modules.
Local assembly under SKD requires fewer steps, such as bolting major parts together, adding select local components, and completing finishing processes. This approach reduces upfront investment while allowing BYD to quickly establish a physical presence, build local expertise, and test the viability of local manufacturing without committing to a full-scale, high-risk plant from the outset.
Strategic Implications and Future Outlook
BYD’s localization plans in Kazakhstan represent more than an isolated business decision—it signals a sophisticated understanding of how Chinese EV manufacturers can establish sustainable footholds in emerging markets. By prioritizing electric buses over passenger vehicles, BYD has identified a pathway that simultaneously addresses infrastructure limitations, regulatory support, and competitive dynamics.
Most significantly, BYD’s bus-first strategy provides a template for market penetration that could be replicated across Central Asia and other developing regions facing similar infrastructure constraints. Success in Kazakhstan’s public transport sector positions the company to eventually expand into passenger vehicles once charging infrastructure matures and consumer adoption increases, effectively using buses as a strategic beachhead for broader market development.
The implications reach beyond BYD itself, potentially influencing how other Chinese manufacturers approach regional expansion. Rather than competing directly in saturated passenger car markets, this model suggests that targeting specific segments with strong government backing and operational advantages may prove more effective for establishing long-term regional presence and influence.
Yunis Sharifli is CGSP’s Non-Resident Fellow for Central Asia.
