Pulse54: African cities embrace ‘green’ vehicles
From transit buses in Nairobi to bikes in Accra, EVs are becoming widespread in African cities. But challenges such as cost of vehicles and inadequate infrastructure threaten to scupper the momentum.
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As rush hour descends upon Lagos, yellow danfo buses and okadas – motorcycle taxis – weave through the chaos, expertly navigating gaps between parked cars and larger buses.
Nearly half of the Nigerian megacity's 21 million residents depend on these vehicles, along with the Bus Rapid Transit (BRT) system, as their primary means of getting around.
As these vehicles crawl through the notoriously congested streets and densely populated urban areas, they leave behind clouds of exhaust fumes that pose significant health risks to commuters and city dwellers alike.
Like much of the Global South, African mobility is largely delivered by internal combustion engines, so-called ICEs, that run on fuel and pollute the air.
But recently, electric vehicles (EVs) have emerged as a promising alternative to solve this problem across the continent’s urban cities.
While ICE vehicles ignite and combust fuel within an internal combustion engine, EVs are powered by electricity from a rechargeable battery.
The need for this shift is becoming increasingly urgent.
Road transport currently contributes to 15% of global emissions, highlighting the need to decarbonize road transport.
With urban populations in Africa projected to surge by 2bn people by 2050, the problem is bound to escalate.
There's hardly any data about how many cars move through the continent but estimates range between 26m and 38m. And there's an upward trend.
The number of vehicles on African roads is expected to hit 50m by 2030, driven by a fast-growing urban and middle-class population.
Without intervention, this could lead to a 50% increase in carbon emissions from transport by 2050.
But there's hope on the horizon.
EVs are growing in Africa, driven by a combination of factors such as the emergence of venture-backed EV upstarts, government incentives, and an increasing awareness of the environmental and economic benefits of electric mobility.
Key players powering the African EV revolution
A wave of innovators—local and foreign startups and more mature companies—have emerged in recent years to bring EVs to African roads.
They provide services that include local assembly and sales of vehicles, asset financing, battery-as-a-service, etc. across two, three, and four-wheelers in a market projected to grow from $12bn in 2021 to $21bn by 2027.
Roam produces electric motorcycles and has plans for buses and cars.
Another Kenyan startup, BasiGo focuses on electric buses for mass transit and has scaled its fleet from two in 2022 to 17 currently.
Per company figures, its buses have traveled over 1m kilometers, carried over 1.3m passengers, and prevented the release of over 200 tonnes of carbon dioxide.
In neighboring country Rwanda, Ampersand is building both electric motorcycles and a network of battery swap stations.
SolarTaxi, a Ghanaian company, is taking a holistic approach. It assembles EVs, installs charging units, and even trains women in mechanical and auto engineering.
In francophone West Africa, Senegalese startup Mbay Mobility began piloting electric vehicles in 2022 and plans to purchase a fleet of 33,000 electric taxis for rollout in Accra, Dakar, and Abidjan.
Major ride-hailing companies are also a major force leading the charge in popularizing EVs on the continent.
Bolt partnered with asset financiers to launch electric motorcycles in Kenya, aiming to boost driver earnings while reducing emissions. Uber has also been piloting electric options in several African markets.
There is no readily available data to track progress but as EV numbers grow, so does the need for charging infrastructure.
On that front, companies like Kofa in Ghana are working to build networks of charging and battery swap stations across urban areas.
Roadblocks on the EV highway
Despite the major progress, significant challenges prevent the mass adoption of EVs on the continent.
One of the biggest hurdles is the high upfront cost of acquiring a vehicle and charging devices, which can be prohibitive for many potential users.
Companies like M-Kopa and Ecobodaa are addressing this through asset financing models that make EVs (electric motorcycles, buses, and other commercial vehicles) more accessible.
Loans are provided to individuals or businesses to buy EVs. So instead of paying the full cost upfront, users can make a small down payment and then pay off the remainder of the vehicle's cost in regular installments over time.
Because around 45% of people living in Sub-Saharan don't have access to a bank account, this approach makes it more manageable for users who may not have access to formal loans or large amounts of capital.
The pay-as-you-go (PAYG) model takes this concept a step further by directly tying payments to vehicle usage.
BasiGo's "Pay-As-You-Drive" system for electric buses allows operators to pay for the vehicle based on the number of kilometers driven each day.
This aligns the cost of the vehicle with the revenue it generates, making it easier for commercial operators to manage their cash flow and reduce financial risk.
Drivers can also purchase the bus without a battery, which accounts for a major portion of the final cost.
For its part, SolarTaxi provides a renting option for electric bikes while its lease-to-own option enables users to lease a car for a period after which they can purchase the vehicle at a predetermined price.
Often, these financing models incorporate technology like IoT devices and telematics to ensure payments and monitor vehicle usage, and in the long run, help reduce costs and improve accessibility.
But even with financing options, EVs remain out of reach for many consumers.
While M-Kopa has helped grow the nascent industry in East Africa, for instance, there are still concerns about its high interest rates.
And outside financing challenges, poor infrastructure in many African countries—such as a lack of reliable and ubiquitous electricity grids—make widespread charging difficult. As such, current battery technology can be a concern for longer journeys.
In addition, a dearth of funding persists, many people are still unfamiliar with EV technology and its benefits, and there's also a need for more local technicians trained to work on EVs.
Funding the future of green mobility…
A Shell Foundation report finds that up to $9bn is needed to finance a sustainable market for electric two-wheelers in Kenya, Nigeria, Uganda, Rwanda, and Ethiopia by 2030.
No doubt there is still a long way to go in terms of funding, but investors are taking notice of the potential in the sector and moving to capture the opportunities.
Several EV companies have recently secured substantial investments to expand their operations and develop innovative solutions for African markets.
In Kenya, around 40 local e-mobility startups have raised over $52m in financing, one of the most funded on the continent. Roam recently raised $24m debt and equity to scale.
Dodai secured $4m in Series A funding to assemble and distribute electric motorbikes in Ethiopia, with 80% of the funds allocated to importing EV parts and batteries.
Moove, a Nigerian vehicle financing platform, raised a $100m Series B round led by Uber to expand into new markets and strengthen its position in the EV financing sector. In 2021, its counterpart Metro Africa Xpress (MAX) netted a $31m round to expand into Ghana and Egypt, the largest round for an EV startup at the time.
To address the financing shortfall for early-stage players in the sector, initiatives like E2W Africa provide growth equity and small-scale asset finance for two-wheelers, three-wheelers, charging infrastructure, and small-scale manufacturing in East Africa.
These developments show the growing investor interest and as more capital flows into the industry, it is likely to accelerate adoption.
…and paving the way with policies
Complementing these private sector-led efforts, a few governments across Africa have policies to help drive adoption.
Kenya was one of the first countries to introduce a roadmap, launched in 2020, and aims to import at least 5% of its EVs by 2025.
Rwanda is offering rent-free land for charging stations, reduced electricity tariffs for EVs, and tax exemptions on EVs and spare parts to woo investors.
Regional neighbor Uganda has waived import duty on two and three-wheeled EVs and introduced special electricity tariffs for charging stations.
In North Africa, Tunisia has slashed customs duties on EV charging equipment and reduced VAT.
And across the Sahara, South Africa introduced tax breaks earlier this year to incentivize production.
Advocacy groups like the Africa E-Mobility Alliance and Electric Drive Africa are also working to help shape policy and raise awareness about the benefits of electric mobility.
The road ahead: Is Africa ready for EVs?
A transition towards EVs will likely take more time in Africa, based on the current state of infrastructure.
But while challenges persist, the momentum is undeniable.
The influx of used EVs is also expected to increase as global efforts to reduce carbon emissions intensify.
Traditionally, imported cars in Africa come from the Global North, where governments are actively promoting the transition to cleaner transportation.
The European Union, United Kingdom, and California have all set 2035 as the deadline for banning new internal combustion engine (ICE) vehicles. The US recently implemented stricter federal pollution standards to encourage a shift to EVs among manufacturers.
These policy changes in developed nations are likely to accelerate the availability of used and perhaps less expensive EVs in African markets.
By 2040, 54% of new global car sales and 33% of the world’s car fleet are expected to be electric.
For now, focusing on affordable, locally fitting solutions and building the necessary infrastructure, can help Africa not just keep pace with global trends but also create solutions that could serve as a model for sustainable transport in other developing regions.
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