BD Insider: What Africa is doing right in its push for EV adoption

Jesutofunmi Adedoyin -

🍔 Quick Bite: While Africa’s Electric Vehicle market is still in its early stages compared to other regions, there are some bright spots. Countries like Kenya, Rwanda, South Africa, and Nigeria are emerging as leaders in EV adoption. The numbers are still modest, but the momentum is definitely building.

 🧠 The Breakdown

Concerns about global climate change have intensified in recent years, with vehicle emissions playing a significant role. The transportation sector alone accounts for about one-fourth of CO2 emissions contributing to the greenhouse effect. This alarming statistic has driven leading ride-hailing companies like Uber to announce their intention to make all vehicles on their platform fully electric by 2040.​

Uber's recent deal with BYD to deploy 100,000 electric vehicles globally has sparked concerns about the state of Africa's EV market. While the deal initially excludes the continent, Uber has signalled its long-term commitment to EV expansion in Africa through its $100 million investment in Moove last March.

However, the EV market share in Africa is currently less than 1%, compared to the global EV market share of 14%. This disparity indicates that Africa's market is not evolving as quickly as other continents.

Current State of Electric Vehicles in Africa

Despite a slow start off the blocks, Africa’s EV market is projected to reach a volume of $162.2 million by 2028. Current indicators suggest that Africa is on track to meet this projection within the next four years. Within the past week, Chinese EV manufacturer Chery announced its partnership with Kenyan company Afrigreen Automobile to invest $20 million in Kenya’s EV sector. The company plans to use this investment to build an assembly plant in Nairobi. This comes a month after another Chinese EV manufacturer, Neta, partnered with auto distributor Moja EV Kenya in a deal expected to result in 250 electric vehicles being assembled monthly.

Nigeria is also experiencing growth in EV adoption. Last Wednesday, leading African EV company Spiro launched its operations in Ogun State, Nigeria. Spiro, which has already deployed over 17,000 electric motorbikes across sub-Saharan Africa, plans to expand to eight major states, including Abeokuta, Ibadan, Lagos, and Abuja.​

Spiro’s model is centred around battery swapping, which allows riders to exchange depleted batteries for fully charged ones at swapping stations. The pilot phase in Nigeria would establish three battery swap stations within Ogun State, with each station able to charge 24 batteries simultaneously.

Lagos, Nigeria's economic capital, is also contributing to the growing adoption of EVs. Last month, its state-owned ride-hailing platform, LagRide, announced a $260 million investment to acquire 5,000 new vehicles, including 1,000 electric ones.

Rwanda is also well-positioned in Africa's growing EV market. In June, Kigali-based energy tech company Ampersand, which operates the largest charging network in Rwanda and Kenya, signed an agreement with BYD to build around 40,000 electric motorcycles by the end of 2026.

In South Africa, a report from the National Automobile Manufacturers of South Africa shows an 82.7% increase in the sale of EVs in Q1 2024 compared to the same period last year. The report revealed that 3042 new energy vehicles were sold in the first quarter of 2024 compared to 1,665 vehicles sold in Q1 2024. Ethiopia has also launched its largest EV factory, expected to produce around 1000 cars a year.​

A couple of factors are responsible for this growth in adoption, with EV startups being the main drivers.

Startups driving the EV adoption

Funding has been one of the speed bumps affecting the acceleration of EV initiatives in the continent, but this year, mobility startups took the brakes off, attracting $254.5 million (the largest share of funding, according to our H1 2024 funding report).

Although the funding numbers encompass more than just EV companies—considering that ride-hailing and logistics solutions also contribute to the mobility sector—the increase in funding is promising for EV startups. It indicates that investors are showing greater interest in transportation innovations.
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In the first half of this year, EV companies such as Ampersand, BasiGo, Roam, and Spiro have all announced new investments. These deals are expected to boost the number of electric vehicles and charging stations across the continent.

The role of Government Policies in EV adoption

Governmental policies play a crucial role in the adoption of electric vehicles in Africa. Fortunately, African governments are beginning to implement laws that support EV adoption across the continent. For instance, Kenya recently launched an Electric Mobility draft policy to guide electric mobility development. The country is targeting 5% of all vehicle registrations to be electric by 2025.

Rwanda also has several policies that support EV adoption, including providing rent-free land for charging stations and exempting electric vehicles from VAT and import duties. Ghana plans to waive import duties on EVs for the next eight years, starting this year. In Ethiopia, there were about 5,000 to 7,000 electric vehicles in the country as of 2023, with incentives like custom duty exemptions driving this growth. Similarly, in 2022, Angola introduced import and vehicle tax reductions that will continue until 2032.​

Despite positive policies, the economic reality in Africa means EVs remain largely unaffordable for many Africans. The high upfront cost is still a major barrier for consumers. This challenge has led M-Kopa, a leading financier in East Africa, to adopt a buy-now-pay-later model where consumers pay off their purchases in instalments. This lending model has propelled M-Kopa to the forefront of the EV market in Kenya, with two out of every three electric bikes sold in the country financed by M-Kopa.

The African EV market is ready to grow, but it requires more support than it’s getting. Lowering technology costs will make EVs more affordable, but startups can't achieve this alone. Supportive government policies, increased investment funding, and better consumer financing options are essential for Africa to become a leading market for electric vehicles.

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