Africa’s EV Revolution: Two Wheels, Not Four

Via The Economist, a look at why Africa’s EV revolution has two wheels not four:

With his electric motorcycle resting on the curbside, Stephen Omusugu explains the economics. The two-wheel-taxi man from Nairobi, Kenya’s capital, went electric a month ago, after watching several of his colleagues do the same. He took out a loan for the new e-bike, which will take him two years to repay in daily instalments. Added to that is the cost of charging the bike’s electric battery or swapping it for a full one each day. All told, Mr Omusugu reckons, he can make 2,500 Kenyan shillings ($19.35) every day, two and a half times as much as when he rode a petrol-powered bike.

Mr Omusugu and his home city are part of an electric vanguard. Nairobi these days buzzes with thousands of e-bikes and boasts dozens of electric-vehicle (EV) startups. Last year, Uber launched its first e-bike fleet in Africa on Nairobi’s streets. In the first six months of this year the number of registered EVs in Kenya tripled. Similar trends are apparent in other countries. That has raised hopes that electric motorbikes, and perhaps one day cars, could spread rapidly across the rest of the continent. Besides lowering climate-warming emissions and improving the air in Africa’s choked cities, they could also save their owners some money.

Over the past year the number of electric motorcycle taxis in Kampala, Uganda’s capital, tripled to around 3,000. Ampersand, a leading EV startup, has sold about the same number in Kigali, Rwanda’s capital. Spiro, the continent’s largest EV manufacturer, says it has 20,000 e-bikes on the road across Africa. Most dramatically, Ethiopia now has more than 100,000 EVs, according to official figures, after it became the first country in the world to ban the import of all petrol- and diesel-powered vehicles.

Ethiopia, though, is an exception. With private cars unaffordable for most Africans, motorbikes and buses are the main form of transport for deliveries and taxi rides, with riders typically travelling up to 100km every day for work. That means widespread electrification of public buses, and above all two-wheelers, could have enormous benefits.

Chief among them are cost savings. The continent is projected to spend $23.5bn on fuel to power some 27m motorbikes in 2024, according to calculations by Ampersand. Much of that could be saved if they all went electric.

As Mr Omusugu concluded, the lifetime cost of an e-bike is lower than that of a petrol-powered equivalent, despite higher upfront costs. Charging and maintenance are cheap and owners do not have to buy fuel. Battery swapping, in which drivers can exchange the removable units for fully charged ones at swap stations, can reduce costs further. “The sweet spot for e-mobility is someone who uses the vehicle very intensively,” explains Josh Whale, Ampersand’s CEO.

For now, the numbers are still tiny compared with other regions. In India, a poor country with a population that is around the same size as Africa’s, 1.5m EVs, mostly two-wheelers, were sold in 2023 alone. McKinsey, a consultancy, expects the market for electric motorbikes to grow faster in Africa than in any other region until the end of the decade, but largely because it is starting from the lowest base.

Plenty of factors could stall the transition to electric mobility. Pessimists note that few companies are likely to expand much beyond Africa’s biggest cities. Most EV startups have yet to demonstrate they can make money, holding investors back; battery infrastructure, in particular, is capital-intensive and tricky to make profitable. In many countries on the continent, EVs will struggle to compete so long as governments subsidise fuel and electricity is erratic.

Yet even if the transition remains confined to big cities, that could make a big difference to their pollution-choked inhabitants, particularly as more Africans move to urban areas over the coming decades. Often it is argued that the world’s green-energy transition imposes unaffordable costs on poor African countries. Electrifying transport is not one of them



This entry was posted on Tuesday, October 22nd, 2024 at 1:39 pm and is filed under Rwanda, Uganda.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

Comments are closed.


ABOUT
WILDCATS AND BLACK SHEEP
Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.