Fate of EVs as Africa’s vehicle fleet to double by 2050

From the newsletter

Motor vehicle ownership in Africa is projected to double from the current 73 to 150 per 1,000 people by 2050. This projected growth presents an opportunity for African countries to accelerate adoption of EVs. The decline in global EV prices will help, but some countries are more prepared than others for this transition. 

• Africa’s population is projected to double to 2.5 billion in 2050, opening up a vast new market for motor vehicles. As continents such as Europe implement phased bans on fuel vehicles, Africa is expected to be the dumping ground for used fuel vehicles.

• Yet, there are positive signs that Africa is joining the global transition to EVs at an increasing rate. But for this to last well into 2050, EV prices have to keep dropping to beat the cheap imported vehicles. Further, the continent must do more to accelerate the construction of charging stations.

More details

• An analysis by Energy for Growth Hub shows Africa’s average motorisation rate (encompassing all classes of registered vehicles) is only 73 vehicles per 1000 people, compared to a global average of 300 and 180 in developing countries. 76% of African countries have motorization rates below 100.

• The low motorisation is informed by the fact that Africa, the world’s poorest continent, has very low incomes. It means its population of more than 1.2 billion can hardly afford cars. This is however changing, with rising income levels across the continent poised to double the continent’s vehicle ownership by 2050.

• The projected vehicle access growth opens a critical yet narrowing window for EV adoption. Majority of African countries spend a significant portion of their foreign exchange to import fuel. Early EV adoption could reduce costly fuel imports, and support broader efforts to modernize transportation systems across the continent.

• The potential benefits of adopting EVs are many. First, besides reducing pollution, EVs could significantly reduce the costly subsidies that African countries spend on making fuel more affordable. Countries could also reduce their dependence on fuel imports, helping them manage their foreign exchange spending. Further, EVs present national power utilities to grow their revenues.  

• When you assess factors such as electricity generation capacity, grid stability, utility financial solvency, cost of EV charging, access to finance, electricity regulation and EV policies, only nine African countries have made a bit of progress towards preparing for the EV transition. They are South Africa, Morocco, Egypt, Ethiopia, Kenya, Rwanda, Ghana, Namibia and Tunisia.

• Innovation will play a critical role in helping Africa fasten the pace of EV ownership. Innovative asset financing and battery-as-a-service models in particular show promise in increasing affordability. However, expanding EV adoption will require more than just financing innovations — it demands broader economic growth, as motorisation rates closely track per capita income. 

Our take

• Europe’s planned ban on fuel vehicles starting 2035 poses a significant threat to Africa’s EV industry. When the ban takes effect, Europeans will dump their fuel cars in other markets, particularly Africa. This abundance will likely tank the prices of ICE vehicles, posing a major threat to EVs. 

• The planned integration of Africa’s electricity grid through regional power pools will make electricity supply cheaper and more reliable. Further, all countries in the continent are racing to increase their electrification rates. The availability of electricity especially in rural areas to facilitate charging will make EVs more appealing. 

• China will be the central figure in Africa’s EVs story. The Asian giant is the largest producer of EVs in the world, and is increasing its capacity to produce not only the vehicles but also components such as batteries. Its economies of scale and strong expertise ensure that it will continue to be the most cost-effective supplier of EVs in Africa in the decades to come.