Why delivery services boom could usher a new era for EVs

From the newsletter

Côte d'Ivoire’s state-owned postal service company La Poste is introducing 100 electric cars and 200 electric motorcycles to its fleet to cut operational costs. This comes as delivery services are booming in Africa, and most vehicles used for deliveries still run on fuel. But this is changing, as a growing number of delivery companies choose EVs to reduce costs. 

• Electricity is typically much cheaper per unit of energy than petrol or diesel, especially in Africa where fuel prices are some of the highest in the world. Thus, the cost per kilometre for an EV is much lower than a fuel vehicle. This results in major cost savings, especially for delivery firms which make many trips daily.

• For La Poste, the GO'POST project will offer a passenger transport service provided by chauffeur-driven EVs. Second, it offers a fast and eco-friendly delivery service for individuals and businesses. While the initial phase of the project involves the deployment of 100 electric cars and 200 electric motorcycles, it precedes a nationwide expansion to reach a wider customer base.  

More details

• The last-mile delivery industry in Africa is rapidly expanding, driven by increasing e-commerce adoption, urbanisation, and a growing demand for efficient and convenient delivery services especially in major countries like Nigeria, South Africa, Egypt and Kenya.

• Millions of vehicles, including cars, vans, light trucks, motorcycles, three-wheelers and bicycles are used to make last-mile deliveries on the continent. Food delivery is especially a significant part of the business as more Africans, especially the middle class, shift to ordering food online.

• The use of EVs can reduce operational costs for last-mile delivery companies, who operate on thin margins. Electric motorcycles are already proving especially economical for riders in markets like Kenya and Uganda where demand is growing. 

• The challenge however remains the high cost of EVs. This means that companies on the continent can only add a small number of EVs to their fleet at a time as they cannot afford the huge capital outlay needed. However, this is changing as leasing becomes the most realistic route for many firms to incorporate EVs to their fleets.

• The use of EVs for last-mile delivery could further help Africa's EV market, which is experiencing significant growth. According to a study by Mordor Intelligence, this market was estimated at $15.8 billion by 2024. Forecasts indicate that it could reach $25.4 billion by 2029. 

• This momentum is further boosted by the entry of EV heavyweights, especially China’s BYD in more than a dozen markets. South Africa is especially seeing increased attention from global automakers especially from China. Morocco is also attracting multi-billion investments in EV manufacturing and associated value chains.   

Our take

• La Poste's initiative and the cost-saving potential of EVs could inspire other African delivery and logistics companies to electrify their fleets, particularly for last-mile services. This shift will address operational costs and cater to booming e-commerce demand.

• Due to high upfront costs, more companies may adopt leasing or rent-to-own models to make EVs financially accessible. This trend will be pivotal in accelerating the integration of EVs into delivery fleets across the continent.

• As delivery services expand to rural and peri-urban areas, demand for electric motorcycles and smaller, cost-efficient EVs will grow. Innovations in solar-powered charging infrastructure could address electricity access challenges in remote areas.