Can BYD crack the mass transport industry?

From the newsletter

South Africa’s Golden Arrow Bus Services (GABS), the continent's oldest bus company, has deployed 20 electric buses this year, and targets to deploy a further 100 before the close of 2025. Supplied by BYD, it is the latest example of the Chinese EV giant's quiet revolution in Africa's bus market, where European brands like Scania and Mercedes-Benz lead. 

• BYD has sold more than 74,000 electric buses globally, one of the largest fleets in the world. The company is now making a splash in Africa, where buses are the primary mode of mass transport. Besides Golden Arrow, BYD has also supplied its buses to other companies in Africa, including BasiGo, an electric bus startup based in Kenya.  

• There are over 1 million buses plying Africa’s roads, but most of them use diesel. It will not be easy for BYD to crack this market due to the high cost of electric buses compared to traditional ones. The biggest selling point for EVs however is their lower operating costs, which could be a draw for mass transit operators. 

More details

• Unlike Europe and parts of Asia like China and Japan that have advanced rail networks, Africa primarily relies on motor vehicles for mass transit, mainly buses, minibuses and vans. Motorcycles are also heavily used to ferry passengers especially over shorter distances.

• Some countries offer public transport buses, which are bought and serviced using tax revenue and charge low fares. In other countries such as Kenya, the government has left the mass transit sector to private players. Thousands of these vehicles ply the roads, and fares are set by the market. 

• Yet, some entrepreneurs have identified an electric bus-sized gap in the market. While expensive to buy upfront, electric buses are way cheaper to run and maintain. This means that in the long term, they are a good investment for bus operators.

• In Kenya for instance, a 25-seater diesel bus costs about $36,000, while its electric counterpart retails at about $171,000. At the same time, a 36-seater diesel bus costs $46,000 compared to $197,000 for an electric bus.

• While it is expected that electric bus prices will reduce in the long term, bus companies are not waiting until that happens. They are introducing new financing models that make it unnecessary to buy electric buses upfront.

• For instance, BasiGo, which operates in Kenya and Rwanda, has a Pay-As-You-Drive model where owners can acquire an electric bus for a minimal upfront cost. Owners then pay a Pay-As-You-Drive fee which includes all charging and maintenance services provided by the company. Since it is mileage-based, owners only pay if their bus is operating. 

• While BYD is making a head start in Africa’s electric buses market, the likes of Mercedes-Benz and Scania, who already have significant market experience through their diesel buses, could give it stiff competition. It could also get competition from its Asian counterparts such as Yutong, a fellow Chinese electric bus manufacturer and South Korea’s Bumhan.  

Our take

• Innovative approaches like BasiGo's Pay-As-You-Drive model could lower the barriers to entry for electric bus ownership, encouraging more operators to transition to EVs. This trend may inspire other companies to adopt similar financing solutions to tap into the growing market.

• African governments should accelerate the implementation of policies and infrastructure to support electric bus deployment, such as subsidies for operators, investments in charging stations, and incentives for public transport companies to go electric.

• As the operational cost benefits of electric buses become more apparent, cities and private transport operators could increasingly favor EVs over diesel-powered buses, contributing to lower operational costs, reduced urban pollution, lower fuel dependency, and more sustainable transit systems across the continent.