Experts say Africa's EV future is on 2 wheels

From the newsletter

According to Crossboundary Energy, Africa's EV revolution will be driven by electric two-wheelers (E2Ws) powered by distributed renewable energy.  These E2Ws are emerging as the hottest trend in green transport across the continent. With lower running costs and growing investment in charging infrastructure, they are poised to transform how people and goods move in cities.

• Africa's youth unemployment rate is high, at 21.9%, above the global average of 20.4%. Motorcycles have become a vital source of employment and economic activity, especially for unemployed youths.

• McKinsey predicts that electric motorcycles will dominate Africa's electric vehicle market, making up to 70% of EV sales by 2040.

More details

• Motorcycles have played a vital role in providing a source of income to unemployed youth who move to urban areas in search of better opportunities. 

• In Kenya alone, the motorcycle sector, commonly known as boda boda, employs 1.5 million people and contributes about $1.8 billion to the economy annually.  

• But a revolution is coming—the electrification of the motorcycle taxi sector. This shift promises even greater benefits to industry players, especially riders, who could save and increase their income by up to 40% compared to using fossil-fueled motorcycles.

• The market is growing rapidly, with major players like Ampersand reporting over 1,150 electric motorcycle sales in Kenya, 1,000 in Rwanda, and emerging companies like Dodai achieving 400 sales in Ethiopia and Zembo with 200 in Uganda.

• Companies are driving E2W sales with innovative approaches.  Ampersand, for example, is tackling two major barriers to adoption – range anxiety and long charging times – by offering electric motorcycles and providing a network of battery-swapping stations.

• However, the electrical grids in many African countries are unreliable, unclean, and often unable to support the mass charging of EVs. 

• Off-grid solar charging offers a compelling solution, and CrossBoundary Energy and Ampersand are pioneering this concept. The partnership involves CrossBoundary Energy supplying 36 charging units powered by a 37kWp solar PV system, along with 150 lithium-ion batteries, to Ampersand. This initiative aims to cut emissions, provide reliable power, and ensure affordability.

• The development of renewable energy infrastructure for e-mobility creates jobs across the supply chain and stimulates local economies.

• Building charging infrastructure across the continent will require billions of dollars, a significant hurdle for large-scale rollout. 

• However, CrossBoundary Energy aims to bridge this gap financing the infrastructure to ensure users and operators only pay for the energy they use. By aggregating demand, they also aim to accelerate the movement towards interoperability.

• Furthermore, financing infrastructure would minimize companies' capital requirements for charging infrastructure, allowing them to focus on operational expenses and enabling off-balance-sheet growth. 

• For a complete sector revolution, need to create supportive policies and incentives to encourage investment in e-mobility and renewable energy.

Our take

• The increasing prominence of E2Ws, particularly in urban transport and last-mile delivery, points towards a bright future.  We've already witnessed E2W companies collaborating with businesses to bolster their delivery services, with examples like Dodai and Rungoo in Ethiopia, Roam and Brood in Kenya, and Egypt's Blue EV partnering with Talabat.

• With the increasing promotion of the productive use of renewable energy across Africa, E2Ws are poised to gain substantial support from industry players. This support has the potential to catapult the market forward, driving significant growth and transformation.