Motorcycle taxis, a prominent mode of transportation in Africa, hold significant promise for electrification as electric two- and three-wheelers gain popularity across the continent. These insights are drawn from a recently published report by the United Nations Environment Programme (UNEP), which focuses on the status of electric two- and three-wheelers in emerging markets.
During a virtual report launch on Wednesday, January 10th, Tom Courtright, the Research Director at Africa e-Mobility Alliance and the lead researcher for the African region in the report, delved into the underlying potential for electrifying two-wheelers in Africa.
“During the launch event, the speaker emphasized the expected dominance of commercial two-wheelers, specifically the motorcycle taxi segment. This trend reflects a global phenomenon, as the past three decades have witnessed a significant increase in the number of Internal Combustion Engine (ICE) motorcycles in Africa, totaling an estimated 27 million two and three-wheelers. Remarkably, 99% of these vehicles still rely on traditional ICE technology.
While two-wheelers may be less common in certain markets like Botswana, their adaptation for use in commercial taxi services, particularly in densely populated urban areas, has contributed to their growing popularity in most regions. According to data from the UNEP, in the East African Community, which includes Kenya, Uganda, Tanzania, Rwanda, and Burundi, there are currently up to 5 million operational motorcycle taxis.”
Electric two-wheelers are positioned as a promising segment for electrification due to a combination of factors. These factors include a growing number of two-wheelers, lower electrification costs, and their relatively high efficiency. This makes electric motorcycles and scooters a key player in driving the transition towards cleaner transportation options.
Notably, the challenges and costs associated with converting four-wheelers to electric vehicles highlight the vital role that two and three-wheelers can play in initiating a significant shift towards cleaner public transit. According to the International Energy Agency, converting a four-wheeler in Africa could cost anywhere between US$25,000 to US$45,000 per vehicle, depending on the car model. In contrast, the conversion of motorcycles can be accomplished for less than US$1000, as noted by Roam, a Nairobi-based e-motorcycle manufacturer.
However, to fully unlock the potential of electric two and three-wheelers, tax incentives are seen as a crucial factor, as pointed out by Courtright. These incentives are essential for realizing the benefits of cleaner and more sustainable transportation options.
“Electric three-wheelers have the potential for widespread adoption in specific markets beyond traditional two-wheelers. In regions like Somalia and northern Nigeria, there exists a promising opportunity for the expansion of three-wheeler transportation,” he elaborated.
However, despite these promising prospects, there are significant challenges that impede the full-scale growth of this sector. These challenges include limitations in grid infrastructure in rural areas, high capital costs, and delays in the introduction of favorable models by major Asian manufacturing companies.
Additionally, financing and investment issues remain critical factors in the African context, affecting the development of electric three-wheelers.”
“Challenges Surrounding Financing and Investment in Africa: High Costs and Rates Pose Obstacles to Widespread Adoption
In the African context, financing and investment issues pose significant challenges to the adoption of electric vehicles. These challenges are characterized by high costs and interest rates, which present additional hurdles in the region’s pursuit of sustainable transportation solutions.
Specifically, the cost of investment financing in Africa is notably high, with companies facing annual rates of at least 10–12%. This substantial financial burden can impact businesses seeking to embrace electric mobility.
Furthermore, the challenges extend to individual users who require financing for electric vehicles. For them, the interest rates can soar to as much as 30–50% annually, a figure that is considerably steep and can deter potential adopters.
Looking to the future, researchers are optimistic about the potential for battery swapping to become a significant trend in Africa’s electric vehicle landscape. This innovation holds promise for addressing some of the financing and infrastructure challenges currently faced by the industry.
Notably, the electric vehicle sector in Africa is already experiencing rapid growth, with promising startups like Spiro and Ampersand making notable strides in the market for electric two- and three-wheelers.”
“Challenges in Financing and Investment in Africa, characterized by high costs and interest rates, pose additional obstacles for achieving widespread adoption.
Africa is poised for substantial economic growth in the coming years. We anticipate that the expansion of the two- and three-wheeler market will persist well into the foreseeable future,” he concluded.