Published on November 24th, 2018 | by Jose Pontes0
Electric Car Sales In Emerging EV Markets — Chapter 1: Africa
November 24th, 2018 by Jose Pontes
While EV adoption is fairly well documented in North America, Europe, and Asia, other geographies have been mostly or entirely absent from the media coverage — like Africa, the Middle East, and Latin America. While electric vehicles in most countries in these areas are still something for the future, there are some interesting cases that deserve special mention. As such, I have split this topic in three chapters — one for Africa, the second for the Middle East, and the third for Latin America. Here, I am covering chapter 1, Africa.
I — Africa
Some two million new vehicles were registered last year in Africa, which is a low number for a continent made of almost two billion people. The vehicle ownership rate is half of what it is in India, and several times less than in more mature markets, making it the most underdeveloped automotive market in the world.
Add that to the accelerated demographic growth and the potential is immense, especially considering that three markets (South Africa, Algeria, and Egypt) own 70% of that overall market.
Countries with highest potential:
Kenya — With a locally developed automotive brand, the Mobius off-roader, and with several automakers (including Peugeot and Volkswagen) investing in the country, expect fast growth in coming years, with 300,000 units a year possible by 2030. This being a tech-friendly country, this could be one of the countries with higher EV uptake in Africa as well.
Nigeria — In a country of 183 million people, the new car market is just 53,900 units … per year. So, by 2030, considering the economic and demographic growth (the country is expected to have 274 million people by then), expect these numbers to surge to some 600,000 units, which would make it one of the fastest growing markets worldwide.
South Africa — Home to a 700,000 unit/year automotive market, and with an industry of over one million units per year, one can consider South Africa the only mature market on the continent. So, while the growth rate until 2030 shouldn’t be impressive, the fact is that the current volume will almost certainly continue to make it the largest car market in Africa, with over 1 million units per year.
Northwest Africa (Morocco, Algeria, and Tunisia) — While geographically part of Africa, these countries are influenced by cultural and economic ties to Europe, and that is particularly visible in Morocco, which is a low-cost assembly hub for the Renault Group (and maybe home of the euro-spec Kwid EV), with Peugeot’s PSA said to be following it soon. So, expect low-cost EVs of French origin to thrive here. In 2030, the total car market of these three countries is said to reach some 1.5 million units.
Egypt — With an established auto industry and the population set to reach some 133 million people by 2030, expect the local auto market to surpass 1 million units by then, rivaling South Africa for the position of largest automotive market on the continent.
And what about EVs?
In a continent where low-cost laptops and smartphones are king, rugged low-cost EVs, like the future Renault Kwid EV, are sure to succeed, as will no-frills electric pickup trucks and proper off-roaders, like the Suzuki Jimny.
And who majors in low-cost EVs? Yep, China. Their manufacturers already have two-digit shares in many African countries, and as the customer base is already being formed around gasoline/diesel models, once buyers switch to electric cars, the Chinese automakers will be well placed to catch that low hanging fruit. With the exception of the upcoming Renault Kwid EV, no other legacy automaker has a competitive low-cost EV in the pipeline to run with the BAIC EC-Series and competitors that will likely be exported/CKD’d from China.
In fact, BAIC has already begun to position itself, having launched manufacturing and assembly plants in South Africa and Zimbabwe, respectively. Initial gasoline/diesel models currently in those markets are the BAIC D20, the X25 CUV, and the BAIC Grand Tiger Pickup. This will give them a nice entry point into the African market and allow them to quickly switch to EVs in the near future.
Another Chinese model being assembled in partnership with local distributers is the Chery QQ, which could be a good precursor to the related Chery EQ in the African market.
Add the fact that Chinese companies are building infrastructure (roads, dams, bridges, etc.) across Africa, and you have the right environment for a friendly uptake of Chinese EVs on the continent.
But will EVs take off in Africa fast, or will it be the final destination of many old gasoline/diesel vehicles coming from Europe and other mature markets?
I guess it will be a bit of both.
Fuel supply is a big issue, so the funny thing is that drivers with gasoline/diesel vehicles can experience range anxiety in many of these countries, as queuing for fuel and fuel shortages is a regular event.
Also, the establishment of microgrids based on solar provides a big opportunity for decentralized charging infrastructure and the introduction of electrified public transport is a big opportunity. On the other hand, the lack of government support is an issue that holds back further development.
The Leapfrog Factor — One of the few advantages of being late to a certain technology is that you can leapfrog certain stages and start in the middle of the newest trend, without being sandbagged by the affiliation of older technologies. This was the case in Africa with communications — landline networks were fast abandoned (not even implemented in many places) and populations there quickly benefited from the newer, better mobile networks.
The same can happen with mobility. Because in most African countries there is no significant “gas car culture,” people will be more open to switch to electric cars and new forms of mobility (carsharing, etc.), so my guess is that once the Chinese EV industry is ready to export in large volumes (2022? 2023?), Africa will be one of the first stops of its expansion plan, thus kickstarting the EV revolution in most countries around the continent.
But this is in the long run, for 2025, or 2030. What about now — are there EVs being sold in Africa?
Well, there’s not a lot to mention, but nevertheless, we have some numbers to report:
South Africa — Electric cars landed in 2014 with the Nissan Leaf. BMW arrived one year later, introducing its i3 & i8 models. While the Leaf hasn’t really caught on, delivering 43 units in its best year (2014), both of BMW’s i models have been delivered in relatively significant volumes, with the total figure now being some 600 units. Overall, share wise, EV adoption in the country is barely noticeable (0.03%). It was enough, however, to encourage Mercedes and Porsche to start delivering a limited number of their PHEVs in the country this year.
A third fully electric model will finally find its way to South Africa in Q1 2019. Jaguar will launch the I-PACE in this market, and Jaguar has also invested $2 million in the electric Powerway, a future public charging network of 82 charging stations that will also cover South Africa’s major highways, such as the busy Johannesburg–Durban and Johannesburg–Cape town routes. The charging network is co-developed with a South African EV charging service provider, Grid Cars.
Regarding the existing charging network, all the BMW service centers have charging stations and one or two of the large shopping centers have EV facilities.
Regarding fiscal policies, in South Africa, EVs carry a 25% luxury tax, making adoption a challenge, but there are talks of lowering it to 17%.
In a way, this market reminds me of Australia, where EV adoption is coming from the top down — big, powerful EVs, like the ones of Tesla and Jaguar, are needed to change mindsets and break the mold, allowing a more EV-friendly environment.
An interesting side note is that the new head of Volkswagen in South Africa was responsible for implementing VW’s first EV plant in Germany. So, although no official comment has been made regarding EVs, one can only hope that in the future Volkswagen will be open minded on this topic. At least Audi is now advertising the e-tron in South Africa, which could mean it is aiming to launch it sometime next year.
So, Tesla and Volkswagen (and Audi and Mercedes) need to land their electric models in South Africa, for the local EV market to finally gain some traction. Will 2019 be the first year that the market hits 600 units/year?
Morocco — Talking of EVs here is basically talking about Renault, which made its quirky Twizy quadricycle available in 2014. The small EV has scored some 100 sales since then. The subcompact Zoe became available in 2017, with some 20 units being registered by now. Yes, 20, not 200 or 2,000.
With the Renault Tangier factory among the favorites to make the upcoming euro-spec Kwid EV, expect the local market to open up to EVs when (well, if) that model hits the road. Maybe in 2020?
Kenya — A common theme in Africa: while new EVs are still a rarity, second-hand EVs are starting to appear here and there, and one of the best examples is Kenya. Since 2016, when the first used EVs arrived, close to 100 units have been imported, mostly Nissan Leafs.
A ride-hailing service in Nairobi has been piloting an all-electric fleet (Nissan Leafs) and has announced plans to grow the fleet to 50 by end of 2018 and 200 by 2020.
With 77% of its energy coming from renewables, it’s really a no brainer that Kenya is among the most enthusiastic countries regarding electromobility in Africa, so expect demand to continue growing, even if based on the second-hand market.
Zimbabwe — Zimbabwe remains a small vehicle market, with annual new gas/diesel sales of under 5,000. In a market dominated by used gas/diesel models (about 70,000 registered per year), a few used Nissan Leafs are now on roads of Harare, sourced from Japan. A Tesla Model X was also registered as recent as last month. As more and more used EVs come onto the market from the traditional source markets of Japan, the United Kingdom, and South Africa, we should start to see more used EVs on the roads. Already, new Chinese electric motorbikes are on sale in downtown Harare, with a distributer opening up shop in Zimbabwe earlier this year. So, if successful, electric cars could be the next logical step.
Madagascar — While this seems one of the most unexpected places to have an EV scene, the fact is that it exists. It started in 2015 with the arrival of two Chinese EVs, the BAIC EV-Series and the BYD Qin PHEV, and was followed last year with the installation of charging infrastructure at Total gas stations. This year, two electric buses landed too. The total number of plug-ins in the country is said to be at over 40 units.