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How to decarbonise African transport
Behold the significance of converting delivery companies, police forces and gold miners to EVs
Hello – we’re back from our break and focused on a seemingly intractable problem.
Few consumers want to buy an electric vehicle (EV) when Africa lacks comprehensive networks of charging stations.
And few investors want to pour money into charging stations when there are still relatively few electric vehicles.
You might say chicken… and egg. What comes first? Neither.
There is a third lever: Pushing fleet owners into switching to EVs en masse. More below.
⏳ Today’s reading time: 4 mins
LOGISTICS UPDATE | Thursday 29 August
EVENTS…
📆 South Africa hosts Green Energy Africa Summit (Oct 7)
📆 Namibia holds Global African Hydrogen Summit (Sep 3)
📆 South Africa hosts Sustainability Week Africa (Oct 24)
AND JOBS…
💼 FSD Africa seeks a carbon markets manager (Kenya)
💼 IFC is looking for an investment officer (Zambia)
💼 Economist & data specialist vacancy at UNDP (Cape Verde)
1.🚁Heli view: Why corporate fleets are key to electric mobility in Africa
EV sales are accelerating on the continent but still far behind global uptake. High acquisition costs stand in the way of undoubted environmental benefits.
Solution needed: The single biggest lever to boost EV growth and reach sustainability is to focus on converting entire corporate fleets of vehicles.
African consumers buy lots of cars every year, but most are second hand, usually imported from Europe and Asia – and far from electric.
Business rules: The corporate sector dominates the African market for new cars in a way that is unknown in more developed economies.
Commercial vehicles made up 86% of new car sales in Kenya last year.
Corporate buyers are disproportionately cash-rich in Africa.
So that's where the buying power to transition the market can be found.
Government first: African politicians have become green champions in recent years, while sitting on the largest vehicle budgets on the continent.
Kenya's leaders spend $1.3 billion on cars a year (1.1% of GDP!), making them the country’s biggest buyers.
The UN is another case, acquiring thousands of white Toyota Landcruisers at a time.
Foreign missions also represent a significant part of the high-end car market.
The rest: The private sector accounts for much of the remaining market.
Logistics and bus companies operate large fleets, given the poverty of rail transport.
Giant oil and mining companies perpetually invest vast sums in new vehicles.
Telcos operate big tanker fleets to fuel mobile phone towers running on generators.
Nonprofits are among Africa’s largest and best-motorised organisations.
Key question: How many fleet vehicles are there in Africa?
Conservative estimates suggest there are 10 to 12 million across the continent.
South Africa had 2.3 million last year and is expected to reach 3.8 million in 2028.
By comparison: Managing and converting fleets is big business in developed countries.
The global fleet management market is valued at $8 billion and growing 10% a year.
54% of new US cars are in fleets, compared to 25% in Asia and 18% in Europe.
Up to 65% of fleet growth in developed economies is in electric vehicles.
The key: Relatively few (and often highly efficient) managers make the purchasing decisions on fleet conversions. Offering them the right incentives could be a clever shortcut.
Replacing private fuel cars will take a generation. But fleets turn over much faster.
In developed countries, fleet vehicles are replaced on average every three years.
Good news: Transitioning entire fleets to EVs is starting to happen in Africa, even at government level.
Corporate headstart: Individual companies still have the largest impact though.
Shift EV, a startup, is converting half the delivery fleet of Danone Egypt.
DHL, the logistics firm, is partnering with Volkswagen to go electric in South Africa.
Fleet manager IZI is helping the electrification of buses in Rwanda’s capital.
Tech support: Startups in Africa’s mobility space play a crucial role in fleet conversions.
South Africa’s GoMetro is making major innovations in fleet data management and electric vehicle transitions.
It targets to decarbonise South Africa's public transport system, a fleet of approximately 250,000 vehicles.
The electric motorbike fleet market, which has even more units than cars, is accelerating too, driven by startups such as Ampersand.
Even faster: Policymakers are now asking how to turbocharge the pace of fleet conversions. Some are opting for targeted import duty reductions.
Tunisia, Uganda and Kenya have recently passed rules aimed at lowering or temporarily eliminating taxes or tariffs on certain EVs.
Ultimate aim: Converting corporate fleets could be a springboard for private EV purchases.
With guaranteed corporate demand, more charging stations would be built, which in turn would attract more private EV buyers.
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