How four-wheels might follow where two-wheels are already heading

Top Chinese electric car maker BYD has announced it is entering the Rwandan market.

Why it matters: Africa has shown good progress in electric motorbikes and buses. But electric cars have so far had almost zero traction on the continent.

• No country has more than about a thousand electric cars, and most have none. 

• By contrast, electric motorbikes are expected to soon number in the millions in Africa.

The BYD model: Selling cars is only part of their roll-out in Rwanda. 

• BYD (see our Cheat Sheet below) will also create charging stations, deploy solar panels for electricity generation, set up maintenance points and offer spare parts.

The strategy: BYD is already in some of Africa’s most sophisticated markets.

• It sells cars in South Africa as well as some North African countries.

• Its buses also operate in Kenya via its partner BasiGo. 

• But Rwanda is the Chinese car giant’s first step beyond well-off Africa.

Why Rwanda? The small East African nation with an annual per-capita income of about $1,000 is not the most obvious market-entry choice. However, there is a logic.

• The capital Kigali and the country as a whole are small enough to make building nationwide charging infrastructure possible. 

• The government strongly supports green tech investments — like the Chinese government. 

• The proximity to Congo and Zimbabwe (sources of critical minerals for battery production) may be useful in future to manufacture in Africa.

The competition: BYD is trying to take the African market but isn’t alone. 

• Homegrown competitors include Uganda's Kiira Motors, Kenya's Mobius, Ghana's Kantanka and Nigeria's Innoson Motors. 

• Western giants such as Tesla and Stellantis are already manufacturing in Morocco.

• Germany’s Evum introduced “aCar” as a low-cost offering in Africa.

Stumbling blocks: What would need to happen for electric cars really to take off on the continent? Standard building blocks are needed:

• Reliable charging infrastructure is paramount. 

• As is a reliable and ideally renewable electricity supply.

• Manufacturing vehicles locally could lower prices. 

Key lever: However, the African market has one long-standing peculiarity. Most cars arrive here second-hand from elsewhere. That’s not likely to change.

• The electric car market needs used imports from Europe & Asia to lower prices. 

• This has led McKinsey to conclude: “Until used four-wheeler EVs become available at scale, likely in the mid to late 2030s, it is unlikely they will be able to compete without incentives in Africa.“

• By 2040, electric cars are expected to account for 10% of African vehicles, while electric two-wheelers will have reached 50%. 

Main ingredient: No electric-car market worldwide has taken off without significant government support. Africa will be no different. 

• State subsidies, non-EV import bans and emission targets may be necessary. 

• And government is needed to create electricity and charging infrastructure.