Necessity has called for innovations and radical changes across the globe. Amid concerns over greenhouse gas emissions, policy frameworks have been formulated to pave the way for a greener approach to doing business. Traditional business models are fast being replaced by new technologies and environmentally friendly models.
The manufacture of internal combustion engines is facing great pressure to being phased out, which in many European countries have already been implemented. Regardless of the transition chaos, Africa is far from embracing the new wave of electric vehicles. Despite the challenges the continent faces towards a carbon-neutral automobile industry, electric cars have the potential to make it on the continent.
Current market forces
An influx of used car imports
The African continent has become a market for second-hand cars mostly from Europe and Japan. It is a rather conflicting situation in terms of environmental management, where developed countries are phasing out polluting combustion cars all the while dumping them in Africa. Japan, one of the biggest exporters of used cars to Africa has set a deadline of 2035 for the phasing out of internally combusted engines.
This is at a time when the number of car ownership in Africa is on the surge, but for these used internally combusted engines. Most imported used cars in Nigeria are more than 11 years old with a quarter of these imports over 19 years old. This is a point of concern towards technological and environmental adaptation. Used cars are cheaper and hence their continued influx on the continent, making it a rare opportunity for electric cars to be adopted on the continent in the immediate term.
Weak energy infrastructure
Access to electrical energy in Africa is very low, either attributable to the non-existent grid support or a weak energy grid failing to meet demand. Grid reliability for areas with electricity support is also poor. The electric car market thrives on reliable electricity market which is a bleak success story to be accounted for in Africa. South Africa which is among one of the countries slowly adopting and embracing electric cars, has a weak energy infrastructure resulting in an unreliable electricity grid.
An inefficient energy matrix also contributes to poor grid performance. The capacity for electricity generation in Africa is huge given its vast natural resources. However, the major setbacks to Africa reaching its energy potential lie in investing in efficient electricity grids. Current electricity grids have huge energy losses, fail to adapt to changing energy demands, and cannot be easily integrated with other electricity sources. Ghana has commendable electricity generating capacity to meet the country’s energy demands yet fails to efficiently provide adequate and reliable electricity. About 61.2 per cent of businesses in Ghana expressed concerns over electricity reliability as per the World Bank’s Enterprise Surveys in 2013. The transition into electric vehicles across the continent calls for substantial energy reform with regard to existing weak electricity grids.
The phasing out of internally combusted engines to electric cars poses a great threat to the continued success of the oil market which significantly relies upon the automobile industry. Oil exports are the major source of revenue and means of livelihood for most African countries. They contribute immensely to employment, investment in energy infrastructure and form a broad base of income through export receipts. Although low-income countries are notably not the biggest oil producers, 60 per cent of them are heavily dependent on oil exports with the majority of them being on the African continent.
In some countries, significant shocks to the oil industry may prompt a systemic crunch across the whole country that will have a severe impact on the economy and the general population. This is the glaring situation in Algeria, the largest oil and gas producer in North Africa. The oil and gas industry is dominated by oil giant, Sonatrach, accounting for 75 per cent of hydrocarbon production in the country. The Algerian government relies on oil and gas exports which account for 60 per cent of its revenue base.
A catastrophic structural shock will occur given the move towards a hasty energy transition towards non-fossil energy fuels globally. The situation in Algeria is a common phenomenon in most oil-producing African countries, hence continued conflict to the energy transition mantra. The success of an absolute electric vehicle market given such circumstances is less probable. Egypt is the only North African country to have made progression towards a carbon-neutral automobile industry with the ban on imported used cars.
Independent electricity grids
Africa is a promising market for renewable energy. The continent has made great progress towards developing independent renewable energy sources to counter the effects of inefficiencies from the main electricity grid. Off-grid renewable energy is playing a pivotal role in meeting the UN’s Sustainable Development Goal 7. Such efforts are closing the gap of providing electricity to the unserviced populations on the continent, through cost-efficient mini-grids.
The surge in middle-income earners
The existing trend signifying a surge in car ownership in Africa is a result of improved earning potential across the continent. The number of middle-income earners is increasing amid sustained economic growth and new start-up businesses being developed.
A considerable 34 per cent of the population in Africa is now in the middle-class group. Growing concern over increased income inequality across the continent continues to be an issue. The success of electric cars which are expensive to purchase and maintain will rely greatly on the income potential of the African market.
Localized automobile production
Multinational companies are growing interest in developing local production plants in Africa. Partnerships with local companies and start–ups will be fostered which will contribute immensely to economic development and income-earning for individuals. It will also offer a cheaper automobile market relative to imports.
The move by these companies is coming with the recent trends in global car manufacturing of hybrid and electric cars. These initiatives will boost the prospects of an electric car industry on the continent.
Africa is a fast-growing continent in terms of both population and economy. Technological advancements are being embraced and adopted at an increasingly positive rate being environmentally conscious with regard to orthodox production processes. In light of the existing market conditions hindering electric car growth, the potential for the industry is probable and can be substantially significant.