Electric vehicles (EVs) represent a significant and rapidly growing segment of the private transportation market. By the end of 2020, there were already 10 million electric cars on the world’s roads, following a decade of impressive expansion. Despite the global downturn in car sales caused by the pandemic, electric car registrations increased by 41% in 2020. According to the Sustainable Development Scenario outlined by the International Energy Agency (IEA), the global EV market could reach a staggering 230 million vehicles by 2030, provided that governments implement stronger policies to achieve their climate objectives.
In major vehicle markets worldwide, EV fleets are expanding at a remarkable pace. The decreasing costs of batteries and EVs, coupled with the rapid expansion of charging infrastructure are driving this progress. Furthermore, this advancement is facilitating the electrification of various modes of transportation, including two/three-wheelers, light-duty vehicles, buses, and even heavy-duty vehicles with short-range requirements, such as those involved in urban deliveries. Notably, manufacturers continue to diversify their offerings by introducing an ever-increasing number of EV models to meet customer demand.
However, despite the encouraging developments, effective policies are still necessary to tackle challenges such as upfront investment costs, the expansion of EV charging infrastructure, and the seamless integration of charging demand into power systems. These efforts will contribute to the further advancement of electric transportation and the achievement of sustainable mobility goals.
The prices of electric vehicles (EVs) are decreasing, leading to a rapid increase in their adoption. This trend is expected to continue, ultimately resulting in EVs reaching price parity with internal combustion engine (ICE) vehicles before 2025. It is projected that by 2030, fully electric vehicles will account for 30% of global passenger vehicle sales. In 2021 alone, EV sales witnessed a remarkable growth of 108%, capturing an 8.3% market share of new sales. These impressive numbers indicate a promising future for EVs in the automotive industry.
While Kenya’s current vehicle manufacturing capacity remains low, the government has set an ambitious goal to double capacity between 2019 and 2025. To support this objective, the government has implemented a National Automotive Policy aimed at bolstering local automotive production.
Kenya is home to the continent’s largest e-mobility start-up ecosystem, bolstered by startup investors who are increasingly turning towards e-mobility. The country also has reliable energy infrastructure to support the uptake of e-mobility. Kenya satisfies most conditions for long-term growth, with a rapidly growing e-mobility ecosystem and access to sizable domestic and export markets. Kenya has a sizable domestic market and a relatively reliable energy infrastructure, with 70% energy access. On average, there are 3.8 outages per month. Currently, the country has an installed capacity of 3,321MW compared to a peak demand of 2,149MW. However, its manufacturing capacity could be improved to match that of the continent’s leaders.
Although the EV market in Kenya is still in its early stages, there is a burgeoning start-up ecosystem that holds great potential for venture capital (VC) investment opportunities. Over 50 start-ups have already entered the EV sector in Kenya, demonstrating the growing interest and entrepreneurial spirit in this field. Public charging infrastructure is currently scarce, but efforts are underway to scale it up. For example, BasiGo, an e-bus company, launched a charging station in Nairobi in 2023, the first to do so under the new e-mobility tariff. BasiGo plans to make its charging stations available to the general public for recharging electric vehicles and trucks by the end of 2023.
E-mobility involves integrating the grid, buildings, homes, and drivers, requiring increased electricity and energy management in buildings. Charging primarily occurs at home, work, or the destination, with only a small percentage happening during transit. Electric vehicles will contribute significantly to residential building electricity consumption, potentially reaching 40%. The majority of EV chargers, approximately 98%, will be installed in buildings and homes. Building owners should prepare their infrastructure for the expected rise in electricity consumption, which could increase by up to 45%. Upgrading urban mobility plans is necessary to accommodate e-mobility, including designing routes that facilitate shared EV usage. The Nairobi County government is actively seeking parking spaces where EVs can charge while their owners conduct their business in the city, as highlighted in a Kenya Power E-Mobility conference report.
Kenya’s mobility space invested a total of USD 26 million in 2021. Opibus secured Sub-Saharan Africa’s largest-ever fundraising for a pure e-mobility player in 2021. Additionally, BasiGo received another huge funding of USD 6.6 million in 2022, bringing BasiGo’s total funding for the year to USD 10.9 million. This funding will enable the company to begin commercial delivery of locally manufactured electric buses and charging infrastructure through their unique Pay-As-You-Drive financing model.
The adoption of electric mobility in emerging economies, like Kenya, presents a range of challenges. These include the high initial costs of electric vehicles (EVs), concerns regarding battery range, and the insufficient charging infrastructure. The uncertainties surrounding battery life and asset resale value often discourage financial institutions from investing in e-mobility projects. Furthermore, it is crucial to ensure that EVs are powered by renewable energy sources to avoid environmental burdens.
To support Kenya’s transition to e-mobility and reduce dependence on external funding, certain banks have introduced affordable financing strategies for investors. As an example, in 2022, NCBA Bank established a KES 2 billion fund that can cover up to 80% of the costs associated with electric vehicles. Top of FormBottom of Form Also, Partnering for Green Growth and the Global Goals 2030 (P4G) platform is collaborating with the Kenyan government and private sector to develop the necessary financial and technical infrastructure to attract investments and facilitate a just transition to e-mobility. The objective of this collaboration is to mitigate risks associated with financing EVs in rural areas and provide evidence-based recommendations to enhance adoption, charging capabilities, local assembly capacity, and financial accessibility for SMEs and individuals.
By addressing these key areas, the partnership aims to create a conducive environment for the widespread adoption of electric vehicles in Kenya, fostering green growth and contributing to the achievement of global sustainability goals.
To achieve a comprehensive approach, it is crucial to implement a strategy that encompasses financial programs, incentives for local manufacturing, tariff and policy reforms, and training programs. The NAMA Facility is partnering with government ministries, nonprofits, and private sector alliances to develop a comprehensive e-mobility program in Kenya. The program aims for 15% of annual vehicle sales to be electric and targets 80% local assembly of electric vehicles by 2028. By implementing this approach in Kenya, there is the potential to revolutionize the transportation system, making it more affordable, equitable, and environmentally friendly. To expedite the e-mobility transformation in Kenya, it is vital for donor countries and development finance institutions to actively participate and invest in these solutions. This active involvement will foster the growth of local markets and promote sustainable green development.
Author: Victor O. Nyakinda
Transport Sector Lead at Fie-Consult