• Tuesday, April 16, 2024
businessday logo

BusinessDay

How rising fuel cost boost electric vehicle adoption in Nigeria market

How rising fuel cost boost electric vehicle adoption in Nigeria market

In recent years, Nigeria has grappled with severe air pollution, primarily attributed to the proliferation of gasoline-powered motorcycles, commonly known as “okadas.” These two-wheelers, while serving as a vital mode of transportation for millions, have contributed significantly to the environmental challenges.

With the rise in fuel which has risen to N679.36/litre as of February 2024 from N263.76 in February 2023 as reported by the National Bureau of statistic, riders are embracing low-carbon motorcycles, powered by electricity or cleaner fuels, as a viable alternative.

Read also: Cost, grid collapse test Tinubu’s electric vehicle rollout

According to a recent report by the Powering Renewable Energy Opportunities (PREO) program, electric motorcycles will play a significant role in the transformation of sub-Saharan Africa’s transportation system towards becoming sustainable.

The report outlined the market opportunity for e-motorcycles, predicting that it will become a driving force in the African e-mobility sector estimated to be worth about $3.65 billion in 2021. The market is projected to grow to $5.07 billion by 2027.

“Investing in e-motorcycles provides a path to more sustainable and equitable growth across African communities and addresses the urgent issue of climate change,” Jon Lane, PREO programme director, said.

In 2021, Nigerian mobility startup Metro Africa Xpress (MAX) became Africa’s most-funded startup in the electric vehicle (EV) space when it raised $31 million in a series B round to expand into Ghana and Egypt.

However, industry advocates believe the company’s goals are too ambitious given the high EV prices, unfriendly government policies, lack of charging infrastructure, high customs duties, and bad roads in African countries.

“There is a future for EVs in Africa. However, the market conditions and business models must be appropriate,” Uche Okoro, an energy analyst said.

According to industry estimates, more than 90 percent of electric motorcycles sold in sub-Saharan Africa are imported from China and India and are not built for African conditions.

With an abundant supply of raw materials in Nigeria, particularly minerals and metals, as well as its expanding economy and sizable population to build electric vehicles, insufficient local production still leaves a significant gap that is filled by imports.

Furthermore, the adoption of low-carbon motorcycles aligns with Nigeria’s broader energy transition goals. As the nation seeks to diversify its energy mix and reduce reliance on fossil fuels, initiatives promoting electric vehicles and alternative fuels gain momentum.

By embracing these technologies, Lagos moves closer to realizing its vision of a cleaner, more sustainable urban environment.

According to reports by rest of the world, Glovo wants to pilot a large-scale EV program for its riders in Nigeria and is in talks with manufacturers.

The company currently has 1,400 gig workers registered on its app in Nigeria — half of whom use traditional motorcycles, and the other half use bicycles.

“Glovo aims to reduce its global carbon footprint by 2030 by having 68 percent of its fleet comprise non-combustion vehicles. Currently, 8 percent of the company’s fleet is electric,” the report said.

While gig workers’ gradual adoption of EVs is a significant development, the government needs to step in to support this shift, Muda Yusuf, former director of the business advocacy group Lagos Chamber of Commerce and Industry said.

Read also: Future of $7trn electric vehicle market tied to Nigeria, others Adesina

“The government needs to build an environment that makes electric motorcycles cheaper, especially to help those in the gig economy and prevent job losses,” he said.

Max, the EV mobility startup in February donated low-emission vehicle to the Lagos State Residents Registration Agency (LASRRA) to support the distribution of registration cards across the state.

“It can never come at a better time than this when the Agency needs to move fast with the distribution of LAG-ID cards to homes of some residents, who could not pick up their cards due to unforeseen circumstances. With the presentation of these durable Motorcycles, the Agency is assured of speed, safety and reliability’’, Adebiyi-Abiola Bilikiss, general manager of

LASRRA said.