Battery-electric passenger vehicles will be cost-effective across Africa well before 2040 – Nature

Report on the Economic Viability and Environmental Impact of Low-Carbon Passenger Vehicles in Africa

Introduction

Decarbonizing road passenger transport is essential for achieving global climate goals and aligns with the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 11 (Sustainable Cities and Communities), and SDG 13 (Climate Action). This report examines the economic cost and life-cycle greenhouse gas (GHG) emissions of low-carbon passenger transport options in Africa, considering 52 countries and six vehicle segments through 2040. The study focuses on battery electric vehicles (BEVs) powered by solar off-grid (SOG) systems and synthetic fuel vehicles compared to conventional fossil-fuelled internal combustion engine (ICE) vehicles.

Economic and Environmental Assessment of Low-Carbon Vehicles

Total Cost of Ownership (TCO) Analysis

A probabilistic Monte Carlo TCO analysis was conducted to evaluate three competing vehicle technologies:

1. Fossil-fuelled internal combustion engine vehicles (ICE-Fos)
2. Internal combustion engine vehicles powered by synthetic fuels (ICE-Syn)
3. Battery electric vehicles charged via standalone solar off-grid systems (BEV-SOG)

The BEV-SOG system addresses the common challenge of unreliable grid electricity in many African countries, supporting SDG 7 by promoting access to clean and reliable energy.

• Six passenger vehicle segments were analyzed: small and large two-wheelers, small, medium, and large four-wheelers, and minibuses representing informal public transport.
• Costs were projected for the years 2025, 2030, and 2040, excluding policy-induced distortions such as taxes and subsidies to focus on resource costs.
• Country-specific financing costs were incorporated, reflecting the high investment risks in many African markets.

Key Findings on Cost Competitiveness

• BEV-SOG vehicles are projected to achieve cost competitiveness with ICE-Fos vehicles by 2030 in many countries and segments, and across all segments by 2040.
• Financing costs are the primary barrier to BEV adoption, often exceeding 100% of the vehicle’s capital cost, highlighting the need for financial de-risking mechanisms.
• Charging costs for BEV-SOG are relatively low, contributing less than 4% to the total cost of ownership, demonstrating the affordability and scalability of solar off-grid charging solutions.
• ICE-Syn vehicles remain economically and environmentally uncompetitive compared to BEV-SOG, even under optimistic synthetic fuel cost scenarios.

Life-Cycle Greenhouse Gas Emissions

BEV-SOG vehicles exhibit substantially lower life-cycle GHG emissions compared to both ICE-Fos and ICE-Syn vehicles, supporting SDG 13 by reducing carbon footprints in the transport sector.

• By 2040, BEV-SOG vehicles demonstrate negative GHG abatement costs in all countries and segments, indicating that emission reductions can be achieved with net economic savings.
• Reducing financing costs correlates strongly with achieving negative GHG abatement costs earlier, emphasizing the importance of financial interventions.
• Synthetic fuel vehicles maintain positive GHG abatement costs, limiting their role in Africa’s transport decarbonization.

Challenges and Policy Implications

Overcoming Financing Barriers

Financing costs are identified as the most critical factor impeding BEV-SOG competitiveness. The study models the maximum financing cost allowable for BEV-SOG to reach cost parity with ICE-Fos by 2030, revealing significant disparities across countries:

• Lower-risk countries such as Botswana, Mauritius, and South Africa already have financing conditions near the required levels.
• Higher-risk countries like Sudan, Guinea, and Ghana require reductions in financing costs by 7–15 percentage points to achieve parity.

Targeted financial de-risking measures, including guarantees, concessional capital, and blended finance, are essential to accelerate BEV adoption, aligning with SDG 17 (Partnerships for the Goals).

Policy Recommendations

1. Financial De-risking: Encourage private sector-led financial instruments and pan-African portfolios to spread risk and lower financing costs.
2. Tailored National Policies: Design country-specific policies based on EV readiness and risk profiles, including subsidies, import duty exemptions, carbon taxes, and phased ICE bans.
3. Infrastructure Development: Promote off-grid solar charging infrastructure to overcome grid limitations, supporting SDG 9 (Industry, Innovation, and Infrastructure).
4. Equity Considerations: Focus incentives on small four-wheelers to enhance affordability for lower-income groups.
5. Long-term Strategies: Implement ICE scrappage programs and sales bans to facilitate fleet turnover.

Implications for Sustainable Development Goals

• SDG 7 (Affordable and Clean Energy): Solar off-grid charging systems provide clean, reliable energy access for electric vehicles, reducing dependence on fossil fuels.
• SDG 11 (Sustainable Cities and Communities): Electrification of passenger transport reduces urban air pollution and supports sustainable urban mobility.
• SDG 13 (Climate Action): Adoption of BEV-SOG vehicles significantly lowers GHG emissions, contributing to global climate mitigation efforts.
• SDG 9 (Industry, Innovation, and Infrastructure): Development of local BEV manufacturing and charging infrastructure fosters innovation and sustainable industrialization.
• SDG 17 (Partnerships for the Goals): Financial partnerships and international cooperation are vital to overcome investment risks and support the transition.

Methodological Approach

Total Cost of Ownership Calculation

The TCO per kilometre was calculated considering capital expenditure (CAPEX), residual vehicle value, operating expenditure (OPEX), and annual kilometres travelled. Financing costs were incorporated using country-specific weighted average cost of capital (WACC) estimates, adjusted for BEV market risks. The analysis excluded policy-induced costs to provide a baseline for policy evaluation.

Solar Off-Grid Charging System Optimization

A nonlinear optimization model sized the solar PV, battery, and inverter components of the SOG system to meet vehicle energy demands with 90% reliability. The levelized cost of charging (LCOC) was calculated, demonstrating affordability across African countries.

Life-Cycle Assessment

Prospective life-cycle GHG emissions were assessed using the premise framework under Shared Socioeconomic Pathway 2 (SSP2) scenarios, accounting for future technological and market developments. Emissions from vehicle production, operation, and fuel production were included.

Conclusion

This comprehensive analysis reveals that battery electric vehicles powered by solar off-grid systems will become cost-effective and environmentally superior to fossil-fuelled vehicles across Africa well before 2040. Addressing financing barriers through targeted de-risking and supportive policies is critical to accelerating this transition. These findings support multiple Sustainable Development Goals by promoting clean energy access, sustainable transport, climate action, and inclusive economic growth.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • The article discusses the use of solar off-grid (SOG) charging systems for battery electric vehicles (BEVs) in Africa, addressing challenges related to electricity infrastructure and access.
2. SDG 9: Industry, Innovation, and Infrastructure
   • Focus on developing and deploying low-carbon transport technologies and infrastructure, including BEVs and solar PV systems.
3. SDG 11: Sustainable Cities and Communities
   • Electrification of passenger transport contributes to sustainable urban mobility and reduced pollution.
4. SDG 13: Climate Action
   • The article centers on decarbonizing road transport in Africa to reduce greenhouse gas emissions and meet global climate goals.
5. SDG 17: Partnerships for the Goals
   • Emphasizes the role of governments, global financial institutions, and private sector partnerships to overcome financing barriers and accelerate EV adoption.

2. Specific Targets Under the Identified SDGs

1. SDG 7: Affordable and Clean Energy
   • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services.
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
2. SDG 9: Industry, Innovation, and Infrastructure
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
3. SDG 11: Sustainable Cities and Communities
   • Target 11.2: By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all.
4. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.
5. SDG 17: Partnerships for the Goals
   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
   • Target 17.6: Enhance North-South, South-South and triangular regional and international cooperation on and access to science, technology and innovation.

3. Indicators Mentioned or Implied to Measure Progress

1. Life-cycle Greenhouse Gas (GHG) Emissions
   • Measurement of GHG emissions per vehicle technology (BEV-SOG, ICE-Fos, ICE-Syn) over their life cycle to assess environmental impact.
   • Used to calculate life-cycle GHG abatement costs (US$ per tCO₂eq), indicating cost-effectiveness of emission reductions.
2. Total Cost of Ownership (TCO)
   • Economic viability indicator comparing BEVs with fossil fuel and synthetic fuel vehicles, including capital expenditure, operating costs, and financing costs.
   • Used to assess cost competitiveness and affordability of low-carbon vehicles.
3. Financing Costs (Weighted Average Cost of Capital – WACC)
   • Country-specific financing costs impacting vehicle affordability and adoption rates.
   • Indicator for financial barriers and effectiveness of financial de-risking measures.
4. Levelized Cost of Charging (LCOC)
   • Cost per kWh of electricity supplied by solar off-grid systems for BEV charging, reflecting affordability and infrastructure viability.
5. Vehicle Adoption and Market Penetration (Implied)
   • Though not explicitly quantified, the article implies monitoring BEV adoption rates across different vehicle segments and countries as a progress indicator.

4. Table of SDGs, Targets, and Indicators

Source: nature.com