The African continent plays a vital role as a supplier of raw materials essential for electric vehicles (EVs), but what about the downstream? Argus spoke with Dave Coffey, chief executive of the African Association of Automotive Manufacturing(AAAM), at the sidelines of the Indaba Mining Conference in Cape Town, South Africa about Africa's EV ambitions.
Which African countries are ready for EV adoption?
We see demand for motorcycles and public transport today, and east Africa is leading that market. The passenger car will take much longer because of affordability issues. Today, we are struggling to increase the sale of internal combustion engines (ICE) and transitioning to electric vehicles will not happen quickly. Instead, you are likely to see an increase in three-wheelers or even four-wheeled micro-mobility options, while passenger cars will lag.
Also, countries will transition at different speeds depending on their natural resources. Some countries have gas, CNG, and they're pushing to convert vehicles to piped natural gas (PNG). Others are pushing for green hydrogen. You're going to see different journeys on the transition to electric mobility. And if you just look at India and China — I often use India as a benchmark for Africa because of its similar population — they are exploring all different types of powertrains, and Africa will be likely to follow suit, moving at various speeds.
Which countries are better positioned in the EV supply chain?
South Africa clearly has the greatest demand on the continent today. If you look forward, say, 10 years, Egypt will have strong demand. Egypt will come through and can produce 500,000 vehicles in the next decade for its own consumption. Algeria is also taking off. Its industry was closed for a number of years owing to corruption issues. Algeria could get to 400,000 vehicles. Morocco will get to 220,000 vehicles for its own use, not for exports. Tunisia will probably be at 80,000 cars.
In sub-Saharan Africa, the Ivory Coast may see demand for 80,000 to 90,000 vehicles. We are investing significant effort into driving demand in sub-Saharan Africa because of the vast opportunities present there. However, it is essential to provide affordable mobility solutions to reduce the reliance on used vehicle imports.
What are the main challenges apart from affordability?
It's the political will to implement the industrial policy, because how do you switch over and cut off used vehicles? You can't industrialise and hope people will buy when they can't afford to buy. The big issue is access to affordable finance. It's a big issue that we're working on in Africa. Imagine if you have a new vehicle that becomes a used vehicle and attracts vehicle finance. It'll compete with the used cars coming in. Financing is a critical issue, both from a consumer perspective and an investment perspective. You're getting component manufacturers wanting to invest. It's not a big ticket out of $10mn. It might be $2mn, and they're not able to access capital. Finance all around is a big development drive in Africa.
Are there any logistical problems delaying EV adoption?
My view on logistics is that, for example, people say we can't ship between one country. We've already seen, and I've got examples, that when the volume picks up, it just gets sold. It does. Because then you've got shipping lines that will put on the shipping routes.
Yes, Africa does face logistics challenges, particularly the lack of rail infrastructure. However, consider this: currently, intra-Africa trade is only at 17pc. Imagine if that figure increased to 50pc. We would need a significant number of commercial vehicles to support that growth. Commercial cars have a huge future for Africa as a result of the intra-Africa trade we're trying to drive.
Creating demand drives the value chain and the entire ecosystem. We need to generate demand.
