EVs in Africa could cost less than gasoline cars — provided financing costs drop

A joint study by ETH Zurich and PSI, with African partners, indicates that electric vehicles could become cheaper than gasoline or diesel-powered cars in several African countries, especially when associated with off-grid solar charging. The drop in battery costs, the increase in global EV production, and the continent's vast solar potential fuel this expectation.

The projection is supported by observed figures: the EV market in Africa generated about US$ 17.4 billion in 2025 and may reach US$ 28 billion by 2030.

The fundamental takeaway is that there is no technical problem — EVs are viable — but rather how to enable financing at scale.

Currently, high interest rates, risk premiums, and limited access to long-term credit keep EVs out of reach for most Africans. In lower-risk countries like Botswana, Mauritius, and South Africa, financing conditions are already close to making EV costs comparable to those of fossil fuel-powered cars.

There are scenarios where outright purchase, excluding taxes, is already competitive today.

This reading points to the need for financing solutions at scale. The research identifies four relevant fronts for researchers, African policymakers, and international financial institutions:

• Financial de-risking with credit guarantees, concessional loans, and blended finance structures, transferring part of the public risk to public institutions to lower interest rates.
• EVs as financial assets — vehicles and charging systems are standardized assets with predictable cash flows, allowing the bundling of thousands of loans and their securitization. Multilateral banks can act as market makers, promoting standards and support for private capital.
• Public financing for private momentum — companies are already testing models such as battery swapping, leasing, and pay-as-you-go; public support can expand these portfolios to a regional scale.
• Policies aligned with financing — measures such as temporary import tax exemptions, incentives for low-income buyers, fuel tax reforms, and strategies to reduce high-polluting used vehicles are crucial and should be reviewed periodically.

EVs as financial assets: vehicles and charging systems are standardized assets with predictable cash flows, enabling the securitization of EV loan packages. Multilateral banks can act as market makers, offering standards, guarantee structures, and support for private capital at scale.

Public financing to reinforce private momentum: in higher-risk sectors, such as Africa, public support is seen as an accelerator. In Kenya and Rwanda, companies are already expanding two- and three-wheeler models with swappable batteries, leasing, and pay-as-you-go, reducing upfront outlay and generating data for investors.

The path forward is to expand these initiatives with regional EV financing platforms that distribute capital more efficiently across countries and risk profiles.

Policies and Financing Conditions by Country

De-risking must go hand-in-hand with public EV policies. Kenya has a National Electric Mobility Policy that offers incentives, strengthens regulatory frameworks, supports the expansion of charging infrastructure, and stimulates local manufacturing.

The heterogeneity between countries means some may require more public intervention than others. Effective measures include:

• temporary import tariff exemptions
• purchase incentives for low-income households
• fuel tax reforms
• strategies to phase out high-polluting used vehicles

Policies should be timebound and reviewed periodically to avoid long-term fiscal burdens as EV prices naturally fall. Focusing on smaller vehicles can improve equity, ensuring public support reaches first-time buyers.

In summary, Africa does not need a technological breakthrough — it needs cheaper capital and stable regulatory environments to accelerate EV adoption.

Practical Conclusion

With a proper financing ecosystem, the total cost of ownership for EVs can already equal that of conventional vehicles in more countries in the coming years, opening the way for a mobility revolution with lower emissions and more economic opportunities.

Which aspect do you find most critical to accelerate EV adoption in Africa: cheaper capital or more stable public policies? Leave your opinion in the comments.