Electric vehicles could soon be cheaper than petrol cars in Africa – if financing barriers fall

The cost of electric vehicles (EVs) has long looked like a barrier to adoption in Africa. Most researchers didn’t expect battery power to become affordable enough to replace petrol or diesel on the continent before 2040. But falling battery costs, surging global EV production and abundant solar resources are changing that view. Our new research shows that EVs, particularly when paired with off-grid solar charging, may be cheaper than petrol- or diesel-powered cars in many African countries in the not-so-distant future. However, several factors are still limiting up-take. We argue that financing is a big one. We are researchers working on energy policy, life-cycle assessment and low-carbon technologies at ETH Zürich and the Paul Scherrer Institute PSI. With African university partners, we’ve spent the past two years examining whether African countries can proceed directly to electric mobility, bypassing older technology. This study came out of the need for context-specific evidence to assess whether EVs can play a meaningful role in the region’s transport future. This could improve local air quality and also transform the emissions trajectory of one of the world’s fastest-growing transport sectors. The main challenge is not whether electric mobility makes sense technically for the African context – it does – but rather, how to make financing work at scale. High interest rates, risk premiums and limited access to long-term credit still make electric vehicles unaffordable for most Africans. But in lower-risk countries such as Botswana, Mauritius and South Africa, the financing conditions today are already close to making costs the same for electric and fossil fuel cars. Our research shows that if an EV is purchased with cash upfront, excluding taxes, in certain scenarios it would be cost-competitive already today. There is a need for focused research into scalable financing solutions to unlock accelerated growth of EVs in Africa. We outline four potentially relevant points for researchers, African policymakers and international finance institutions. Financial de-risking alongside indirect public subsidies Africa’s EV market is growing fast, reaching US$17.4 billion in 2025 and expected to hit US$28 billion by 2030, despite currently being less than 1% of the total on-road vehicle fleet. Our research looks at the total cost of ownership competitiveness of EVs across 52 African countries in six passenger vehicle segments: small and medium two-wheelers; small, medium, and large four-wheelers; and a minibus segment. We also looked at three timeframes: 2025, 2030 and 2040. We found that, for more than half the countries examined, financing costs would need to fall by 7-15 percentage points for EVs to reach cost parity with conventional vehicles by 2030. That drop can reduce lifetime financing expenses by thousands of dollars, often enough to shift a vehicle from being unaffordable to firmly within reach. Technology risk is no longer the problem: EVs are now commercially mature and widely used around the world and increasingly in Africa. Country-specific risk is more the problem. It reflects several perceived or actual investment risks such as macroeconomic or institutional instability, currency volatility, or unfamiliarity with EV business models among lenders, which results in elevated purchase prices. Indirect subsidies such as tax or import duty exemptions for EVs are helpful and popular in many African countries. But to accelerate and sustain EV adoption, countries may also need tools that transfer financial risk from private lenders to public actors. This could lower the overall price of the vehicle. Among these tools could be credit guarantees, concessional loans and blended finance structures. In practice, this means governments or other public financial institutions would absorb part of the risk associated with EV loans. This would make lenders feel more comfortable to finance EVs. By absorbing some risk, these instruments could lower interest rates to levels that make EVs more affordable – speeding up adoption and shortening the window where public subsidies are needed. EVs as financial assets EVs are well suited to de-risking. Cars and charging systems are standardised assets with predictable cash flows. Loans can be bundled and securitised, meaning individual vehicle loans are pooled together and converted into tradable financial products. A similar thing happens with mortgages, but not with most infrastructure projects. In this sense, EV financing could be simpler and more scalable than traditional development finance. Packaging thousands of small EV loans into investable products could attract pension funds, insurers and impact investors – capital pools far larger than traditional development aid. Multilateral development banks play a critical role here, not as primary lenders but as market makers. By helping structure financial products, setting standards and offering partial guarantees, they can crowd in private capital at scale. Public financing to reinforce private sector momentum Private companies are already proving that electric mobility can work in lower-risk African markets. In Kenya and Rwanda, firms offering battery-swapping, leasing and pay-as-you-go models for electric two- and three-wheelers are expanding rapidly. These business models reduce up-front costs for consumers and generate operating data that builds confidence among investors. The opportunity now is to secure public funding to build on these early successes. Private firms can bundle vehicle loans and charging assets into regional portfolios, spreading risk across countries and customer segments. Once these portfolios are established, public actors, like development banks or climate funds, could scale them, particularly in higher-risk markets. They could help to, for example, build pan-African EV financing platforms that channel capital smartly across high and low risk environments. EV policies and country-specific financing conditions Financial de-risking efforts for EVs in Africa must be developed along with broader EV policy. Clear, predictable national policy frameworks can reduce investment uncertainty and directly lower financing costs. Kenya’s National Electric Mobility Policy is a leading example. In addition to offering incentives to increase EV adoption, the policy strengthens regulatory frameworks and supports expansion of charging infrastructure. It encourages local EV manufacturing and assembly too, potentially helping to create opportunities for green economic growth. This does not mean every country needs aggressive EV mandates tomorrow. Within the continent, there are strong cross-country differences in both financing needs and policy environments for e-mobility. Some countries may require more public intervention than others. Effective policy measures may include: temporary import duty exemptions

targeted purchase incentives for lower-income buyers

fuel tax reforms

clear strategies for phasing out high-polluting used vehicles.

Policies should be time-bound and regularly reviewed, avoiding long-term fiscal burdens as EV prices fall naturally. Targeting incentives towards smaller, mass-market vehicles can also improve equity. This would ensure that public support benefits first-time buyers rather than wealthier households. The evidence is clear, Africa does not need a technological breakthrough to electrify passenger transport. What it needs is cheaper capital and supportive policy environments for accelerated EV adoption.

Christian Moretti acknowledges funding from the ETH Mobility Initiative. Bessie Noll acknowledges funding from the ETH Mobility Initiative.