Electric Micro-Mobility for Last-Mile Delivery
The electric micro-mobility sector, encompassing electric bicycles, motorcycles, and three-wheelers, has shown significant potential, particularly in the last-mile delivery segment. With a projected market size of 50.000 electric micro-vehicles, valued between ZAR 2 billion (USD 107 million) for electric bicycles and ZAR 7,5 billion (USD 402 million) for electric three-wheelers, this sector is poised for growth. The rise in e-commerce, which is expected to reach ZAR 225 billion (US 12 billion) by 2025, further fuels the demand for efficient, low-cost delivery solutions.
Local assembly and existing component supply chains enhance the feasibility of this market, making it an attractive investment. However, challenges such as limited battery range, public charging infrastructure, and regulatory constraints must be addressed. The high CAPEX cost remains a significant barrier, though emerging leasing models and EV-as-a-service businesses are helping to mitigate this.
Electrification of Public Transportation
Public transportation in South Africa, particularly buses and minibuses, is another promising area for electrification. The annual market size for electric buses is estimated at 900 units, valued at ZAR 6,3 billion (USD 337 million), while electric minibuses are projected at 2.400 units, valued at ZAR 3,6 billion (USD 193 million).
The growing cost competitiveness due to rising fuel prices and the feasibility of local assembly drive this market. However, the high upfront costs, limited financing mechanisms, and insufficient charging infrastructure present significant hurdles. Moreover, energy security concerns due to frequent loadshedding add to the challenges of transitioning to electric public transportation.
Electrification of Freight and Logistics
The freight and logistics sector offers substantial opportunities, with the market size for electric trucks estimated at 3.600 units annually, valued at ZAR 25,2 billion (USD 1,35 billion), and 47.000 electric light delivery vehicles (LDVs) valued at ZAR 37,6 billion (USD 2,01 billion). The shift from rail to road freight, driven by the decline in rail infrastructure, has further bolstered the demand for road-based logistics solutions.
The main drivers include cost savings on fuel and the feasibility of local assembly. However, similar to public transportation, this sector faces high CAPEX costs, limited financing options, and a lack of charging infrastructure. Ensuring reliable energy supply is critical for the successful electrification of freight and logistics.
Local Manufacturing of Electric Private Passenger Vehicles
With an estimated annual market size of 620.000 vehicles valued at ZAR 620 billion (USD 33,2 billion), the local manufacturing of electric private passenger vehicles represents the largest opportunity within the EV market. The diversification of global supply chains away from Asia, coupled with South Africa’s competitive labor costs and favorable currency exchange rates, positions the country as a potential hub for EV manufacturing.
However, energy security concerns, particularly related to loadshedding, and logistics bottlenecks at ports pose significant barriers. The success of this market segment will depend on addressing these infrastructural challenges and leveraging existing trade agreements, such as the African Growth and Opportunity Act (AGOA) and the African Continental Free Trade Area (AfCFTA), to access key export markets.
Conclusion
The EV market in South Africa presents a mixed landscape of opportunities and challenges. While sectors like electric micro-mobility, public transportation, freight, and private passenger vehicles offer substantial growth potential, overcoming barriers such as high CAPEX, limited infrastructure, and energy security is crucial. Investors and stakeholders must strategically navigate these challenges to unlock the full potential of South Africa’s EV market, contributing to the country’s green economy and energy security goals.
South Africa’s ability to capitalise on these opportunities will hinge on the effective implementation of supportive policies, investment in infrastructure, and the development of innovative financing models to make EVs accessible and economically viable across various sectors.
Source: Greencape
