On an untarred road in Nigeria’s upmarket neighborhood of Victoria Island in Lagos, a fairly modest looking car dealership has been drawing attention.
The showroom floor of Saglev, an independent electric vehicle dealer in Nigeria’s largest city, showcases several car models with unfamiliar names for most Nigerians: Voyah, Nammi and Mhero — all made by Chinese automaker Dongfeng Motor Group Co. Three Saglev-branded luxury EV sedans parked in front of the showroom turn a few drivers’ heads as they pass by in gasoline-fueled cars.
While the EV revolution is well underway in many parts of the world, the idea of charging up a car with electrons is still somewhat bemusing in the West Africa nation where half of the population have no access to electricity, and the other experiences frequently interrupted power.
Yet after gasoline prices began to soar in Nigeria in 2023, EV proponents saw an opportunity to pitch their wares to the millions of drivers across Africa’s most populated nation. There are now at least 10 dealerships across Nigeria pushing two- and four-wheel EVs, mainly from Chinese makers. Separately, efforts are underway to build up a nationwide EV charging infrastructure and Saglev is even backing a domestic manufacturing facility to build zero emissions vehicles.
Rather than be deterred by the notoriously erratic power supply in Nigeria, investors see EVs as a savvy long-term bet in a country that needs to quickly switch to reliable clean power for cost reasons alone.
“The actual EV story in Africa is not actually climate change but economic,” said Saglev Chief Executive Sam Faleye, a native Nigerian who left his medical practice in the US to go into EVs in Africa. He has partnered with Chinese EV maker Dongfeng to annually assemble up to 2,500 units in Nigeria by as early as this year.
Until two years ago, gasoline in Nigeria was among the cheapest globally as the country spent about $10 billion annually to keep the fuel affordable for its largely poor population. That changed in May 2023, when newly elected President Bola Tinubu put an end to the costly practice that was pushing the nation into a fiscal crisis. Subsidies were consuming nearly half of government income, while debt service took the remainder. Pump prices of gasoline subsequently soared more than fivefold, leaving many people struggling to keep their cars on the road.
To cushion the pain of higher fuel costs, the government has been urging car owners to convert their vehicles to ones running on compressed natural gas.
At the same time, Faleye said, the case for EVs has been improving — especially for electric ride-hailing drivers who had to stop work after gasoline subsidies ended.
“Today a ride hailing driver in a small vehicle will need almost 18,000 to 20,000 naira ($11.91 to ($13.23) for petrol for the day,” he said. “It’s less than 4,000 naira for the electric vehicle.”
With an average daily income of about 13,000 naira for a ride-hailing driver in Lagos, according to service provider Bolt Technology OU, the jump in gasoline prices made the service unprofitable.
While the lower cost of operating an EV makes it attractive, its prospects might at first look dim in a country that supplies only 4 gigawatts of electricity for its over 200 million citizens. As a comparison, South Africa with about one fourth of Nigeria’s population generates about 25 gigawatts.
In Nigeria, households and businesses cover the energy shortfall with gasoline-powered generators. This means in the near term, EVs charged at home will likely be fueled by dirty power systems, which is paradoxical to the advantages the clean cars are supposed to bring. Over time though, renewable energy will play a bigger role in meeting Nigeria’s electricity needs.
BloombergNEF expects solar installations in Nigeria to soar. The researcher had to completely revamp its forecasts after gasoline prices surged in 2023. It currently sees Nigeria’s solar capacity increasing to as much as 21.5 gigawatts by the end of the decade, compared with only around 1 gigawatt a couple of years ago.
Jenny Chase, an analyst for BloombergNEF, said one indication that solar is already taking off at a great clip is customs data show in 2024, $150 million of solar panels — about 1.5 gigawatts — left China for Nigeria. “It isn’t clear where they have gone, but most likely they have been installed on homes and businesses to help people generate power independent of the grid and without burning expensive diesel and gasoline,” she said. “This trend is likely to continue, as solar modules are now incredibly cheap.”
Already more than 7 million Nigerians in rural areas are now able to access power via decentralized renewable projects. Siemens AG is also working with the government on a $2.3 billion project to improve transmission and distribution.
Meanwhile, Sterling Bank is backing an initiative through Qoray Mobility to build a network of EV charging stations across Nigeria, with a little more than a dozen deployed so far. The bank funded the first publicly available EV-fueling station in the business district of Lagos. “That station has been running for nearly a year now charging some of the most sophisticated electric vehicles, the Tesla of this world to the BYDs and the rest,” said Olabanjo Alimi, head of renewable energy and mobility at Lagos-based Sterling Bank.
Arguably the biggest obstacle for the expansion of EVs across Nigeria, however, is upfront cost. An estimated 87 million Nigerians were living below the poverty line in 2023, according to the World Bank, making it the world’s second-largest poor population after India.
For some EV proponents, the answer is to focus on just two- or three-wheel EVs, which are cheaper to make and buy. Adetayo Bamiduro, chief executive and co-founder of Max, a Nigerian vehicle subscription startup, said his company is aiming to deploy around 100,000 EVs — mainly two-wheelers — in Nigeria and other African countries over the next five years. “Max is mainly focused on two-wheeler EVs because of affordability,” he said. “A lot more people can afford to buy an electric motorcycle than buy a an electric car.”
There are a mix of private and public solutions to make EV purchases more financially feasible. As part of its Qoray initiative, Sterling Bank is providing buyers of EVs loans for up to 90% of the value of a vehicle with repayment spread over five years.
The government is also offering incentives as it aims for 30% of domestic car production to be EVs by 2032. It announced in October last year a value-added tax exemption for EVs in a bid to promote usage and reduce greenhouse emissions in line with its net-zero target by 2060. EV dealers can also get additional tariff waivers with a so-called import duty certificate.
Faleye said the exemption has made EVs cheaper when compared to their gasoline counterparts, while Chinese EVs are almost cost competitive on their own. “Today the electric vehicles coming out of China, cost wise, quality wise you can’t get anywhere in the world,” he said.
The potential to scale-up business is also key. Alimi noted that any slice of the vehicle market in a country as populous as Nigeria can give a good return in the long term.
“There are 12 million registered vehicles on Nigerian roads,” he said. “At some point in time, these 12 million registered cars on Nigerian roads will begin to have some electric vehicle [in the] mix.”
By Anthony Osae-Brown and Emele Onu,
Bloomberg
