The global e-mobility revolution is rapidly transforming the global automotive and transport sectors, with the rapidly developing EV industry at the forefront. As African countries strive to increase adoption of 4-wheel EVs for their environmental and economic benefits, Tanzania is one such emerging economy with a huge potential market poised to embrace this shift. Below, we will explore the key economic and financial factors influencing 4-wheel EV adoption in Tanzania, and offer some high level insights for business leaders and
policymakers.
Current State of the Tanzanian Automotive Industry and Fuel Infrastructure
Tanzania’s automotive industry is predominantly built around internal combustion engine (ICE) vehicles, supported by a well-established fuel infrastructure. In 2022, Tanzania imported $5.19B of refined petroleum, making it the country’s costliest import. This dependency on imported fuel makes the economy vulnerable to global oil price fluctuations. A transition to e-Mobility has huge potential to reduce this dependency, stabilise the economy, and enhance national energy security.
Potential Economic Benefits of Widespread EV Adoption
Large scale adoption of EVs in Tanzania could offer several other economic benefits. Firstly, reducing the fuel import bill could allow the government to divert spending to other critical areas of economic development. Secondly, the EV sector could create new jobs across all parts of the e-Mobility ecosystem and supply chain such as in manufacturing, maintenance, and charging infrastructure, stimulating economic growth and employment. In addition, EVs contribute to reducing greenhouse gas emissions, aligning with global UN climate goals and potentially attracting international investment.
Financial Considerations for EV Ownership in Tanzania
The financial viability of EVs is a major consideration for both consumers and businesses. Historically, the upfront cost of EV has been higher than ICE vehicles. However, this gap is narrowing as manufacturing becomes more efficient and battery costs decrease. Chinese manufacturers like BYD and Geely, for example, are starting to offer extremely competitively priced EVs, such as the BYD Seagull, priced under $10,000 in some African markets. Price sensitivity is generally high among consumers in Tanzania, so an up-front price point for new and used EVs must be close to or reach parity with ICEs.
The funding, investment and development of charging infrastructure is crucial for widespread EV adoption, and Tanzania like most other countries “chicken or the egg” dilemna. Potential government incentives, such as subsidies, tax exemptions, and reduced import duties for EVs, can make EV ownership more attractive. In this regard, and in government policy and coordination as a whole, Tanzania lags significantly behind neighboring countries like Kenya and Rwanda. Potential incentives could mirror policies in countries like Kenya, which has drafted a National e-Mobility Policy to stimulate its EV market.
Tanzania’s Energy Grid and Solutions for Charging Infrastructure Development
Like some other African countries, the national electricity grid of Tanzania is not always reliable or stable, and the country often faces power cuts and electricity rationing similar to “Load Shedding” in South Africa. However, the Nyerere Hydropower Plant, which is semi-online, has drastically reduced power cuts in some regions throughout 2024, and is expected to generate up to 2,115 MW on completion. This will go some way to handling any future increased demand driven by EV adoption. However, the quality and reliability of transmission and local distribution networks will still need to be addressed; the implementation of smart grid technology will also be key to optimise electricity distribution and manage demand. Additionally, Tanzania has an established and growing solar off-grid and mini-grid network which can also facilitate and complement the viability of EV charging in Tanzania.
Total Cost of Ownership (TCO) Comparison: EVs vs ICEs
Calculating the Total Cost of Ownership (TCO) is essential for understanding the long-term financial benefits of EVs from an individual or fleet perspective. In Tanzania, the operational costs of EVs are significantly lower than those of ICE vehicles. EVs generally require 50% less maintenance than ICE vehicles due to fewer moving parts. Moreover, as of 2024, the average price of petrol in Tanzania is around TZS 3,210 per litre ($1.19), whereas electricity costs about TZS 230 per kWh ($0.09). This translates to substantial savings, with electricity costing approximately 7% of petrol on a per-unit basis. For instance, running an EV in Tanzania could save up to 86% on fuel costs compared to a gasoline vehicle. However, a recent TCO study in Tanzania has recently concluded that TCO is still higher for EVs than ICEs, owing to the higher upfront costs, including cost of vehicle, import duties, taxes and registration fees.
The Future Outlook for EVs in Tanzania
While challenges remain, the future economic and financial advantages of EVs present a compelling case for their adoption in Tanzania. Addressing policy and regulatory barriers, enhancing consumer awareness, and developing the necessary infrastructure are critical steps, as also suggested by a 2023 report by the Africa E-Mobility Alliance. Additionally, the current upfront cost and taxes applied to EVs are a drawback, but lower cost EVs entering the market and a growing second hand market may improve this outlook. With strategic planning and investment, Tanzania can position itself at the forefront of the e-mobility revolution in Africa, reaping substantial economic and environmental benefits.
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