Why Nigeria must increase its electric vehicle adoption rate despite low income, new refinery, unstable electricity

Former Vice President Yemi Osinbajo revealed the country’s first successful attempt at a locally-assembled electric vehicle (EV) to Nigerians and the rest of the world during an event celebrating Made-in-Nigeria products in 2021. Produced in Nigeria by Stallion Group, the Hyundai Kona Electric not only stole the show due to its stunning design but offered guests and those who watched on television hope that the West African nation, too, would embrace the global trend of EV use. 

Despite the glamour of Osinbanjo’s speech, a portion stood out perhaps because it was, as secondary school Literature teachers say, a hyperbole. “You can literally charge it anywhere,” Nigeria’s Vice President from 2015 through 2023 said. Unfortunately, two primary reasons prevent the average citizen from agreeing with that statement. They are a limited number of public charging stations and a track record of abysmal electricity supply.  

Since the return to civilian rule in 1999, electricity generation and supply remained a crucial problem that every presidential election candidate pledged to tackle. Despite the multi-billion dollar privatization of the country’s power sector, complaints of low electricity supply and blackouts spinning months flood the comment sections of social media accounts created by Nigeria’s 11 power distribution companies. 

Last year, Stallion Group revealed that it had sold just 120 units of the Kona Electric since the EV’s 2021 debut. Nigeria has an estimated population of 221 million, most of whom are owners of vehicles running with internal combustion engines (ICEs). Although countries like the U.S. Norway, and China have recorded increased adoption, Nigeria and Africa have many years of strategic planning and policymaking ahead of them. 

Last year, the U.S. state of California announced that by 2035 any ICE vehicle sale would be illegal. Ordinarily, one would ask, why introduce such a harsh rule? Well, California currently has an EV market share of 21%, the largest for any U.S. state. 

“The Golden State” also houses two EV assembly plants belonging to Ford Motor Company and Tesla. Both automakers have, in recent years, rolled out a slew of electric models boasting ample range, stylish designs, and next-gen in-vehicle technologies. 

EV is gaining ground not only in California, but across North America because of existing infrastructure like stable power for home charging, existing tax credits, and a growing network of public chargers (Level 2 and Level 3). 

Meanwhile, Africa’s most populous country lacks such foundations. Being a major producer and exporter of crude oil has not helped its EV adoption goal or even the locally assembled vehicle industry. A report commissioned by PwC found that between the early 1960s and late 1980s, Nigeria witnessed the golden age of automotive production. 

“In the early 1960s, private companies such as the UAC, Leventis, SCOA, and R.T. Briscoe pioneered Completely Knocked Down (CKD) or Semi-Knocked Down (SKD) auto assembly in the country,” the report states. Seeing the industry’s massive potential, the government between the 70s and 80s collaborated with foreign original equipment manufacturers (OEMs) to build state-owned assembly plants in the Northern, Southern, and Eastern regions. 

The above efforts hoped to position Nigeria as a global force in vehicle manufacturing, but with the country’s increased reliance on its massive crude oil deposits came less and less support for the auto industry. The National Automotive Council’s establishment in 1990 was expected to revive interest in the industry trade, but Nigeria’s reliance on oil has failed to meet a boundary.  

Read also: How JET Motors is leading Africa into a new era of mobility with electric vehicles

Government-backed efforts to spread the EV message 

A few months following the Hyundai EV’s launch,  the National Automotive Design and Development Council (NADDC) unveiled the country’s first-ever solar-powered EV charging station at the Usmanu Danfodiyo University. Claiming that the feat aligned with Nigeria’s EV strategy, Jelani Aliyu – NADDC director general – promised the establishment of additional stations at the Universities of Lagos and Nigeria-Nsukka respectively. 

Last month, the federal government led by former President Muhammadu Buhari, approved a new Automobile policy called National Automotive Industry Development Plan (NADIP). Although the policy document is currently unavailable, the NADIP is scheduled to run from 2023 through 2033. 

Additionally, Nigeria, through this new agenda, intends to manufacture 30% of EVs. If achieved, the NADIP projects 1 million new jobs,  economic growth, enviable advancements in innovation, and other accomplishments that will attract foreign investments and raise the standard of living.  

Interestingly, Jelani recently shared at the 2023 West African Automotive Show that the government will provide a 10-year tax relief for Nigeria-based EV manufacturers. “We will continue to support all our stakeholders in the development of the industry by providing the necessary policy framework and the Investment Promotion incentives to support the industry as the new policy provides policy direction and investment promotion incentives for the first time to electric and gas-powered vehicles development in Nigeria,” he added. 

Proposed remedies to improve Nigeria’s low uptake of EVs  

Despite having vast natural resources, Nigeria’s economy has undergone multiple recessions amid questionable government spending. Last month, the inflation rate hit 22.2%. Unemployment in Nigeria is currently 33.3% while youth unemployment is 42.5%. There’s nothing about these numbers to be proud of, truthfully. 

With the cost of living steadily increasing while many states still haven’t implemented the laughable N30,000 minimum wage, it’s worth asking if Nigerians can afford EVs. The country’s first locally-assembled EV costs between N24 million and N30 million. 

Eager to get insights into the affordability of EVs in Nigeria and possible solutions, Technext spoke to two players in the nation’s electric mobility industry – Joseph Osanipin the COO of Jet Motor Company, and David Hoyme of MAX NG. 

EVs are undeniably more expensive than their ICE counterparts for many reasons. The battery which serves as the EV’s lifeblood is costly to produce. EVs also feature the latest technologies.  For instance, Tesla Model Y owners can use the automaker’s mobile app to call their EVs.  The Tesla EV uses its repertoire of cameras and sensors to avoid hitting pedestrians or objects when summoned.  The Model Y currently ranges between $47,790 (N21.9 million) and $54,490 (N25 million depending on trim level. 

Commenting on how Nigerians, a people plagued by inflationary tensions, afford such vehicles, Osanipin shares “It is true that the EV cost is high compared to ICE vehicles. So the government can encourage adoption by providing certain incentives to make EV purchases possible.  They include waivers of the Personal Income Tax (PIT) for individuals and Companies Income Tax (CIT) for corporate entities, provision of low-interest loans specifically for EV purchase, and import duty waiver.” 

Hoyme also believes that having one or more of the above facilities will encourage many Nigerians to look toward electric mobility. Hoyme – the Director of MAX’s International Growth and Expansion – adds that establishing large-scale charging infrastructure will lower the upfront and operational costs of EVs. 

Although the NADDC’s main reason for installing EV charging stations at universities is to enable the academic community to witness future technologies, the government agency should also consider collaborating with restaurants, shopping malls, and residential estates to establish Level 2 chargers outside these points of interest. 

Although not the fastest EV charging method, Level 2 connectors can take a battery from 0% to 80% between 4-10 hours. 

Moving on, Technext asked Osanipin and Hoyme for their thoughts on the viability of EV adoption in a country heavily dependent on the revenue from crude oil exports. Before jumping into their responses, it’s worth highlighting the most recent chapter in the ongoing romance story between Nigeria and oil. 

Late last month, former President Buhari commissioned the $19 billion Dangote Refinery, the largest in Africa. The primary objective of the refinery is to lessen the country’s counterproductive practice of exporting credit oil followed by paying for the same product to be refined overseas and then imported afterwards. The importation of petroleum products in 2023 cost Nigeria $23.3 billion. Before the Dangote refinery’s emergence, 

Nigeria’s three main refineries situated in Warri, Port-Harcourt, and Kaduna had made the headlines for their poor performance despite gulping billions of naira yearly. 

Although the new multi-billion refinery is anticipated to transform Nigeria into a country that produces and refines its oil, there are concerns that this will complicate EV adoption. According to Nigeria’s Vision 2050 policy document, the percentage of EVs in the country was less than 1%.

With its sights set on locally-processed oil, one wonders how the government will reconcile its reality with the ambition of 30% homemade EVs by 2033. Osanipin believes that despite the new refinery, Nigeria must also key into the potential of the EV market. In his words, “We can’t afford to stand aloof.”

Times are changing and many countries are exploring ways to reduce their carbon emissions, hence they may strongly consider EVs.  Spain and India may be the major importers of Nigeria’s crude oil, but what happens when both nations decide to encourage mass adoption of EVs? 

The European Union – an organization to which Spain belongs – has already pledged to ban the sale of new vehicles that emit carbon dioxide by 2035. Although India hasn’t yet announced plans to ban ICE cars, Asia’s second most populous nation may be headed in that direction soon. 

“Nigeria cannot afford to ignore the global trend of EV adoption and the environmental impact of fossil fuels. EVs are not only cleaner but are more efficient and cost-effective in the long run,” Hoyme adds.