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FEATURE STORYNovember 17, 2022

Electric Vehicles: An Economic and Environmental Win for Developing Countries

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Photo credit: Think b/Adobe Stock. 

STORY HIGHLIGHTS

  • Electric passenger vehicles are widely accepted in major markets like China, United States and Europe, but their adoption in developing countries has been slow.
  • A study of 20 developing countries across Africa, Asia, the Caribbean, Oceana, Europe and South America finds that more than half would benefit economically by adopting electric mobility.
  • The financial rewards of electric mobility can be substantial even considering high up-front costs because EVs – from two-wheeled scooters to buses – are less expensive to run and maintain.

Electric passenger vehicles, invented more than a century ago, are now accepted as part of the solution to rising climate emissions in major markets like China, the United States and Europe. But the transition to e-mobility has been slow in low- and middle-income countries, in large measure because of worries about high up-front costs. A new World Bank report makes a strong economic case for wider adoption of electric vehicles in developing countries, with advantages that range from improved public health, to less urban traffic congestion, to a decrease in dependence on expensive imported fossil fuels.

In a study of 20 countries across Africa, Asia, the Caribbean, Oceana, Europe and South America, the report Economics of Electric Vehicles for Passenger Transportation found that more than half would benefit economically by adopting electric mobility. In some of these countries, the higher investments associated with electric vehicles (EVs) are already justified in terms of lower operating costs, while in others, they only become economically attractive when environmental benefits are considered. The strongest case can be made in countries that don’t have a car-dominated transportation culture, those that are net oil importers and those with lower-cost vehicles.

The financial rewards can be substantial, even considering the up-front 70-80 percent cost premium compared with fossil-fueled vehicles, because EVs – from two-wheeled scooters to buses – are less expensive to run and maintain. Lower maintenance costs alone can amount to a $5,000 saving over the life of the EV, outweighing the higher cost of using electricity as fuel. Because many low- and middle-income countries (LMICs) tax gasoline and subsidize electricity brings even greater savings.

As with many aspects of the global transition to lower-carbon transportation, solutions need to be tailored to the needs of different markets. For example, in Africa’s Sahel region, where the World Bank is already working to advance electric mobility, the key may well be to concentrate first on electrifying two-wheeled scooters and three-wheeled tuktuks and rickshaws rather than four-wheeled personal vehicles, while electric buses offer another efficient way to get passengers to their daily destinations. In many growing African cities, bus rapid transit (BRT) could pave the way for even more carbon and economic savings.  

The same could apply in India, where more than 70 percent of all miles traveled are by two-wheeled vehicles. Making the switch to electric mobility will be critical to reducing air pollution, since half of the world’s most polluted cities are in India, and helping to curb the country’s heavy dependence on imported oil while boosting industrial development. As in Africa, the path toward an Indian electric fleet will probably be driven by private two-wheelers and public three-wheelers. A model where batteries for these vehicles can be swapped out would cut initial EV costs and increase commercial run time, which is often worked in several daily shifts.

There is an urgent need to lower carbon emissions from transport. All decarbonization tools – including e-mobility – are on the table. For developing countries, the e-mobility transition is no longer a question of ‘if’ but ‘how’ and ‘when.
Cecilia M. Briceno-Garmendia
Lead Economist World Bank Transport Global Practice

Pollution could also be an e-mobility motivator in the Middle East and northern Africa, where urban lockdowns and resulting decreases in fossil-fueled vehicle use during the COVID-19 pandemic improved air quality in Cairo, Riyadh, Beirut, Jeddah, Baghdad and other cities across the region. The Greater Cairo Air Pollution Management and Climate Change Project is looking into the possibility of an electric bus fleet and related infrastructure development, while the World Bank’s MENA Infrastructure team is examining the challenges in the region to develop technical, policy and financing solutions to scale up electric mobility, focusing first on Egypt, Morocco and Jordan.

E-mobility reaches beyond roads to include electrification of urban railways, as in Buenos Aires, where World Bank loans totaling more than $900 million aim to electrify and upgrade two key rail lines, one that serves some of the city’s most vulnerable low-income neighborhoods and another that links the central business district to northern and western suburbs.

These projects aim to offer safer, faster and more frequent service, a notable improvement for women passengers, who rely more on informal and public transit then men do; nearly three-quarters of women who use public transit to commute say they don’t feel safe doing so. Many of the upgrades respond specifically to these concerns: new, brighter lights, security cameras and emergency kiosks. In addition to benefiting travelers, the electrification project will enable one line to make the transition from diesel to electric power, reducing greenhouse gas emissions from transport. The upgraded infrastructure will also be designed to withstand extreme weather events and other climate risks.

“There is an urgent need to lower carbon emissions from transport. All decarbonization tools – including e-mobility – are on the table,” according to Cecilia M. Briceno-Garmendia, Lead Economist for the World Bank’s Transport Global Practice and lead author of the report. “For developing countries, the e-mobility transition is no longer a question of ‘if’ but ‘how’ and ‘when.’”

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