EV Market Development Outlook
The Middle East & Africa Electric Vehicle Market was valued at USD 35 Million in 2020 and is expected to reach USD 84 Million by 2026 registering CAGR of over 15% during the period (2021 - 2026).
The impact of the COVID-19 pandemic on the MEA EV Market is unavoidable, as it has affected almost every other industry in the market. Manufacturing units have been closed due to continuous lockdowns, social distancing, norms to follow, limited staff available to run production lines with all safety measures, and the region's slowdown in the EV market.
However, the market is witnessing substantial growth due to the swiftly escalating year-on-year adoption rate of EV across the region. The growing focus of the governments across the region to promote the use of EVs and increased awareness about energy storage solutions in the renewable-based power sector is expected to drive the market in the near future. Moreover, expanding the 5th Generation based telecommunication network and implementation of Vision Documents in Saudi Arabia, UAE, Qatar and Kuwait are likely to further aid the MEA EV market in the coming years.
The MEA region is very diverse, especially when it comes to clean energy ambitions and actions. We at CATEC Mobility has been actively working in the EV charging business across the region since 2018 and have witnessed the developments in most of the countries. For example:
UAE is the most developed market for EVs, not only in terms of sales, but also in terms of charging infrastructure, with Dubai having over 700 charging stations and other emirates over 150. The UAE government targeting to have 42,000 electric cars on the roads in a few years. Moreover, favourable government policies, incentives offer rewarding opportunities to major players to promote the adoption of EVs over the coming years in the region.
Because of these efforts to build charging infrastructure, the ratio of EV to the public charging stations is now one of the highest in the world.
The number of registered EVs in the UAE has increased to over 3500 EVs now.
The high prices of gasoline in the country and Custom Tax are contributing to the gradual shift of consumers towards electric vehicles.
Significant investment is made for the implementation of the Jordan National Vision 2025 initiative by the government to support green and clean energy projects such as the installation of 3,000 charging stations in several parts of the country and lower taxes as compared to conventional and hybrid vehicles.
However, right now most of the EV owners use residential charging stations which have relatively low power rating (5–7 kW) and long charging time.
In public transportation, the government has replaced hundreds of gasoline-powered cars in its fleet with Tesla EVs. Moreover, it is planning to purchase over 150 low emission buses, including 15 battery electric buses (BEB), as part of the rapid transit project in Amman.
The number of registered EVs in Jordan has increased to over 25000
In term of developments in the KSA. SASO (The Saudi Arabian Standards Organization) issued rules governing the use of electric vehicles.
The first commercial EV charging station was installed in Riyadh in August 2019 at a branch of one of the largest local chains of petrol stations, SASCO
Also Saudi Arabia has entered into a couple of partnerships and alliances to develop nationwide EV charging infrastructure and to develop technologies such as smart grids and electric vehicles.
On the other hand, Qatar announced in December 2019 that its plans to introduce a fleet of self-driving and emission-free electric shuttles to help improve urban mobility by 2022, The Qatar investment Authority. Qatar General Electricity & Water Corporation (KAHRAMA) has commissioned an EV charging at the KAHRAMA complex in Mesaimeer
Egypt has started operating electric buses in Greater Cairo and Alexandria since 2020 and 2018, respectively.
The Egyptian government has started to locally manufacture passenger electric vehicles and charging stations
Incentives to encourage EVs: custom duty exemption for electric cars
In General, The Middle East EV market is expected to grow rapidly in the coming years. Despite the fact that oil is a major source of national revenue and domestic fuel in several Middle Eastern countries, the governments are focusing on renewable energy and clean transportation technologies, as well as the implementation of economic and energy diversification plans.
In terms of African (SSA) countries they are urgently require alternative transportation energy sources to mitigate the growing load of fuel dependency and subsidies, as well as an electricity storage solution to leverage their readily available renewable energy resources. Electric Vehicles, which are powered by electricity and run on battery storage, may provide a solution to both of these issues. Many SSA countries will invest heavily in power capacity over the next decade.
Though the African EV Market is still in its early stage, various key players in the market are attempting to establish new facilities for product development, founding alliances, joint ventures, and acquisitions with major market players thereby increasing their market presence.
EV Charging Infrastructure market outlook
The Middle East electric vehicle charging infrastructure market is anticipated to be driven by rising pollution levels in the developed countries across the region, growing demand for effective pollution control strategies coupled with a heave in demand for electric vehicles in the region. Additionally, getting sufficient imposed by the government of the developed countries for the adoption of electric vehicles as an excellent solution for the alarming rising pollution issue and is expected to push the growth of the Middle East electric vehicle charging infrastructure market over the coming years.
In terms of EV Infrastructure market outlook:
We expect that the UAE will continue to lead the EV market development in the MENA region for the next 5 years. Egypt and Saudi Arabia will also have very strong markets.
Accordingly, we expect that in terms of the numbers of public charging stations Egypt will most likely have the largest number of public charging stations followed by the UAE and Saudi Arabia.
Other MENA countries that we expect to see a lot of progress in and accordingly many new opportunities too are Jordan, Oman and Kuwait.
CATEC Mobility has also been working actively in Africa and we see already a lot of good progress in many African countries such as South Africa, Nigeria, Tanzania and more.
As for the types of chargers’ outlook:
AC charging stations will still be the most practical, affordable and easy to install option for individuals and businesses.
But to encourage more EV adoption and tackle the challenge of range anxiety, we expect that the number of the DC charging stations will increase dramatically as well.
We also expect the charging technology to develop much faster and people would soon be able to connect to faster charging station easily and conveniently.
Public private partnership role in accelerating the development of EV Charging infrastructure in the MEA region
Public-Private Partnerships (PPPs) may offer a promising way forward and accelerate the development of charging infrastructure by tapping the private sectors’ financial resources and professional skills. However, PPP has not been commonly adopted in this sector yet.
The revenue from end-users cannot cover the construction and operation costs in a charging infrastructure project. In order to deliver such a project via PPP mode, a government fund is needed to close the investment gap. Therefore, compared to other economic infrastructure sectors such as power, toll road, and water, the charging infrastructure was not favored by both the public and private sectors. Along with the rapid development of PPPs in the region, subnational governments started to explore the opportunity of using PPPs in many other sectors including the charging infrastructure. Currently, PPP in charging infrastructure in the region is at its initial stage, in which the governments are keen, and the participation degree of private sector is increasing. Therefore, the planning, construction, risk sharing, profit spreading, and supervision during the execution stage need to be further studied. The payment mechanism of viability gap funding denotes that the government will make PPP projects financially viable by dedicating a portion of its budget to fund the gap between the expected project revenues and costs.
PPP is very important, especially in the MENA region and that’s for different reasons:
The electricity distribution market is heavily regulated, and, in this region, it is dominated by the governments.
Policy are mostly produced by top-down approach.
We’ve seen that when the private sector works closely with the public sector the market develops faster and more efficiently.
There are many of the current challenges for EV adoption where the private sector can play a vital role to support the governments in, such as installing more accessible charging stations, providing easy experience for the EV owners, etc.
Government incentives for companies investing in the sector must also be provided.
So far It is not clear how the government should structure a PPP deal in the electric vehicle charging infrastructure to achieve value for money due to its significant differences with other infrastructure sectors.
Most suitable Commercial business models for EV Charging Business across MEA region
There is massive potential to offer EV charging services and take a slice of the business. However, it is important to mitigate risk from investment, build a sound business case, keep the operating costs low, and ensure profit from EV charging.
For major private and public enterprises, like retail chains, hotel groups and utilities, there are business opportunities around inter-regional and inter-city infrastructure gaps. Considerable long-term partnership work and internal resources are typically required.
Consumer-facing businesses with existing or planned premises can gain competitive advantage from marketing and branding opportunities and have EV charging as part of their customer experience. EV drivers are attractive customers, characterized by high than average income and higher than average education. This model is attractive to companies looking to increase revenue per customer visit.
Multi-site DC fast charging networks can blow new life into tired buildings or locations and provide a launch boost to new businesses.
In terms of Local, small businesses initiatives, Tourist destinations typically compete on accommodation, services, activities and accessibility. With poor accessibility, visitor numbers decline, and businesses suffer.
For towns, cities and attractions that rely on highway access for visitors, EV infrastructure is becoming vital, and it's a business opportunity.
The accessibility needs of self-drivers are changing as more drivers switch to electric vehicles. In the future, the tourist destinations with the best EV charging infrastructure will be the most accessible to the new generation of electric drivers.
To create local infrastructure, coordination is often required between small business groups, such as local chambers of commerce or similar organisations. There is also potential to partner with local tourism, cultural, sports and environmental bodies. One potential complication is that the design of EV charging points may have to satisfy local heritage regulations and planning bylaws.
This model is very important for businesses and organizations that have to maximize revenue from peak seasonal traffic. This is a great fit for mid-sized towns that are popular tourist destinations or commuter towns. Locations with high footfall can also benefit from added value charging station solutions with, for example, built-in advertising displays that bring in additional sources of income.
Retailers, shopping centres, hotels, fast food outlets, car parking providers and all kinds of business with off street parking can now offer commercial EV charging with low effort. Commercial EV charging can also be a more strategic move from a larger chain, such as a hotel group or fast-food chain.
The services provided by the best EV charging manufacturers, and EV charging technology and connectivity, have advanced significantly. This means that EV charging capabilities are now within reach of smaller businesses and individual sites, with low risk and low investment.
Resellers and charging point network operators (CPNOs) offer turnkey solutions and white label apps. Solutions often include a charging point management system (CPMS) that handles user authorisation (typically by RFID card) and billing. Success with this relies on hardware with reliable, advanced connectivity.
For different business types, the benefits include: bringing in new, higher value customers; increasing time in store; referral sales; reaching sustainability goals; and improving customer satisfaction. There is also the potential for competitive advantage from positioning as a green company.
Charging doesn’t have to be just for customers. Charging for staff and customers’ private vehicles, as well as the business’ own fleet, offers potential to increase revenue and decrease costs. That of course with appropriate actions taken. Because 80 % of EV charging related costs are generated by the day to day usage of you chargers, that is where you need to act.
The biggest risk in the commercial model is to underestimate the OPEX costs of EV charging. The lowest cost hardware typically leads to high service and maintenance costs, as well as unwanted downtime. The best providers remove this risk with high quality hardware, and lifetime service plans. Over 80% of lifetime EV charger costs are from OPEX.
The role of EV Charging Management Systems in increasing the adoption of EVs and increasing the return for the EV Charging operators
The processes of managing EV charging networks are complicated. It’s critical to ensure chargers are running efficiently so that they operate properly when drivers want to charge. It is essential to oversee the network and monitor issues with the chargers; clear visibility and logging of chargers’ issues is critical. Once an issue is found, there’s a need for tools to investigate, track, and resolve it quickly and easily. An important next step, following issues’ detection, is the ability to provide self-healing capabilities- the ability to fix issues automatically before the drivers or the operators are impacted by the issue. Proactive issue resolution leads to a more stable chargers’ environment, a smoother EV charging experience for the driver while improving the operator’s TCO. Ultimately, the business value of operational excellence delivers lower TCO, increased monetization, and improved ROI.
In the future organizations will be focused on revenue growth while delivering on the promise of business flexibility in a world of disruption and change. Optimizing monetization and maximizing customer experience require the flexibility to define various charging and billing plans – KWh; first hour free, second hour paid; penalties for peak charging, etc. The ability to select the payment gateway adds major business flexibility and means that you can select the payment gateway that addresses your needs both from a quality and fees perspective. To keep customers happy and loyal, EV charging providers will require a solution which will allow them to offer incentives such as coupons to support retailers; free or discounted charging, and so on. As EV drivers need to be able to roam, the back-end solution must integrate with external service providers like Hubject, GIREVE, and e clearing.net, and/or peer-to-peer roaming protocols like OCPI. The chargers’ data is not always accurate and clean. Corrupted transactions need to be handled automatically to prevent them from entering the billing cycle. This precludes worst-case scenarios of unresolved disputes with drivers, erupting into irate, frustrated customers. therefore a comprehensive EV charging system flexibility is key to increasing monetization and improving ROI
Customer Centricity: Drivers are the most important piece of the puzzle, so the EV charging management solution needs to be customer centric. Chargers’ availability and stability are key to EV drivers’ satisfaction, and all customer facing, self-service tools need to be intuitive and simple, delighting the driver and providing a seamless charging experience. The solution must deliver clear understanding and insights into the individual customers and their behaviors to better understand and support them. The ev management solution would also support different business users in the ecosystem, such as EV fleets managers, facility managers in commercial buildings and MDUs, etc. Customer-centric solutions increase customer satisfaction and loyalty, minimizing client recruitment costs, and establishing a strong brand.
Form the Energy Optimization prospective: and to manage the EV impact on the existing grid, balance needs to occur among chargers’ power demands, buildings’ power consumption requirements, and renewables. Specialized algorithms are required to make sure charging is optimized for the number and type of vehicles; the different types of drivers (e.g., VIP drivers); energy-related priorities, etc. A smart energy management solution must support time-of-use (ToU)/spot pricing. Energy needs to be managed on the different levels – starting at parking lot or campus level – all the way up to demand response. The energy management system needs to handle power load balancing, energy optimization, EV fleet prioritization, demand response, and integration with the flexibility market, local distribution, and renewables. A smart energy management solution will eliminate the need to replace electricity infrastructure by” flattening the curve” of energy demand and reduce charging costs by ensuring charging occurs when energy is less expensive. The business value is ultimately transforming the EV charging energy challenge into a solution to a bigger problem, as we can use EVs as a balancing tool for the grid to increase efficiency and reduce pollution.
However, Scalability must be proven. Services providers may begin small, but as they grow, the system must keep up. Because the EV charging solutions would allow for expansion across countries or within a single region, operators must be able to scale the network quickly, easily, and without disrupting existing operations. For true business value, operators would definitely require a system that expands in combination with the EV market growth.