Electric vehicles (EVs) have low running and maintenance costs; however, they come with a wallet-breaking price. On average, EVs are 50 percent more expensive than their Internal Combustion Engine (ICE) aka petrol and diesel-run siblings. While subsidies on EVs by the government do bring the cost down a little, they still don’t make them as affordable as the ICE vehicles. Several financial institutions such as banks have announced loans at special interest rates to ease things for EV buyers. What’s more, loans on electric vehicles, including cars and bikes, come with added benefits such as tax deductions, which are generally not found in other auto loans. Below is a list of banks offering loans with special interest rates on electric vehicles.
However, several banks have demystified this and have come on board to give loans to acquire electric vehicles.
In Kenya, three commercial lenders- NCBA, Family Bank, and Kenya Commercial Bank(KCB) have announced strategic partnerships with electric mobility start-ups to ease the cost of accessing e-vehicles.
Family Bank and KCB are targeting public service vehicles through a partnership with startup BasiGo.
In August 2022, NCBA Group launched an Sh2 billion electric vehicle financing as customers increasingly shift to battery-powered cars amid climate change advocacy and the rise in global oil prices. The lender announced in a statement that the financing, for new personal and public transport vehicles, is part of its green finance strategy.
Part of the statement said that the deal is set to run for five years which will see the customers enjoy asset financing of up to 80 percent of the total cost of any personal or public service vehicle that they identify. In addition, NCBA will give a 10 percent cent interest rate on reducing the balance offer for electric vehicle loan applications received within the first 90 days.
Kenya’s central bank in September raised its benchmark lending rate by 75 basis points, to 8.25 percent.
In Mauritius, AfrAsia Bank is offering a much longer repayment tenure of seven years with an interest rate of 5.15 percent, for hybrid or pure electric cars. They are designed for eco-friendly car choices, our Green Car Loan offers an array of benefits for driving the green way.
In North Africa, Asset financier, Abdul Latif Jameel Finance Egypt unveiled in August a program that offers customers electric mobility-related loans of up to EGP 4 million (US$ 208,900), with a five-year repayment period.
Abdul Latif Jameel Finance Egypt, CEO and Country General Manager, Mohamed El Gazzar have created this new financing option to help customers take their first step towards EV ownership and the initial feedback has been very positive.
In Uganda and Nigeria, startups like Tugende and MAX respectively have begun modeling startup financing plans for electric bikes, in anticipation of high uptake of the two-wheelers on the continent, compared to the demand for electric cars and buses elsewhere.
A Shell Foundation-commissioned report, Financing the Transition to Electric Vehicles in sub-Saharan Africa 2022, covering Ethiopia, Kenya, Nigeria, Rwanda, and Uganda, shows that up to US$ 8.9 billion will be needed to finance demand for electric two-wheelers alone, by 2030.
The report gave the size of the opportunity, interest in financing e-mobility (particularly two-wheelers) is growing among financiers in Africa. Kenya, with up to 315,000 units, and Nigeria, with up to 330,000 units, are projected to record high annual sales of electric bikes by 2030.
The Shell report disclosed that over 20 financiers in Africa, including commercial banks, Venture Capital funds, Private Equity funds, and Development Finance Institutions, have expressed interest in e-mobility and identified it as a ‘priority’ sector.
However, they are still struggling to understand the financing structure for electric-powered vehicles, especially motorbikes. Asset financiers are currently faced with the challenge of being unfamiliar with electric two-wheelers credit cycles and technologies, such as the life cycle of batteries and the residual values.