Achieving Cost Parity for Battery Electric Vehicles in Africa: a case study of Ghana

Abstract

Ghana commits to reducing greenhouse gas emissions of 64 MtCO₂ and reducing 2,900 premature deaths but has very low electric vehicle penetration. We used a total cost of ownership model to determine the cost of ownership parity of BEV compared to internal combustion engine vehicles (ICEV). The results show that BEV will not reach cost parity with ICEV until the 11^th year. Waiving the 20% import duty on BEV only reduced the years to parity by a year. Cost parity for the BEV was achieved in the seventh year when the interest rate was reduced from 23% to 10%. By waiving import duty and reducing the interest rate of BEV to 10%, cost parity was reached right from the first year. BEV in Ghana could reduce CO2, NOx, VOC, SOx, and PM emissions by 72%, 85%, 99.2%, 41%, and 60% respectively. Based on the 7.17 MtCO₂e attributed to transportation emissions in 2016, a BEV transition could reduce CO₂ emissions by 5 MtCO₂e. We conclude that a special financing scheme with an interest rate below 10% should be made available for green financing. Additionally, we recommend the removal of the 20% import duty for BEV to reach cost parity with ICEV.