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Nigeria’s Auto Policy And Challenges Of Electric Car Evolution

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In this piece, ANTHONY AWUNOR looks at the challenges Nigeria is already facing in tapping into the new auto technological revolution of electric vehicles (EVs), and how the country can overcome them.

Electric Vehicle Concept

An electric vehicle, also called an EV, uses one or more electric motors or traction motors for propulsion.

An electric vehicle may be powered through a collector system by electricity from off-vehicle sources, or may be self-contained with a battery, solar panels or an electric generator to convert fuel to electricity.

EVs include, but are not limited to, road and rail vehicles, surface and underwater vessels, electric aircraft and electric spacecraft. EVs first came into existence in the mid-19th century, when electricity was among the preferred methods for motor vehicle propulsion, providing a level of comfort and ease of operation that could not be achieved by the gasoline cars of the time.

Modern internal combustion engines have been the dominant propulsion method for motor vehicles for almost 100 years, but electric power has remained commonplace in other vehicle types, such as trains and smaller vehicles of all types. In the 21st century, EVs saw a resurgence due to technological developments, and an increased focus on renewable energy. A great deal of demand for electric vehicles developed and a small core of do-it-yourself (DIY) engineers began sharing technical details for doing electric vehicle conversions. Government incentives to increase adoptions were introduced, including in the United States and the European Union.

A recent report published by the World Economic Forum, entitled “Electric vehicles for smarter cities: The future of energy and mobility,” indicated that French multinational automaker, Renault, plans to produce 20 electrified models by 2022, while Germany-based, Volkswagen, will invest up to $84 billion in battery and EV technology to electrify all 300 of its models by 2030.

How Prepared Is Nigeria?

Nigeria’s automotive sector is facing a lot of challenges, ranging from the auto policy, infrastructure, power and others, the directorgeneral of the National Automotive Design and Development Council, (NADDC), Mr. Jelani Aliyu had assured that there is still hope as it concerns the auto industry.

In his keynote address at the Nigerian Auto Journalist Association (NAJA) Awards ceremony held recently at in Lagos, Aliyu said the first industrial revolution saw the emergence of steam engines and mechanization; the second brought about electricity and mass production, while the third industrial revolution brought about electronics and abundant power sources.

Describing the present era as the fourth industrial revolution (4IR), he said the first, second and third industrial revolutions were brought about by exponential advances in the sciences, art and technology. “We are now in the fourth industrial revolution, characterised by digitisation, virtual realities (VR) and an enhanced human consciousness dedicated to the sustainability of the world’s natural ecosystems.” The NADDC boss observed that recent innovations at the global auto industry are good news for Nigeria, since fossil fuel engines are being replaced by engines powered by electricity, batteries and hydrogen fuel cells.

“For example, an electric vehicle has far fewer moving parts than an internal combustion engine, and hence less things go wrong; the electric motor is virtually good for a million miles. This is good for Nigeria”, he said. To tap from the trend, Aliyu said it was for these reasons that the Council is already in discussion with international stakeholders in the field of vehicle electrification, in order to get started with an electric vehicle pilot programme so as to better understand the viability, challenges and opportunities.

“We have met and discussed with both electric vehicle and charging station manufacturers and stakeholders in China and Germany towards the pilot program”, Aliyu informed.

“The electric vehicles program will have three components. Vehicles, charging stations and training/maintenance”, he added.

He pointed out that NADDC has also signed an MOU with Volkswagen to produce vehicles in Nigeria, noting Volkswagen is Europe’s largest auto manufacturer and it is very serious about electric vehicles and other new mobility solutions.

“As we position ourselves to provide the best for Nigerians that’s the type of partnership we need for our nation. Volkswagen has just started producing cars in Rwanda, and our intention is for them to do it on an even larger scale here in Nigeria”.

Auto Policy As An Impediment

Five years after the Nigerian Automotive Industry Development Plan (NAIDP) was introduced by the Goodluck Jonathan administration in 2013, stakeholders in the nation’s auto industry are still struggling to survive with poor implementation of NAIDP. The reason attributed to the poor implementation of the auto policy by experts is the fact that, even though the bill has passed through the National Assembly, the President is yet to sign it into law.

To gain investors’ confidence, these experts have strongly advised that the policy establishing the NAIDP be passed into law. Unfortunately, the President few months ago declined accent to the bill. Before the final decline, Original Equipment Manufacturers (OEMs) had earlier visited from South Africa to Nigeria, to meet with the National Assembly and Vice President, imploring Mr. President to put ascent on the bill as it was considered a key factor for them to establish their plants in Nigeria.

In addition, the Economic Community for West African States (ECOWAS) has admitted automotive industry for consideration as one of its priority development sectors. Apart from the legal aspect, other challenges the NAIDP is facing  include: difficult process of certification of bona fide motor vehicle assemblers/manufacturers; the programmes to precede the imposition of 35 per cent levy on used vehicle which can potentially undermine investment have not been realised because of investors fear of policy reversal and delays in the integration with Nigeria Customs Service to obtain vehicle identification number (VIN) records and the outstanding full buy-in of the Nigeria Customs Service due to misunderstanding of policy intent and perceived conflict with revenue collection.

Already, stakeholders are facing serious challenges in the auto industry which is not auguring well, both for the economy and investors. Recounting some of the challenges auto makers face in Nigeria, former managing director of Stallion Motors, Parvir Singh said that one major issue they contend with is the influx of second hand vehicles into the country.

Singh said “As you know, to a large extent, the auto industry bill that was supposed to be signed has not been signed yet. And also have the issue of full implementation of the auto policy in terms of reduction of second-hand vehicles coming into the Nigeria.

“Because the study by PWC shows that on average, second hand vehicles coming into Nigeria are over 15 years old. And the percentage is very high compared to the neigbouring countries where the average is about four to five years,” he said while speaking with journalists in Lagos recently. Also speaking on the auto policy, founder, president and chairman of the Cocharis Group, Mr. Cosmas Maduka told LEADERSHIP Sunday that the policy may be good but that the government does not have the will to see it through.

Maduka said “I opposed auto policy initially because I did not believe that the government had the will to see it through. Not that it cannot work but I doubted their will to see it through. Whether anybody likes it or not, all those prophesies I made have come to pass now. I think in all honesty that if Jonathan administration had continued, he would have retained Aganga because they had will to make it happen. They understood what it takes and they would have seen it through.

“They had already started forcing government to buy Made-In-Nigeria vehicles, putting things in place for the workability and create the incentives. They had the will to make Nigeria viable. Let’s be very honest, for 200 million people looking at our demography, World Bank prediction targeting 2050, we will become 450 to 500 million people. We need to own our own car. Renault exports over 300, 000 car annually from Morocco. South Africa export to USA, Japan, Australia, UK including BMW and Mercedes.”

Regretting his investments done already in the auto sector, Maduka said he cannot exist in isolation.

“The government was very determined and they were willing to enforce it. As a famous player in the industry, I bought into the project and built a factory for assembling which costs about $50 million or more. It is an investment we thought we could recoup in eight to 10 years but it is much more now. This is because we projected to be selling 10, 000 cars but now we are selling under 2,000 cars.”

Explaining his views on the impact of non-implementation of the new auto policy, managing director of Allen Motors, Chinedu Akpu said that, the government should review the policy if they feel it is not working out appropriately. He said that there is need for reduction in tariff differentials between Knocked Down and Fully Built, adding that such incentive is what attracts the OEMs.

Akpu said “the auto policy, though is not affecting we dealers as it affects manufacturers and the big players. However, I think is for the interest of the country. There has been a period of implementation of the auto policy. There is need to relook at it to determine the opportunities lost by the government vis- a-vis the automotive industry. The government is losing revenue to other neigbouring countries and smugglers”, the auto dealer informed.

Pragmatic Steps On EVs

Despite the challenges bedevilling Nigeria’s automotive sector, some assemblers have expressed interest to invest in the production of electric vehicles (EVs) in the country. To catch up the evolution train, Nigus Enfinity, an indigenous automaker, plans to introduce electric vehicles into the Nigerian automobile market this year, while its local assembly plant for EVs will be ready by 2020.

The company’s chairman, Malik Ado-Ibrahim, noted that many countries across the world have already set targets for the ban of fossil-fuelled vehicles with India targeting 2030, and the United Kingdom, 2040. He said Nigeria and Africa need to look inward to be at the forefront of the automotive revolution, or risk becoming a dumping ground for banned vehicles from other countries.

In preparation for this, AdoIbrahim said his firm is already building a 100-megawatt (mw) solar power plant in Katsina, and Adamawa states. Ahead of the debut for its brand of EVs, he said Nigus Enfinity is partnering with a Chinese firm, Build Your Dreams (BYD), to import electric vehicles at affordable costs. “We are also working with BYD to get a local brand, and start an electric vehicle assembly plant for Nigeria from 2020. Gradually, we will move to an EV with an African DNA, starting in Nigeria,” he explained.

On his part, marketing manager, Kia Motors Nigeria, Olawale Jimoh also revealed that Nigeria had already launched the use of EVs since 2015, as the automaker was the first to bring in such vehicles into the country. Accordingly, Jimoh said a number of people especially some government officials are currently driving electric vehicles.

Way Forward

Electric vehicles have been predicted to be the next disruptive market force in the transportation technology sector in the future. It has the potential to change how energy is used, created and recycled. Its impact has the potential of solving the negative environmental impact of vehicles and has been proven to be very relevant in the sustainability of the environment.

However, while all and sundry are planning to go into full vehicle manufacturing or assembly plants, Professor Pat Utomi, founder of Centre for Value in Leadership (CVL) has a different view. To the management expert and professor of political economy, Nigeria should take up one aspect of the car accessories and develop it, such that it can be a major supplier in the Africa.

This he said would help Nigeria can maximise the gains of the agreement establishing the African Continental Free Trade Area (AfCFTA) signed recently by President Mohammadu Buhari.

Utomi said “First of all, the reliance on fossil fuels will be something we have to now look at with the same latent comparative advantage we are talking about in mind. In 15 years, most cars will be running on battery and not petrol. Fortunately, we have lithium which is the basic input in these batteries and it comes from endowments in form of mineral deposits in Africa.

“Maybe, we can focus on essentially becoming a world class producer of the best quality lithium batteries and that becomes our own deal into the motor industry so that we become competitive. It is not that we will begin to make these cars now, and 10 years after we have made all the investments, we realise that that is not where the motor car is any more, only for us to begin to travel again. We have to be futuristic and develop our strategy relating to motor industry in that direction”, Utomi said.

Other experts have equally opined that the signing of the Nigerian Automotive Industry Development Plan (NAIDP), will in no little measure, give the sector a boost and ultimately, bring an improvement in the country’s investment drive from foreign and local investors.

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