Sustainable Transportation in Cities and the Adoption of Renewable Energy in Developing Economies

Accelerating the Shift to Sustainable Urban Mobility

The global movement toward greener urban transportation is gaining momentum, propelled by the urgent need to cut carbon emissions and address energy challenges, especially in developing regions. Solar-powered public transport and electric mobility infrastructure are becoming essential pillars of this transformation, providing scalable ways to lower emissions and enhance economic stability. For investors, the intersection of technological progress, supportive policies, and behavioral insights in nations such as South Africa and India offers a promising landscape.

Expanding Market and Promising Growth Prospects

The market for solar-powered buses is expected to experience a robust compound annual growth rate of 21.6% between 2025 and 2033, with projections estimating the sector will reach $17.79 billion by 2033. This surge is being driven by falling prices for solar panels, improvements in battery technology, and the decreasing cost of electric vehicles. Emerging economies in Africa and Asia are leading this evolution. For instance, South Africa has committed to boosting its solar capacity by 20% as part of its renewable energy agenda, while India is building a comprehensive electric vehicle ecosystem through national policies that incentivize manufacturing and charging infrastructure.

Leading Examples: South Africa and India

South Africa’s Push for Solar Transit

South Africa is rapidly expanding its fleet of solar and electric buses. MAN Truck & Bus plans to supply 100 fully electric city buses to the Paruk Group, with local assembly set to begin in 2026. In Cape Town, Autel Energy is rolling out solar-hybrid charging stations to support 120 electric buses by 2025, a move expected to cut 18,000 tonnes of CO₂ emissions annually. Golden Arrow Bus Services has grown its electric fleet from two to sixty buses in a single year. These advancements are supported by a government investment of R1 billion ($54 million) to encourage local electric vehicle and battery manufacturing, including tax breaks for producers.

India’s Policy-Driven E-Mobility Transformation

India stands out in the Global South for its advanced e-mobility policies. National initiatives like the FAME II program provide subsidies for electric vehicle purchases and charging infrastructure, while state-level measures, such as Tamil Nadu’s EV policy, offer additional incentives like reduced import duties and tax exemptions. Research from 2025 shows that behavioral economics tools—such as social nudges and peer comparisons—have helped reduce household electricity use by 7% in pilot projects. These strategies are now being applied to encourage electric vehicle adoption, focusing on practical benefits like lower maintenance costs and strong government backing.

The Role of Behavioral Economics in Policy Development

Behavioral economics is increasingly shaping the design of e-mobility policies. In South Africa, studies among paratransit operators reveal that 38% are open to switching to electric vehicles, influenced by perceptions of reliability and environmental responsibility. India’s approach combines theories of consumption value and planned behavior, showing how targeted policies can align with consumer choices. For example, India’s use of social norm messaging has led to measurable reductions in electricity consumption—a tactic that could be adapted to promote solar-powered public transport.

Although South Africa’s policy framework is still developing, the country is beginning to apply behavioral insights. Recent analysis highlights a “green window of opportunity” in its automotive industry, recommending targeted measures to address concerns about upfront costs and reliability. By adopting India’s behavioral strategies—such as emphasizing peer adoption rates or framing electric vehicles as long-term savings—South Africa could speed up its transition to e-mobility.

Key Drivers for Scaling Up: Policy and Demographics

The widespread adoption of solar-powered public transit depends on coherent policies and demographic trends. In India, rapid urbanization and government mandates for electric vehicle use in major cities are fueling demand for low-carbon transportation. South Africa’s growing middle class and youthful population also create favorable conditions for investment in sustainable mobility. However, obstacles like high import tariffs and limited rural charging infrastructure remain significant challenges.

Collaborative initiatives such as EMBRACE (Electric Mobility Bridge for Regional Africa-India Cooperation and Exchange) are helping to overcome these barriers. By exchanging best practices in policy and infrastructure, India and African countries can tackle shared challenges, including workforce development and financing. Rwanda’s advanced e-mobility policies, which scored highly in regional assessments, provide a model for South Africa and others to emulate.

Investment Landscape: Balancing Risks and Opportunities

While the outlook for solar-powered public transit is highly promising, investors must be mindful of risks like regulatory uncertainty and substantial upfront costs. In South Africa, the absence of direct subsidies for electric vehicles and inconsistent tax incentives pose challenges. Nevertheless, the nation’s focus on local manufacturing and integrating renewable energy—such as solar-powered charging—helps offset some of these risks. India’s more established policy environment and increasing private sector involvement, including venture capital in electric vehicle startups, make it an attractive and relatively lower-risk market.

Innovative financing solutions, such as green bonds and public-private partnerships, will be essential for scaling up projects in both countries. Investors who collaborate with governments and apply behavioral insights to address consumer concerns will be well-positioned to benefit from the anticipated $17.79 billion solar bus market by 2033.

Conclusion

The shift toward sustainable urban mobility in emerging economies is now a tangible investment prospect. South Africa and India demonstrate how solar-powered transit and electric mobility infrastructure can drive both decarbonization and economic growth. By weaving behavioral economics into policy and fostering cross-regional cooperation, investors can overcome challenges and unlock significant long-term value in a sector set for rapid expansion.