Electric Vehicle and Labor Market Transformation

Motorcycle-taxis are among the fastest-growing forms of informal transport in developing economies, providing essential mobility and absorbing millions of workers into flexible but precarious livelihoods. As ride-hailing platforms increasingly drive electric motorcycle adoption in this sector, the design of underlying business models has become critical—yet remains poorly understood. This report introduces a structured analytical framework for assessing how business-model transitions affect driver welfare, productivity, and electric vehicle (EV) adoption, grounded in causal inference. Drawing on a field experiment conducted in Nairobi, Kenya, the study tracks the transition of motorcycle-taxi drivers from a Guaranteed-Salary Program to a Target-Based Lease-To-Own model. Combining real-time EV GPS telemetry, platform data, battery charging point data, and driver surveys, the analysis reveals that the business-model shift raised productivity by 37 percent and nearly doubled output per unit of energy consumed, creating strong synergies with the inherent efficiency advantages of electric motorcycles. The prospect of vehicle ownership emerged as a powerful driver of retention and participation, even under demanding work conditions. However, the transition also introduced significant trade-offs: average speeds increased by 4.6 km/h and working hours rose by approximately four hours per day, raising concerns about road safety and labor conditions. Battery swapping and charging costs were found to function as a hidden tax on drivers' effective income. The findings demonstrate that business-model design can be as influential as traditional formalization efforts in shaping economic outcomes for informal transport workers. For policymakers, private-sector operators, and development partners, the study underscores that EV adoption in the informal transport sector is not solely a technological or environmental challenge—it is also closely tied to institutional design and labor market structure.