Electric motorbike startups jostle for advantage in Africa’s nascent EV sector
The Scoop
Startups providing electric motorcycles and batteries are setting up new plants, raising capital and competing for government partnerships in a bid to lead Africa’s drive into a $21 billion electric vehicle future.
Spiro, a company with about 9,400 motorcycles in Benin, Togo and Rwanda, will sign a $63 million debt financing agreement this week with French bank Société Générale and London-based financier GuarantCo.
The funds will be used to import more bikes and batteries from Spiro’s China-based EV maker Horwin, CEO Jules Samain told Semafor Africa. Spiro had raised $65 million in equity from investors including the Africa Transformation and Industrialization Fund, an Abu Dhabi company.
Some of that money is funding two electric motorcycle assembly and battery manufacturing plants being built in Benin and Togo and scheduled to open in 2024, Samain said.
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Formerly called Mauto, Spiro’s two bike models each cost $1,500 and $1,900 and are wholly powered by batteries that can be swapped out in three minutes at designated service points. It has done 2.5 million such swaps since April 2022, with each bike owner entitled to two swaps a day (it was unlimited until August 1). Commando, its most expensive and fastest model at 49 miles an hour, has a top range of 46 miles for each full charge.
Spiro’s new raise comes a few weeks after Roam, a Swedish EV and solar energy company, moved into a newly built 10,000-square meter production plant located in Kenya’s capital Nairobi. The factory’s expected output is 50,000 bikes a year though it will take “a couple of years” to reach that maximum, the company said.
Alexander’s view
The multimillion-dollar moves by Spiro and Roam add color to data that suggests Africa’s electric vehicle market, estimated to reach $21.4 billion in value by 2027 from under $12 billion two years ago, will be dominated by two-wheelers.
Of the nearly 5 million EVs that will be sold in Ethiopia, Kenya, Nigeria, Uganda and Rwanda by 2040, at least 80% will be motorcycles, a 2022 Shell Foundation report analyzed by McKinsey said.
Some EV providers in Africa offer other vehicle types like mass transit buses, as BasiGo does in Kenya and Roam plans to roll out there next month. But motorcycles are often effective means of public transportation in many African cities, numbering in the hundreds of thousands in major cities like Kampala and Kigali. Even in Lagos where the government’s 2020 ban was premised on safety and security concerns, residents still depend on motorcycles to navigate thin muddy roads in difficult-to-access suburbs. Food delivery services and leading online retailer Jumia mostly use motorcycles for fulfillment.
The challenge for electric bike providers, however, is to affordably sell a product that costs significantly more than what it hopes to replace. Spiro’s cheaper $1,500 model is at least twice the price of a new petrol-powered motorcycle in Nigeria. One sales strategy that borrows from a popular playbook in East Africa is to allow users to pay over time. Roam has a deal with M-KOPA, a company whose pay-as-you-use technology enables Kenyans own solar energy products and smartphones, to be its financing partner for customers who wish to buy electric motorbikes.
But partnerships with governments keen on renewable energy transition could be pivotal. In Uganda, Spiro entered an agreement in March with the government to make 140,000 of its bikes and 3,000 battery swap stations available within five years. The company is set to formalize a similar agreement with the Kenyan government in the coming weeks, Samain told Semafor Africa.
Room for Disagreement
Normalizing EVs in Africa could be hampered by poor electricity supply and the huge capital costs of infrastructure needed for battery stations, a Rest of World report in February argued. Shell Foundation estimates that at least $3.5 billion will be needed by 2030 to finance costs associated with making electric motorcycles work in Africa.
The View From Abuja
Optimism is stirring ideas about how best to generate public enthusiasm for EVs. Electric Vehicle Experience Centre (EVEC), a physical space for Nigerians to ask questions about the feasibility of EV adoption, is set to open this month in the capital city Abuja. On its premises are a number of electric cars and motorcycles on display for users to test drive.
“We need people to understand that charging EVs can be similar to how we charge phones, and that maintenance is cheaper,” Mosope Olaosebikan, founder of Possible EVS, told Semafor Africa in July. His company launched an EV based taxi service earlier this year and operates the experience center. A similar center is planned for Lagos, Olaosebikan said.
Notable
As a cautionary tale for African EV providers, the first EV taxi service to launch in Kenya shut down last year. Launched in 2018, NopeaRide had 70 vehicles at its peak and a network of charging stations in the capital Nairobi but closed its doors after EkoRent OY, its Finnish parent company, became insolvent.
