Outside of North America and Europe, electric two-wheelers are gradually emerging in other markets and cultivating the most suitable business system for the local market.
In the global market, the choice of mainstream short-distance travel tools in different regions is influenced by different factors such as culture and economy. For example, electric scooters and electric bicycles have become commonplace in Europe and North America; in Asia Pacific and Southeast Asia, electric mopeds and motorcycles have become mainstream; while South Africa and sub-Saharan Africa are gradually becoming emerging markets for electric two-wheelers (E2W). It is predicted that by 2027, the size of the African motorcycle market will grow to US$5.07 billion, and electric motorcycles will become the leading product for sustainable transportation transformation in sub-Saharan Africa. The craze for electric two-wheelers is also spreading widely in this land.
Two-wheelers - the dual pillars of residents' lives and economy
Motorcycles are very popular in sub-Saharan Africa. Between 2010 and 2022, the number of registered two-wheelers surged from about 5 million to more than 27 million, more than five times. In this vast land, the complex and desolate landscape makes the nimble two-wheelers a basic means of transportation for local residents. At the same time, two-wheelers are the economic pillars on which many families rely for survival.
Two-wheelers create abundant economic opportunities for drivers, especially as a means of transportation for taxis, goods and food delivery. It is estimated that as many as 80%-90% of two-wheelers in the region are used for commercial purposes. However, with the continuous rise in fuel prices and the cancellation of fuel subsidies, the cost of using internal combustion engines is getting higher and higher. The cost of buying an electric two-wheeler is gradually approaching or even lower than that of internal combustion engines, not to mention the subsequent use costs. As a result, electric two-wheelers are slowly replacing the original mode of transportation for local residents.
Abdullah, a taxi driver in Ghana, said: "Since I bought this electric motorcycle, my daily income has become much more stable. Moreover, I no longer have to worry about rising oil prices and making my expenses insufficient." A survey shows that the daily travel cost of electric two-wheelers is up to 50% lower than that of fuel vehicles. For most customers who make a living by commercial driving and have a high mileage, these cost savings will directly translate into a significant increase in total income.
Multiple companies are laying out the African market
On September 1, 2023, the President of Kenya announced a partnership with Spiro, an African electric vehicle startup, to promote sales of up to 1.2 million electric motorcycles in Kenya and deploy more than 3,000 charging and swapping stations. In June 2023, Spiro signed a five-year strategic cooperation agreement with Changzhou Haowan New Energy, planning to sell 500,000 electric motorcycles in Africa in the next five years, with a total amount of up to US$1 billion. The business will cover emerging African markets such as Kenya and Uganda.
Ampersand, a Rwandan electric vehicle startup, announced on December 19, 2023 that it had received US$19.5 million in financing led by Ecosystem Integrity Fund (EIF), with a total financing of more than US$35 million. Currently, Ampersand has set up 32 battery replacement stations in Rwanda and Kenya, providing battery replacement services for 1,700 electric motorcycle customers, and plans to put more than 10,000 electric motorcycles into operation by the end of 2024, and provide battery replacement services for 1 million electric motorcycles every day by 2030.
Many electric motorcycles produced in China have also become popular in Africa because of their low cost, high efficiency, environmental protection, quietness and ease of use.
Battery replacement and battery service upgrade
Although the electric two-wheeler market has great potential, the backward economic environment has also created a considerable obstacle to the popularization of electric two-wheelers. The local infrastructure is not perfect. How to replenish electricity in time and reduce the initial cost are the problems currently faced by operators.
Among them, the high initial cost is one of the key factors restricting the development of the market. In a market with relatively low consumer purchasing power, the price of E2W may be twice that of similar internal combustion engine motorcycles. This makes many potential customers discouraged. In addition, there are significant differences in power supply and grid stability between different countries and regions. The power grid in many places cannot bear the additional load of vehicle charging, resulting in many difficulties in the construction and operation of charging facilities. For commercial riders, that is, most two-wheeler customers, stable power supply and charging facilities are one of the important considerations for them to choose electric two-wheelers.
For operators, the cost of laying a full grid is too high, and improving battery life is limited by technology and riding experience. In this context, an innovative business model was born, namely battery replacement and battery-as-a-service model, and it has become a unique charging method in Africa.
Battery swapping and battery-as-a-service are about taking advantage of local EV tax incentives and tax breaks and working with local financing institutions to establish flexible payment options for customers. The battery-as-a-service business model (exemplified by E2W innovators such as Ampersand and Rwanda Electric Motors) allows customers to purchase a vehicle without a battery.
Instead, the company provides a service to rent out the battery by the day, week, or month and provides access to a network of battery swap stations. The battery-as-a-service business model reduces the barrier of upfront costs for customers and also creates opportunities for local companies to participate in the electric transportation ecosystem by hosting battery swap points.
Even if the battery is included in the price of the vehicle, many people will still use battery swap services. Companies such as Roam Electric (Kenya) and Solar Taxi (Ghana) have a different model, offering a combination of public and residential charging, where the operating cost of battery swap subscriptions can be much lower than the traditional refueling costs of ICE two-wheelers.
Some companies estimate that commercial drivers can save 30% to 50% by switching to E2W by reducing maintenance costs and battery swap and refueling costs. Battery swap stations don’t require continuous, instant charging like electric vehicle charging stations do, so there’s no need to worry too much about grid stability. The expanding number of charging stations also makes it more and more convenient for local riders, and some companies (such as ArcRide) design their vehicles to be equipped with multiple batteries, which allows for longer battery life.
Development of local enterprises
Although there are a large number of low-cost electric bicycles and scooters available for import into sub-Saharan Africa, some people believe that these products are often unable to cope with the complex local road conditions and climate conditions, and there are still design flaws. For example, imported vehicles are unable to cope with rough roads and frequent rainy seasons, and they also lack the cargo capacity required by commercial drivers. Therefore, local companies have discovered the gap in the E2W market and are committed to developing products with sufficient durability, cargo capacity and mileage, and more and more local companies are beginning to invest in this market.
John from South Africa said: "We are well aware of how demanding the road conditions and climate conditions in Africa are for vehicles. Therefore, the electric two-wheelers we designed not only have excellent durability and cargo capacity, but also maintain stable performance in adverse weather conditions."