A disturbing video dropped into my WhatsApp yesterday. This came from Africa and captured a boneyard full of broken electric motorcycles. A rough count puts the number of machines at about a hundred, parked in a small lot.
The thick layer of dust, expected in Africa, indicated that the motorcycles had been parked for some time. The same little bird informed that more than 65% of electric motorcycles in a certain African country are not running.
It seems someone was late in ordering a container of much-needed parts from China.
UnFortunately, we are not in the sensational media business, so the video would remain private on my WhatsApp, but it did serve as a numbing reminder of what has happened in India over the last two years.
The same story may be unfolding in Africa now.
So, What Happened in India?
For the uninitiated, India-based Ola Electric, which was the market leader in e-scooters through 2023 and 2024, has seen a rapid drop in customer confidence thanks to product quality issues compounded by a service lag. This has led to a massive erosion in sales. From its peak, to-date-in-Feb, Ola sales are down by a near 90% even as the market is up by an estimated 40%. In fact, nearly every manufacturer in the Indian market has seen a healthy sales growth, even as Ola has had a cardiac arrest.
Ola’s problems are unique to the company and not representative of the market. The space that Ola ceded has been rapidly filled by companies that invested in engineering quality controls and managed a slow and steady rollout of the network.
At the same time, markets like India (also including LatAm, ASEAN, and Africa), where motorcycles, driven by electric or ICE or bird poop, are the lifeline and livelihood of the common man, are brutal. Sure, there are thousands millions of early adopters, easy to find in a billion-plus populace. However, the long-term fate of any new mobility ecosystem hinges on customer experience.
Something that strategy and product planners in their glass towers do not quite understand today. They are being overwhelmed by penny pushers.
Markets like India are also a sobering reminder that consumer markets reward predictable behaviour, longevity, and dependability.
The Large Market Boom and Bust Cycles
Every country, every geography goes through its boom-and-bust cycles. During a boom, industries and markets expand very fast, often prioritizing sales over service and customer satisfaction. Everyone and everything in the startup building is fuelled by an adrenaline rush erupting from a heady flow of capital attracted to growth (prospects).
In the case of electric motorcycles, sales growth happens easily as long as there is money to support it. The Chinese suppliers are good notorious at scaling up fast. The process is all about scouting suppliers, negotiating with them on specs and prices, often sparse field testing of product samples (handpicked by the supplier…probably the best five pieces that they produced that year), and grinding down the FOB prices down to the last penny. Then it is about collecting the containers at the port and doing some assembly at a warehouse.
Mea Culpa, I oversimplified things there, but it’s not too far from the real picture.
Service growth is an altogether different journey. Start it by trashing the book that says electric needs less service. For electric mobility, service quality means trained hardware service personnel, battery specialists, electronics experts, and software bug fixers, all under one roof. That’s many degrees more complex than ICE, which needs only mechanical specialists.
It gets even more complicated because accountants negotiated the terms and prices with the Chinese suppliers. Quality was not debated much. To further make you feel like a destitute, the ICE world, from the Japanese to the Indians have been delivering high-quality, dependable motorcycles for decades now. Even when things go kaput in ICE, a man with a tool kit and a tinkering brain can get things going.
Try doing that with a circuit board that the multimeter just pronounced dead.
Delivering ICE level service in electric is very difficult, near impossible if you are a team on a mission to change the world by next fortnight. Service ends up lagging by a decade. The early adopter customers, your mascots, who should have been your cheerleaders, come away angry. They complain…loudly.
Shit hits the fan.
What we don’t realize in the electric world is that the ICE world spent decades honing products, sales, and service quality to deliver the quality and longevity that the customer is now used to. This is something that the electric world has to outmatch. Business models, product planning, and strategy are guilty of focusing on the TCO model and counting pennies (saved?) on every kilometer ridden. However, they missed the fact that eventually there is a human owning and riding the machine.
Eventually, all comes to naught if the motorcycle on which the livelihood of a BodaBoda rider or delivery person depends is parked in a yard waiting to be serviced.
The Chinese Hardware Problem
Almost all Africa-based electric mobility players depend heavily on China for batteries, motors, controllers, and even entire motorcycles. This China-driven ecosystem is not very confidence-inspiring.
So will the same story play out in Africa? The video is alarming, and I hope that corrective action is urgent and decisive, and this is also the last video I see on this subject.
When it comes to Africa, I always have mixed feelings. Only one operator, Spiro, has access to a large chunk of capital. Two days back, they raised another USD 50 million. A week back, it was seven million in debt financing from Nithio. There was a massive rise just a few months back. We are still wrapping our heads around how much they have actually raised and how much of this is duplicate reporting. However, no one can deny the fact that Spiro has been super successful in raising funds and also in driving a FOMO feeling in the investment community in Africa.
However, even Spiro’s capital raise pales in comparison to what Ola and Ather managed in India. If Spiro is big, yet unimpressive, the others are not even at the starting block yet in terms of capital raise. Everyone has raised capital in single-digit USD million numbers, or at best, in low double-digit USD million numbers. We have stressed in the past how insignificant that is. The investors need to open up their wallets, checkbooks, hearts, and minds.
Except that the global investment community, which masquerades as risk-takers, is the most conservative when it comes to supporting clean energy. Most of the global investment has veered towards AI and anything that has “AI” in the pitch deck. At times, it is even laughable how forced the AI bit is in the pitch deck, with even AI-driven BESS to support AI datacenters being pitched successfully.
The critical point is that it sucks out funding from mobility hardware.
In Africa, we have two types of operators rolling out motorcycles. Of the first kind are the well-funded. Only one operator, Spiro, qualifies here. They are aggressively rolling out motorcycles in all African geographies because they have ample cash.
The second kind are operators who are starved for cash and are rolling out motorcycles slowly.
In both cases, almost everyone has forgotten that a significant investment should have gone into developing their own hardware. Literally, nearly everyone is dependent on China. But as Wave 1 of the Indian electric scooter market and parts of Wave 2 have demonstrated, China just cannot deliver good-quality hardware.
Not at the good prices the world is expecting. The controllers won’t last long.
Though we should not be painting everyone with the same wide brush. Much of Zeno’s seed capital went into developing the Emara motorcycle, the battery, and the swapping system. To their credit, Spiro has been investing in people and in development facilities in India. Tomorrow would be brighter.
It has to be. The industry has to look at India, and at the erstwhile market leader, to realise that more than two billion in investment can turn to zero if there are no customers. Electric mobility will come to naught if the customer has given up on the idea.
While on the Subject of Africa
We would like to point you to the Africa: Motorcycle Taxis and Delivery Market Report that InsightEV published a few weeks back. This is a must-have intelligence for anyone looking at the African commercial motorcycle market.
