Electrifying the BodaBodas
Africa is emerging as an unexpected shining star for E2Ws
Quick question: Which geography has the highest battery swaps daily after Taiwan and China?
It is Africa, and that’s a big story, considering the image most people in the rest of the world have of the continent. An electric revolution is happening, most of it under the radar, and many of us are not participating.
But first, a poll.
This is our fourth real newsletter to you; we are still finding our feet. We love talking about E2Ws, the promising industry, and what the future holds. However, we realise that reading a 12-14-minute post may not fit your calendar well. Maybe we should send two separate 6-8-minute posts twice a week?
We don’t know, so we ask.
Now, on to the main post.
Africa: The Myth of the Monolith
The world sees Africa as a monolithic mass, which is not even close to reality. A more accurate segregation of Africa would be to look at it as made up of three zones:
The Saharan Africa (everything touching the Mediterranean on the north)
Sub-Saharan Africa, which includes everything in the centre and down to Zimbabwe
The third zone is the country of South Africa and the island nations of Seychelles and Mauritius.
All three are quite different zones when considering basic economic measurables like Per Capita Income on a PPP basis.
When considering PCI PPP, the island nations of Africa lead the continent. This is largely due to tourism, dubious FX brokers, off-shoring financial institutions, and a relatively small population.
The northern part of the continent, which borders the Mediterranean, enjoys a strong European influence and a moderately high per capita income relative to Africa.
This map on Reddit illustrates the disparity better:
Sub-Saharan Africa, the large band of countries in the centre, represents the real challenges of Africa's low per capita income and infrastructure development.
It is important to note that some of the highest pockets of population density are found in this region.
To illustrate this better, we found another map on Reddit!
In the context of electric mobility, the challenges faced by sub-Saharan Africa are instrumental in shaping the continent's E2W future.
Africa has the world’s largest population of people under the age of 30. A lack of infrastructure development outside the major cities means that two-wheelers are the most popular mode of transport. Public transport is in its nascent stages, and the general population has to rely on their means of transport. As a result of this and the low per capita income, two-wheelers are the most popular mode of transport.
Two-Wheeler Market
The African market for two-wheelers is around 2.2 million units annually (Data estimates - InsightEV Global Landscape and Future Prospects Report), of which about 1.3 million are motorcycles, most of which are 100cc-150cc commuter machines. The market is equally dominated by Honda, Chinese, and Indian brands (Bajaj, TVS, and Hero), all of whom have good experience making ICE commuter motorcycles.
Nigeria, Egypt, and South Africa are the largest 2W markets in Africa, with Algeria, Kenya, Morocco, and Uganda being the other significant markets.
African demands from a Two-wheeler
Since motorcycles are shared, sometimes even carrying more than two passengers, and the terrain is harsh due to bad roads, African commuters are expected to be robust, with high load-carrying capacity.
Motorcycles must be frugal yet have high torque, even though the top speed is not a game changer. The African customer is also very value-conscious, so the motorcycles have to be right-priced - prices start as low as USD 1000.
Two-wheelers are also shared, and ‘Bike Taxis’ are very popular in sub-Saharan African countries. The locals call them BodaBodas, and they are the economy's lifeline in many African cities. Over the last two decades, these have become very popular across sub-Saharan Africa, and it is estimated that 5-7 million BodaBodas are operating in Africa.
Pollution problems
For decades, Africa has become the dumping ground for used vehicles worldwide. The used light vehicle market is cited as bigger than the new vehicle market. As a result, vehicles in Africa do not meet contemporary emission norms. The average emissions in any densely populated city in Africa are often much higher than in the developed world. The air in cities like Kampala (Uganda) and Kigali (Rwanda) is highly polluted. Governments feel that the increasing usage of motorcycle taxis has a role in causing this pollution.
Concerns have also been raised about BodaBodas' safety, as they flout traffic rules and overspeed and overload.
This belief has led to bans on Bodas in big cities, which had to be withdrawn soon as the whole local economy ground to a halt. There is no public transport, and the BodaBodas are the lifelines of any city. For Motorcycle Taxi drivers, the bike is their only means of employment and the only skill they have.
So the other option is to electrify these motorcycles.
That is what has led us to where we are today.
Electrifying BodaBodas seems to be a win-win solution for all stakeholders:
A switch to electric significantly lowers BodaBoda operators' running costs and, in almost all cases, their maintenance costs.
The cities get cleaner as thousands of polluting, ageing, and, at times, badly maintained ICE motorcycles are replaced by cleaner electric motorcycles.
More jobs are created immediately as the E2W infrastructure, charging and swapping stations, and the motorcycle and battery assembly plants all need people.
As a result, the economy gets a boost, and industrialisation improves. Motorcycles are largely imported into Africa from India, China, and ASEAN. However, with electric BodaBodas, the final assembly of motorcycles and batteries will be done locally.
There are challenges. Electric motorcycles are far more expensive, so business models have to be created around them to make them affordable to the end user. Also, motorcycles have to be designed to meet local needs.
Electrifying Bodas: Opportunity and Challenges
Using the same methodology for pointless TAM calculations that we usually do at E2W start-ups (and investors’) offices, the BodaBoda market should be around 5-7 million units, with three million in Kenya itself. That’s a juicy market for anyone planning to invest in a start-up that proposes to put a million (relatively low-tech) electric motorcycles on the roads in Africa.
But electrifying Bodas is not that easy. There are two challenges:
1. The Price Challenge
First, the price - the most popular ICE commuters start at USD 1000, an impossible price point for a sturdy-built electric motorcycle to match when considering seating for two or three (or more!) and a reasonably long range.
Even the most basic electric motorcycle with at least 3.2 kWh of battery capacity would cost more than USD 1500. Not to mention, Africa does not currently make electric motorcycles, so anything coming from China or India, the two likely sources, would also attract local tariffs.
2. The Grid Challenge
The biggest challenge to mass electrification of two-wheelers is the electricity shortage in Africa. A 2022 study by the International Energy Agency reported that only 57 per cent of the African population has access to electricity.
However, Africa is not homogeneous, and some countries like Kenya, Rwanda, and Uganda have sufficient electricity to start thinking of a revolution. Kenya is the shining beacon in Africa, with 100 percent of urban households having access to electricity. Moreover, more than 80 percent of its electricity comes from renewables.
Apart from these, some more sub-Saharan countries have electricity generation and supply levels at 75-90% of their gross requirements, and they may be the right candidates for electric two-wheelers.
However, interruptions may occur due to grid failures and transmission issues in all these countries.
Swapping: A Sustainable Model
Given #1 and #2, a different business model will likely work better, where the motorcycle's acquisition cost is de-linked from the battery. The battery is the most expensive and constantly decaying component in an E2W. Things become attractive if, instead of selling the E2W with batteries, the battery is offered as a monthly subscription. The BodaBoda operator can then exchange them at multiple swapping points in the city.
We popularly know it as a battery-swapping model, as popularised by Gogoro in Taiwan.
This model removes the cost of the battery from the motorcycle. For a roughly 4.0 kWh battery pack, at USD 120 per kWh, this removes nearly USD 500 from the motorcycle's price, bringing the E2W price down to near ICE levels. Economies of scale and some government subsidies should close the delta further.
Battery-swapping models have potential when operating within a constrained geography, which is why Gogoro works in Taiwan.
BodaBodas also operate in a constrained geography. A rider plies within the city or the suburbs and can be supported in that geography through battery-swapping networks.
Then there is the daily travel—BodaBoda riders may travel 150-200 km daily, carrying up to three on the motorcycle. That is an impossible range (with payload) for any electric motorcycle to deliver. A switch to the swapping model can solve this problem.
The swapping model also offers greater peace of mind to the user. The battery's life may be a concern for a new convert to E2Ws, so disengaging that from the buying decision would attract more converts.
The other big concern cited by African mobility start-ups is that for most BodaBodas, their motorcycle is a lifeline. They need to be operational every working day. The swapping model is more dependable.
Also, the quality of electricity supply at Boda households may not be dependable or high quality and mobility companies can ensure better supply quality and power backup options at their swapping stations.
That Changes the Business
The business would change once participants understood that the battery-swapping model is the most efficient.
It is no longer an electric motorcycle business but an energy business offering battery swapping as a service.
That is probably why Spiro hired Kaushik Burman, a Gogoro old-timer, as their Co-CEO last year.
‘African pride’ and to generate employment in the country, the final battery and motorcycle assembly are carried out in the country of deployment.
That also means that participants would like to control the battery, its constituents, and its tech more than the electric motorcycle itself. This is how the landscape has changed: only two African startups—Roam and Spiro—have worked on developing their motorcycles. The others have worked with Chinese factories and customised factory-offered designs.
In most cases, startups may ‘borrow’ the motorcycle but would design their battery as that is the core of the business. Controlling the battery and battery swapping stations while selling or leasing the motorcycles to Bodas is the core business, and we see multiple variations of this theme being played out.
Should Start-ups develop their Motorcycles?
It’s rather pointless!
We at InsightEV are big believers in honest engineering efforts. At the same time, a pragmatic lot, we are. Africa, for now and for the future, is a market for sturdy yet basic machines. No technology breakthrough is being sought here - no rocket engines, new alloys, metallurgical processes, nuclear reactors, nothing special.
The market needs sturdy motorcycles, low-power motors, and fairly large yet portable batteries.
That’s a low ask; enough engineering companies and/or Chinese factories can deliver this without sweat.
African startups have realised this, and no one is sweating over the design of the motorcycles. Sure, ‘localisation’ and adapting to local conditions are still the key themes, but there are hardly any design-from-scratch programmes in the African E2W landscape.
In cases where the African start-up has sourced a preexisting motorcycle, the hardware modifications usually involve changing the frame design to accommodate larger batteries.
However, increasing R&D efforts are being focused on the software side. The software has to solve a lot of problems in the African ecosystem:
Basic BMS and MCU-embedded software is required and needs to be tinkered with for improvement.
For battery swapping and battery tracking
For tracking motorcycles
Monitoring the quality and presence of electric supply
Managing the BodaBoda networks
Ride-hailing BodaBodas for the customer.
Government incentives
Multiple African governments have desired to promote electric mobility, especially in the motorcycle taxi segment. However, only a few have announced any significant incentives.
We must consider that the countries suitable for the mass adaptation of electric two-wheelers are also the ones with very modest per capita income (PPP). Governments don’t have the means to directly incentivize millions of electric two-wheeler purchases, so there appears to be more lip service to the cause than actual action.
Kenya has announced that it is eliminating VAT on electric motorcycles and exempting them from excise duty. Electric motorcycles are an important focus area of Kenya's e-mobility program, announced in September 2023.
Rwanda has announced several fiscal and non-fiscal incentives to promote electric vehicles. These include capping electricity tariffs for charging stations at the large industry category tariff level and offering reduced tariffs during off-peak times. The Rwandan government also removed VAT, import, excise, and customs duties on EVs, spare parts, batteries, and charging station equipment. There is also a proposal to introduce a Carbon tax to discourage polluting vehicles.
However, things are shaky. Last month, Semafor reported that Kenya may introduce VAT on electric motorcycles, buses, solar panels, and lithium-ion batteries as part of the country’s new finance bill. The bill is being discussed amidst much furore and criticism, but President Ruto has justified it, citing the country’s poor economic health.
That’s a bummer for electric mobility!
We will continue the discussion on Africa next week as we look at the key participants and prevalent business models and identify the real beneficiaries in Electrify the BodaBodas Part - 2
Meanwhile, Last Week…
From this week, we will add an on/off section named “Meanwhile, Last Week,” where we discuss some key happenings of the week that may impact the development of the E2W industry in the future.
The Kawasaki Hybrids
We recognise hybrids as a good stop-gap for two-wheelers until the industry can solve the Core Fundamental issues that we discussed earlier. Kawasaki has jumped ahead of the industry with the Ninja 7 Hybrid and Z 7 Hybrid motorcycles launched a few months back.
Now Cycleworld reports, citing Kawasaki patent filings, that the brand is also working on a hybrid variant of its popular Versys ADV and Eliminator cruiser.
Meanwhile, BMW launched a 2.0-litre Roadster concept, packing a large engine in a compact frame. The team at The Pack quoted BMW Motorrad’s CEO Markus Flasch from the R20 launch conference, in which he essentially said that BMW Motorrad is in no hurry to develop a line of high-performance electric motorcycles.
BMW unveiled the Vision DC Roadster concept in 2019 and had nearly developed it completely when development and industrialization were halted.
“After evaluating the costs and capabilities of the Vision DC Roadster, it was well-developed but still not competitive with models like the M 1000 RR,” Flasch commented on the concept and its No Go.
For now, BMW seems happy with the CE04, and InsightEV doesn’t expect a high-performance electric motorcycle from the brand anytime in the next five years.
“It’s pointless for now; perhaps in the future,” Flasch added that none of the bikers he spoke to would spend 30,000 euros on an electric motorcycle to ride around a lake or climb a mountain pass.
“Motorcycling is about freedom and independence, and the electric vehicle does not fulfil that need at this time,” Flasch concluded things in more ways than one with his final statement.
This post borrows heavily from the detailed chapter on Africa from InsightEV’s upcoming Global Landscape and Future Prospects Report, a comprehensive analysis of the global E2W and urban Mobility industry.