Gogoro: Is there a Future?
When the Brand is Bigger than the Business
Over the past three weeks, we have been analyzing publicly traded electric two-wheeler manufacturers. We looked at Livewire, Arcimoto, Volcon, Zapp, and Niu, all traded on the Nasdaq. It seems most are down with the flu.
Then, we also checked on the health of ASX (Australia) listed VMoto, the Shanghai traded AIMA and SUNRA, and Hong Kong-listed Luyuan and Yadea. Not many are doing too well, though arguably, the Shanghai and HK-listed Chinese factories are faring much better than the Nasdaq-listed fashionable start-ups.
We intentionally left Gogoro out of the discussion as we consider it unique. The Taiwanese brand was the one that brought electric two-wheelers to the limelight. Before Livewire, Alta, Yadea, or Ather Energy, the Gogoro scooters got everyone to notice electric two-wheeled mobility.
Gogoro is one of the reasons why InsightEV exists. Long ago, when we first saw the Taiwanese electric scooter manufacturer, we fell in love with the passionate business. Here was a company offering an elegant and environmentally friendly solution to mobility—scooters that could go on forever, supported as they were with a battery swapping system.
Battery-swapping systems are not new, and Gogoro is not the business's first or last entrant. But it created something special. We consider the Gogoro Network the most advanced swapping system in the world today. Since it was the first large-scale battery-swapping network with visuals splashed all over social media, the Gogoro network has become the identity of battery-swapping networks globally.
While Gachaco, Honda e: swap and other geography-specific swapping systems are now equally advanced, the Gogoro Network has the most chutzpah. Even rivals agree that many of them, including Yamaha and Yadea, use the Gogoro Network (Powered by Gogoro Network - PBGN) in this variation.
S1: Gogoro is Vespa
…and that’s good and bad.
From the scooters to the batteries and the swapping ‘racks’ to the accessories, it is apparent that Gogoro has some capable design talent working for them. The products, even the accessories, look good, and we won’t be stretching out on a limb to say that there is a lot of Vespa in Gogoro.
There is the same attention to detail and the same disregard for BoM cost. There is also limited appeal and adoration, followed by a mad Chinese rush to ape the styling. Oh! And Gogoro, too, started with a monocoque.
As an enthusiast, I find it easy to love Gogoro. As an accountant? Not too much.
Take the first Gogoro - the now-discontinued S1. This was not a scooter designed for mass commuting; it was a project of passion put into production.
It started with an aluminum monocoque—Gogoro also throws the words “Aerospace Alloys” in the mix. The monocoque is adhesive-bonded with hardly any welds. Overall, it is pretty cool tech but not something that would be easy to mass-manufacture at a large scale. There is a reason why nearly everyone but Vespa moved to a body-on-tubular-frame construction for scooters.
Then things go even more premium - the front suspension is a single-sided inverted single-piston setup. It is adjustable. The only other scooter in modern times that uses this geometry has been the Etergo AppScooter (now the Ola S1 Pro). But the Etergo was a non-adjustable unit, and Ola ditched the set-up in their S1 Gen-2 variant after local media outlets reported repeated front suspension failure on bad Indian roads.
This front suspension setup works beautifully by showing off the impressive front alloys, which is also true with the Gogoro S1.
The rear suspension is an adjustable multi-link setup with a near-horizontal placement. This is not BoM cost-friendly, but the near horizontal layout liberates space, and Gogoro packs a neat glovebox even after making space for the two batteries.
The disregard for the BoM theme also continues with the brakes—the front disc has four-pot calipers, which is pretty standard in race-spec supersport motorcycles.
Not at all common in a commuter scooter.
Overall, the S1 was an exercise in excess - impressive and expensive.
Gogoro has since mended its ways, and all the scooters after the S1—the S2 range, the Viva(s), the Crossover and the Jego, and even the newly launched flagship, Pulse—have toned down on the construction complexity. Models like the SuperSport (earlier named the S3) and everything afterward have even gone down to recyclable polypropylene for body panels.
So, was the S1 a collector’s item? We don’t know. We have FOMO, but it should not matter—mated as it is to the Gogoro swapping network, the thing won't work outside Taiwan anyway.
What is Gogoro’s business?
Gogoro is a unique company that makes intelligent batteries for smart swapping systems and scooters. As you can see, we put batteries and swapping systems first and scooters later.
Gogoro’s business model involves selling the scooter upfront and leasing the batteries through a monthly subscription. In Taiwan, Gogoro’s home market, scooter users can swap the battery at one of the over 2500 locations.
So, Gogoro's revenue accrues through two primary channels: outright sales and battery subscriptions. The company also counts accessory sales as part of hardware (scooter) sales.
For FY 2023, Gogoro made USD 218m from scooter sales and nearly USD 132m from battery swapping. Even though scooter sales are much higher, the trend is declining. FY 2023, revenues from Scooter sales were down 16.4 percent from USD 261.2m to USD 218.1m.
The above should not be too alarming (except for the fall in overall revenue). Remember that scooter sales are all new vehicle sales and are counted one-time. Meanwhile, battery swapping revenues apply to the entire Gogoro (and allied brands) parc and continuously grow as subscribers accumulate with every sale.
Still, the declining trend in scooter sales is a bit concerning. Gogoro sells ten scooter models and twenty main variants built on five platforms. Yet sales in Taiwan have declined from 71.9k units in 2021 to 64.7k units in 2022 and further to 56.7k units in 2023.
This small sales volume with a declining trend is unsustainable, especially when Gogoro maintains an aggressive timeline for new product rollouts. At this rate, we expect Scooter Sales revenues to lag Battery Swap revenues by 2025. There is nothing wrong with that again, but scooter sales revenues must recover for Gogoro to remain a scooter company.
But does it want to?
Gogoro's business strategy clearly shows that it is first an energy company and then a scooter company.
The argument for an energy company business works best if you own the back end, like what BYD has done or what India-based Ola plans to do to a lesser extent. There can be no efficient energy company that does not make its cells and, ideally, pluck Lithium out of the earth. Gogoro’s cells come from high-quality global suppliers—Panasonic, LG Energy Solution, and Samsung—with the same quality levels in sourcing as we would expect any high-quality electric scooter brand to do anywhere. Except it does not provide any comprehensive edge.
The PBGN Network: Good or bad?
So Gogoro makes really good batteries using outsourced cells. The cells are 21700s, the standard for any good scooter brand today. It puts the batteries in its scooters, and users can swap them from its network.
The company also offers its batteries and network as a product to the competition. As a result, brands like Yamaha, Yadea, eMOVING, and A-Motor use Gogoro batteries to make scooters for the same primary market—Taiwan.
They compete with Gogoro scooters!
What Gogoro loses in terms of new vehicle sales to the competition, it gains back somewhat through life-long battery swaps. It’s debatable whether this is good or bad. To analyze this, we go back to the core fundamentals of electric two-wheelers, where we deduced that the entry barriers to electric two-wheel mobility are quite low.
The Gogoro battery is good, and the company perhaps has the most advanced swapping system. There is still a low barrier to entry, and Taiwan is a rather small market. Most competitors have come to the Gogoro Network because they did not want to invest in setting up their own—arguably capital-intensive—swapping infrastructure.
Notably, apart from Yamaha (we didn’t count Yadea in the mix as it is a different story we will discuss later), the other companies using the Gogoro network are not significant players outside Taiwan. Even Yamaha is not significant in EVs yet. Most partners depend on Gogoro beyond just swapping batteries and are in the business because there is an opportunity to piggyback on Gogoro.
PGO, eReady, Yamaha, and Aeon Motors (A-Motor) all source the battery packs, Gogoro’s G2/G2.2 mid-drive motors, and other aggregates for their scooters. That’s a neat arrangement for Gogoro for immediate component sales, not so much in terms of complete scooter sales or in propagating its scooter brand. As a result, Gogoro ends up sharing a significant part of the Taiwanese electric scooter market with its competition.
In that sense, Gogoro’s best partnership should be the one it has with Dachangjiang (Haojue) and Yadea. The two Chinese two-wheeler majors formed a partnership company in mainland China—AI Huan Huan—that would develop and deploy electric mopeds/scooters running on batteries and a swapping network powered by Gogoro. The first six products under the venture have already been launched.
Swapping Networks are Money Guzzlers
Swapping Networks appears to be an elegant solution—for the user, it is free of range anxiety, and for the deployer, it guarantees long-lasting revenues. However, they are capital-intensive and put a lot of depreciating assets on your books.
Gogoro says that as of December 2023, they had deployed 12,000 battery racks at 2,540 locations in Taiwan—the user is never more than a kilometer away from a swapping point.
In doing so, the company has raised USD 1.1bn in funds. With an estimated USD 250m cash left on its books, it seems Gogoro has run through USD 850m of money in making the scooters and setting up the swapping network. Nearly 90-percent of the network is in Taiwan itself. The company’s 2023 annual report puts the value of its deployed battery packs at USD 380.3m.
We don’t know exactly how much it costs Gogoro to set up one swapping station, but a 2015 Wired article put the cost for an eight-battery swapping rack at USD 10,000 in 2015 dollars. Gogoro has 12,000 of these racks. Even in 2015 dollar rates, that is USD 120m in capital deployed.
Between the racks and the batteries, not counting the charging station infra, the batteries in transit, the batteries written off, and the associated manufacturing equipment, there is a capital deployment of USD 500m in Taiwan alone.
At the end of 2023, Gogoro had supported 587,000 swapping customers in the geography. That equals USD 850 in capital deployed per customer, or TWD 28,000. At the current subscription rates of about TWD 700 per month, Gogoro would take 40 months to recover the investment.
That is not a problem—Gogoro’s modeling shows recurring revenues of up to 10 years per customer. While we know that Gogoro scooters are exceptionally well made, ten years is still a stretch. Then, even the best-made battery packs do deteriorate.
In all the above calculations, we have ignored the battery's depreciation and residual value after 40 months. The point was not whether Gogoro could profit from swapping—we believe it would. The more important point is the immense capital deployed to support a small geography like Taiwan.
Swapping Networks work well in small geographies.
Taiwan is a small island, but Gogoro still had to deploy over 12,000 swapping racks across 2,500 locations, and they are adding more.
What happens when Gogoro goes to more meaningful, much larger geographies like Indonesia, China, or India? This number becomes immense.
Gogoro has been trying to expand internationally. Some of the important geographies that Gogoro has deployed are India, China, and Indonesia. All of these are high-volume, large-area markets.
Understanding the capital-intensive limitations of Gogoro’s battery-swapping model, the company has focused on running city-specific pilots until now. In the recent past, Gogoro has initiated pilots with Gojek in Indonesia, Metro Motor and Paz Group in Tel Aviv, and Zypp Electric in Delhi.
In addition to the above, the company initiated pilots with Jardines Cycle & Carriage in Singapore, and one with Ayala Corp, and Globe’s 917 ventures in the Philippines.
All of these have been city-specific pilots and are rather small in size. The above international network combined was about 500 swapping locations. That represents only 20 percent of what Gogoro has deployed in Taiwan alone. Doing any meaningful expansion in a large geography would require a multi-billion-dollar capital deployment.
Gogoro doesn’t have that.
The European Tourism
Gogoro tried to make several inroads in Europe, with Amsterdam and Berlin being the leading cities of focus. In 2016, it also partnered with Coup, a scooter-sharing service funded by Bosch. Gogoro would deploy 300 scooters in Berlin under Coup. They followed up by deploying 600 scooters in Paris with the Coup partnership. Then, in 2018, Coup added Madrid and claimed they had already deployed 3500 scooters across the three cities.
However, Bosch would discontinue Coup in Nov 2019. Ride-sharing startup TIER Mobility would swoop in and pick up the 5000-odd Gogoro scooters and add them to its platform as e-moped hires.
Then, at the end of 2022, TIER shut down its moped-sharing services, citing high costs. That was the end of Gogoro’s run in Europe.
The India experiment
A strong partner can solve a high capital requirement. Gogoro initiated its India experiment in April 2021 through a joint venture agreement with Hero MotoCorp, the largest two-wheeler manufacturer in the country. On paper, the partnership worked. Gogoro had the tech, the batteries, and the deployment experience. Hero MotoCorp had the financial muscle and some real estate with dealer partners and workshops.
However, as we have noticed in the Indian market, startups are more convinced about electric mobility than incumbents. Hero’s Munjal and Gogoro’s Horace Luke started enthusiastically, but the partners stopped calling each other within a year. They never announced it, but the partnership is dead, with Hero moving to its Vida brand and an investment collaboration with Zero Motorcycles.
Gogoro would then advance to a pilot with Zypp Electric, an EV aggregator in Delhi. They started a pilot project, but things ended there.
Gogoro also announced two pilots with Indian food delivery leader Zomato and its rival Swiggy. In both cases, the plan was to deploy Gogoro scooters with delivery partners.
Then, in January 2023, Gogoro announced an MoU for a new partnership with Pune, India-based Belrise Industries to manufacture scooters and batteries. Belrise is an Indian automotive supplier group. This was a high-profile partnership, with the agreement signed at WEF, Davos. Both partners quoted a USD 2.5bn number they planned to invest. Both did not have the capital, which was okay—funds could be raised, as was the plan.
However, the MoU did not materialize by the end of the year, and both partners decided to part ways.
Gogoro decided to enter the Indian market alone and roped in its manufacturing partner, Foxconn, to manufacture Gogoro scooters locally. The company announced and homologated the CrossOver scooter for the Indian market. It has since started limited production at a Foxconn plant in India.
In November 2023, Gogoro also announced a partnership with Indian oil distribution company HPCL to use HPCL pumps to set up Gogoro swapping stations.
Somewhere along the way, the company parted ways with Kaushik Burman, its longtime senior executive and CEO of India. Burman would join Spiro, an African startup with a similar battery-swapping business model.
The numbers are not impressive in a market where electric scooter sales are nearing a million units annually. Things won’t change as the Indian market is cost-sensitive—scooters with batteries cost about USD 1000, which Gogoro cannot match without scale. Currently, the CrossOver is being deployed with a limited network roll-out in Delhi and Goa. Gogoro has indicated plans for a USD 1.0bn investment, but we get the impression that this is unlikely to go far.
Listing and Trading
Gogoro went public in April 2022 through an SPAC deal with Nasdaq-listed Poema Global. At the time of listing, the combined entity was valued at USD 2.35bn. However, the valuation has eroded rapidly since then and now stands at less than 25 percent of the high at the time of listing at around USD 500m. This is a company that still holds about USD 220m in cash.
The market is conscious of Gogoro’s falling sales numbers and inability to turn in a profit, even an operating one. The year 2022 was particularly bad for the company as sales crashed, and the company made an operating loss of USD 298.3m.
Things improved somewhat in 2023, with the operating loss declining to USD 88.4m. However, the hardware (scooter) sales trend remains depressing.
Everyone expects Gogoro to turn a profit sometime over the horizon. However, the business's capital-intensive nature means that Gogoro would need to seek constant investments like the one from Castrol recently.
This post draws heavily from Gogoro's detailed company profile in InsightEV’s upcoming Global Landscape and Future Prospects Report, a comprehensive analysis of the global E2W and urban mobility industry.
I live in Taiwan and own a Gogoro and loved the deeper analysis of this post. Having converted from petrol to Gogoro, my impression is that I've gone from paying $5 per month for petrol to $15 per month for a battery subscription. With purchase incentives for the Gogoro, it will be 5 years before that monthly subscription catches up to the all-in cost of a new petrol bike. However, I wonder if the higher monthly fees weigh heavily on people’s psychology since you definitely have to take a big picture view to keep the Gogoro value in mind.
I think the second-hand market is also relevant. You can get a reasonably good bike for $800 that comes with those low petrol fees (a new Gogoro is around $2000 with incentives). Now that Gogoro has lost its novelty factor, for the vast majority, who see the scooter as a basic tool, that’s tough competition.