Scramble rages for ultimate electric car financial prize

electric car

An electric car at a charging station.

Photo credit: Pool

At the launch of the Nairobi International Financial Centre (NIFC) on July 4, a small start-up ARC Ride Kenya became one of the first companies to sign up.

The firm plans to churn out 500 units of two and three-wheeled electric scooters and bikes each month and has already established an electric vehicle assembly plant in Nairobi.

The company is targeting boda bodas and logistics companies with the units retailing at about Sh90,000 — a bargain because one will not have to buy fuel after purchase, reducing maintenance costs.

ARC Ride boss Joseph Hurst-Croft says they have even partnered with lenders to provide asset finance options that will see boda bodas pay as little as Sh700 a day.

“Arc ride is one of the leaders of the e-mobility sector in Africa. We are investing in an assembly plant in Nairobi, which is building affordable, reliable, clean vehicles. So whether it’s an e-bike for food delivery, commuting or electric boda boda services, to be able to save 50 per cent on fuel costs for the rider, which is very much needed in today’s economic times,” said Mr Croft.

The ARC Ride CEO said they have invested more than $7 million (Sh833 million) so far and will be looking to raise more capital with the support of NIFC to continue the growth, not only in Nairobi, but also in other large towns in Kenya and regionally.

Food delivery

In their range of vehicles, they have an e-bike for food delivery and personal commuting, an electric boda boda for the mass market either delivery or for personal transportation. Next year, they plan to launch a personal scooter and have developed an electric tuk-tuk as well.

The company also plans to set up battery swapping infrastructure in Nairobi for exchanging batteries like gas or bottle swapping facilities.

Mr Croft said financing is the key to scaling into the mass market. He added that a typical bodaboda rider pays about Sh400 for hire purchase and an additional fuel cost of up to Sh600 a day, which amounts to Sh1000.

ArcRide is bringing a product to the market that will cost no more than Sh700 a day minus the fuel costs — which means they will put Sh300 a day back into the pocket of the bodaboda rider.

The e-bike for food delivery and personal commuting will retail at about Sh90,000.

“We have partnered with companies like Watu Credit and M-Kopa to be able to offer the product through financing terms so much like any motorbike or any vehicle in the market,” said Mr Croft.

“This is an exciting time for us because if you look at rapidly growing economies in Asia, around 80 per cent of households have a scooter, and their development is perhaps say 20 years ahead of cities like Nairobi, Kampala and Dar es Salaam, where the desire for personal transportation is taking off as the middle-class increases that people want to move towards owning a car,” he says.

“Not everybody can buy a car straight away and also the transport system isn’t going to cope...We reckon we’re on the edge of a real big takeoff of this market.”

E –mobility companies have become the rage as the world makes a stab at abandoning fossil fuels for clean energy.

The European Commission wants to ban the sale of diesel and petrol-powered vehicles by 2035, signalling a global shift, prompting Kenya to set the ground for its e-mobility.

Clean mobility

Kenya is racing against time to catch up with the rest of the world in the shift to clean mobility and reduce pollution.

The country has more than 1,000 low-carbon emission vehicles with dealers expecting an increase due to the high fuel cost. Recent geopolitical tensions in Europe following Russia’s invasion of Ukraine have seen fuel prices spike out of reach for most motorists.

Car & General (C&G), in January, announced that it would start selling electric vehicles and tuk-tuks as part of diversifying into the green mobility business, which is set to grow amid a push to address climate change and pollution.

Kenyan electric vehicle start-up BasiGo raised $4.3million in seed funding and has launched a Sh5 million passenger electric bus in anticipation of increased demand for environmentally friendly transport.

The 25-seater bus, which is designed by the world’s largest manufacturer of electric buses BYD Automotive, has a 250-kilometre range with a recharging period of fewer than four hours.

Buyers will also be subjected to a daily subscription fee of Sh20 per kilometre to cover the cost of leasing the battery, nightly charging at a BasiGo depot as well as service and maintenance for the buses.

Electric vehicles are also attracting the financial muscle of lenders keen on securing green financing and complying with Environment Social Governance (ESG) regulations.

Electric vehicle financing

NCBA Group has launched Sh2 billion electric vehicle financing as customers increasingly shift to battery-powered cars amid climate change advocacy and the rise in global oil prices.

The five-year deal will see customers enjoy asset financing of up to 80 percent of the total cost of any personal or public service vehicle they are interested in buying.

In addition, NCBA will give a 10 percent interest rate on reducing balance offer for electric vehicle loan applications received within the first 90 days.

As companies like Arc Ride and BasiGo look to bring affordable electric vehicles into the market, a new industry is rising -- the battery charging hubs that are expected to replace fuel stations in the future.

Kenya Power plans to construct electric charging systems for homes, businesses and the public across the country as the shift to clean transport gathers momentum.

The power distributor said it has enough electricity to charge 50,000 buses and two million motorcycles during off-peak hours.

The State-owned power utility is seeking a firm to build an e-mobility network infrastructure system in Nairobi and Nakuru to pilot the charging stations.

Kenya Electricity Generating Company has also installed an electric vehicle charging station in Nairobi as the State agency joins other actors steering the push for e-mobility.