Six Key Trends Driving Affordable, Low-Carbon Growth in the Rural E-Mobility Sector
In the last five years, a vast array of e-mobility startups have sprung up across sub-Saharan Africa. They focus on micro-mobility, which comprises commuter transport and light cargo transportation and includes electric bikes, scooters and three-wheelers.
Micro-mobility businesses are already ubiquitous in urban areas across Africa. In East Africa, boda bodas (motorcycle taxis) and tuk tuks (autorickshaws) are among the most popular transport options for ferrying commuters and goods for small businesses. The boda boda industry is also one of the largest employers of young people in Kenya and Uganda. Similarly, in India, according to NITI Aayog’s “Zero Emission Vehicles” policy report, an estimated 79% of vehicles on the roads are two-wheelers, led by a very strong home-grown manufacturing market.
Two and three-wheeler segments are high-impact, high-volume segments of the transportation industry, as they make up the low-cost electric vehicle (EV) solutions market. They often use off-the-shelf components in their production, or locally assemble imported kits. They also hold great potential for developing local manufacturing capabilities beyond just assembling imported kits. Furthermore, these segments can give a second life to existing internal combustion engine (ICE) models by replacing the petrol or diesel engine with an electric engine and converting the vehicle to an electric version. This, in turn, can boost local skill development and job creation.
Below, I have outlined six key trends and business model features that offer a unique opportunity for accelerating low carbon and affordable growth in the rural e-mobility sector.
An opportunity for South-South cooperation between large-scale manufacturers
Interestingly, Indian two-wheeler manufacturers Bajaj Auto and TVS Motor comprise almost half of the two-wheeler export market to Africa. This puts them almost neck-and-neck with Chinese exporters in terms of market share, a dynamic which also offers opportunities for South-South trade cooperation between Indian companies and local African partners in the development of the continent’s EV two-wheeler segment.
Bajaj Auto, the largest two-wheeler manufacturer in India and the largest exporter of two-wheelers to African countries, already has an electric scooter model called the Bajaj Chetak Electric selling commercially in India. This indicates that large-scale manufacturers can play a role in promoting the development of the off-grid sector by scaling new electric appliance/vehicle categories by including off- and weak-grid markets in their sales strategies. One of the biggest roadblocks in enabling faster growth in productive use appliance access in off-grid markets has been the absence of a key role for large-scale manufacturers, something that could have hastened the upscaling of these markets. Small-scale startups dominate the current market, with only a handful of large-scale manufacturers in the mix. However, the respective market shares of small startups and large-scale manufacturers in the two-wheeler off-grid e-mobility segment could develop differently, given that established, large-scale Indian players already enjoy strong domestic manufacturing capabilities and a dominant share of the imported two-wheeler segment in Africa. For example, the Uganda-based startup Bodawerk is already using imported petrol engine-based Bajaj bikes, converting them to an electric version as part of its business model. Potentially, Bajaj’s Chetak Electric motorbike could also find a new market in East Africa.
User-oriented product service system modes can help promote the circular economy
Product service system (PSS) models allow customers to pay for temporary access to a product, typically through a short- or long-term lease agreement, while the service provider retains full ownership. These are also popularly known as “mobility as a service” or MAAS models. These models prolong the usage of existing vehicles and components, narrowing resource flows and extending the product’s technical life.
Variations of the model include renting out vehicles or renting out batteries – as seen in many battery swapping models. Mahindra, an India-based company, piloted a scheme that involved selling Reva electric cars (Mahindra’s most affordable small electric cars) in Bhutan. In this scheme, Mahindra retained ownership of the batteries, and users would rent charged batteries from the company, helping improve battery service and longevity. In the energy access world, betteries, a Germany-based startup, offers another interesting PSS model. The company has created a docking module for vehicle charging, with a modular battery design in which batteries are stacked on top of each other in a charging module. People take their electric vehicles to the module and select a fully charged battery, leaving their depleted battery on the module to be charged (and later taken by a different customer). Betteries has also indicated that these batteries can be rented out for use in electric vehicles.
PSS models are an important affordability strategy, as they can help address rising demand for vehicles, and heavy congestion and pollution in urban regions. And in rural areas, this model can help reduce the burden of high upfront and ongoing costs in traditional sales-based models.
In addition, MAAS models can narrow and slow resource flows. In a MAAS model, a vehicle’s “idle” time is reduced, since several users share each vehicle, which results in the intensification of product use. This leads to obvious environmental benefits, as the need to extract resources to produce one product per user is greatly reduced. Furthermore, since the company retains the ownership of the vehicle, it also ensures timely repair. The company is more aware of the most common types of repair issues that could be encountered, and can undertake more efficient stocking of spare parts. Therefore, these models can also help extend the technical life of a product and reduce the need for the extraction of materials for the production of new products. E-Bikes4Africa, based in Namibia, and Mobility for Africa, based in Zimbabwe – which both sell and rent e-bikes – are noteworthy examples of MAAS.
For products with little environmental impact in use but high impact in production, product life-extension is beneficial. However, if environmental impacts in use are significant, and technological improvements can lead to reductions in those impacts, it may be better to replace products earlier, rather than continuing to extend their lifespan. For electric vehicles available on MAAS-based models, product use intensification combined with low emissions in energy consumption have reduced environmental impacts during the use phase. Carbon emissions can be lowered further if these models use second-life batteries or give used ICE vehicles a second life by converting them to electric versions. Retaining vehicle companies’ ownership of these assets via PSS models is one of the lowest-carbon pathways to boosting transport access, as companies will provide timely repair and help ensure the longest technical life possible for these vehicles.
A boost to local assembly and local manufacturing
E-vehicle use in rural regions is highly amenable to local assembly and manufacturing, which can strengthen the rural e-vehicle sector’s resilience to the global supply chain shocks that we’ve witnessed during the current pandemic. This is especially true in a country like India, which already has a strong local vehicle manufacturing industry. Local assembly can help enable quicker production, boost local skill development and job creation, and improve the local availability of spare parts. This enhances products’ repairability. Examples include the Acumen and EEP Africa-funded Zem.bo, which imports parts from China and assembles e-bikes locally in Uganda, and E-bikes4Africa, which also locally assembles their bikes.
A conversion-based approach
Simply put, a conversion-based approach involves replacing a petrol engine with an electric one. This approach can give existing ICE vehicles a second life by making their drive trains electric. Given the bad terrain in many remote rural areas of Africa and India, conventional electric vehicles may not work effectively. Taking locally available and durable ICE vehicles that are designed for local terrain and making them electric is one strategy for overcoming this challenge.
Opibus, a Swedish company working in Kenya, follows a conversion-based approach: It takes existing vehicles like Land Rovers and converts them to electric versions to be used in safaris. Interestingly, the company is looking to scale the model in Sweden and other parts of the world, in a rare example of the Global South to North transference of a business model. (Usually when developing innovations for use in emerging economies, companies take things that have worked in developed countries and clone or adapt them to local contexts in developing countries.) As mentioned above, Bodawerk follows this approach in Uganda: It converts existing motorcycles to electric versions and combines this with a battery rental service model.
The Impact of Upcycling
Upcycling refers to the process of transforming by-products, waste materials, and useless or unwanted products into new and higher-quality materials or products. Recharging batteries from end-of-life electric vehicles or other appliances and using these for rural e-mobility applications is a great example of upcycling in this sector.
Upcycling is a useful approach for off-grid vehicles and appliances, because e-waste management of these products is often a challenge, as they are not designed for recycling. Existing recycling processes for batteries mainly target the recovery of cobalt-based lithium batteries, and exclude the non-cobalt lithium batteries that are more commonly used in the off-grid solar sector. Africa and India could find an important opportunity in upcycling these batteries, giving them a second life for use in rural e-transport applications. This would also generate another important benefit: improving vehicle affordability.
The use of Internet of Things (IoT) is promoting circularity and resiliency
One emerging option for modular off-grid appliances and vehicles involves embedding sufficient electronic monitoring in the products via IoT, to predict when different modules will expire based on their use history, and to provide preventative maintenance via remote troubleshooting. Pay-as-you-go- based models in energy access are already quite popular, and have demonstrated these possibilities. The use of IoT also helps promote resiliency during global shocks such as pandemics, for instance by enabling contactless payments. This has high applicability for e-transport use cases as well.
As illustrated by the trends and business models discussed above, a combination of price-sensitive customers, affordable prices and local innovation has helped spur the development of a vibrant and growing micro e-mobility sector in rural emerging markets. These innovations are boosting the off-grid energy sector and supporting low-income communities’ transition to a low-carbon future.
Photo courtesy of Random Institute.