Entrepreneurship Zone: 11 April 2023 :: Manufacturing electric motorcycles in Africa for Africa

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Entrepreneurship Zone: 11 April 2023 ::   Manufacturing electric
motorcycles in Africa for Africa

 

	
 


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Roam, formerly known as Opibus, is a Swedish-Kenyan company founded in 2017
by Filip Lövström and Mikael Gånge, with a mission to implement electric
mobility in emerging markets. Initially it began as a research project at
one of Sweden’s top technical universities before transforming into an
electric mobility company. Roam settled in Kenya given the country’s steady
rise as one of sub-Saharan Africa’s fastest-growing nations, especially in
relation to electric mobility adoption. Kenya’s growing used-vehicle import
market also provides a basis for electric conversions, which was the focus
in Roam’s inception years.

Over the years, Roam has evolved to provide tailored solutions to meet
market demand through business segments that today include:

·         Roam Air, a tailored electric motorcycle for Africa.

·         Roam Transit, a segment focused on manufacturing public transport
solutions such as electric buses.

·         Roam Energy & Charging distributes off-the-shelf energy products.

·         Roam Canopy provides tailored software applications to fleet
owners, business operators, financiers and others.


Roam’s business model


In 2019, Roam’s market research revealed a lack of reliable, high-quality
and environmentally friendly transportation means for African commuters. It
established that an affordable transportation alternative to the fossil
fuel-powered vehicles can be provided by achieving end-user savings from
lower operational and maintenance cost of the motorcycles. With these inputs
and extensive product market analysis, Roam decided to design and
manufacture its own electric motorcycles locally in Kenya.

Roam is now one of the leading electric motorcycle manufacturers in Kenya
with sales exceeding 200 units. Roam’s business model is selling electric
motorcycles to asset financiers, energy companies and other enterprises in
logistics and transportation. The company sells electric motorcycles at
almost price parity with the internal combustion engine (ICE) equivalent. By
selling electric motorcycles on an upfront cash basis to businesses, Roam
passes on the asset financing requirement and where possible, operating the
charging infrastructure to its network partners. Most recently, Roam
partnered with M-Kopa, an African asset financing platform, signing a supply
agreement that will see mass deployment of electric motorcycles financed
through the M-Kopa platform using a pay-as-you-go model.

Roam is also partnering with mini-grid companies that can finance and
provide charging infrastructure to acquire rural customers. This is an
attractive proposition for mini-grid developers as electric mobility could
potentially increase demand at their sites, acting as anchor clients.
Consequently, Roam has partnered with Powerhive, a mini-grid developer with
existing sites in Kenya.


Local manufacturing and assembly


According to Roam, manufacturing and local assembly is key to reducing the
final price of electric motorcycles while also allowing for product
customisation to meet local market needs. In addition, Roam’s ambition is to
build all the hardware and software infrastructure which other key players
in the industry can utilise. This is comparable with Gogoro’s “hardware as a
service” model. In this model, they sell underlying hardware such as bike
components and kit parts to original equipment manufacturers (OEMs) which
greatly increases interoperability within the battery-swapping network.

Roam currently has the capacity to design 100% and manufacture 35% of its
electric motorcycle in-house. It has an ambitious goal to manufacture and
assemble as much as 70% of the motorcycle locally over the next three to
five years. Its next-generation electric motorcycles will even include
proprietary frames, a first of its kind in Africa.

Roam has prioritised components where local manufacturing capacity already
exists, e.g. injection moulding, welding, metal bending and sub-assemblies.
Roam is collaborating with 10 local suppliers that currently manufacture ICE
motorcycle parts to help them transition to electric motorcycle
manufacturing. Since some components such as battery cells and base
components (resistors and converters) require high production standards and
capital expenditure to set up locally, these will still have to be procured
internationally.

Besides scaling locally, Roam has plans to expand beyond Kenya to other
African markets through strategic partnerships. One such partnership is to
supply Uber with 3,000 electric bikes for its delivery services. Through
this partnership, Roam will strategically position itself to scale across
Uber’s geographical reach, including Ghana, Nigeria, Côte d’Ivoire,
Tanzania, Uganda and South Africa.


Growth challenges


One of the most recent challenges has been faulty batteries, which led to a
delay in the delivery of electric motorcycles. The batteries were depleted
on arrival and inspection revealed that the internal wiring did not meet
specifications. For safety purposes, the batteries had to be returned to
China for redesign and testing before they could be used locally for the
bikes. An in-depth quality control framework will be implemented in China to
mitigate the above-mentioned risks, ensuring reliable batteries of high
quality.

Scaling an electric motorcycle manufacturing business can be costly due to
the large CAPEX needed to set up manufacturing infrastructure and the
working capital to build inventory. The sale of EVs and maintenance of
supporting infrastructure require substantial investments. Roam is looking
to raise US$17.5 million in equity and debt for working capital as part of
its Series A funding round to reach its 2024 operational targets.

>From Roam’s experience, there is a lack of local labour and specialist
experience in the electric mobility sector. There is a need to upskill the
existing workforce of engineers and technicians to meet the future demands
of the sector, e.g. in design, manufacturing, operations and maintenance.

To increase its own capacity, Roam staff receive on-the-job training and,
in some instances, experienced specialists are brought in for specific
assignments to bridge the skills gap.

- Howwemadeitinafrica

 

 


 


 


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