6 musings on low-income EVs from frontier tech testing

Will the 2020’s be remembered as the decade where people plugged in to Electric Vehicles ?

Tesla CEO Elon Musk is the richest man in the world, Electric vehicle (EV) sales tripled globally between 2019 and 2021 and, at the COP26 conference in Glasgow, conversation centred on transitioning away from conventional fuels. Despite some apparent “failings” around fossil fuels at the conference, the role of electrifying transport as a step towards the green transition was never really argued.

As well as rising climate concerns, some of this shift is of course economics: the total cost of ownership of EVs is lowering and is converging closer to conventional vehicles, in part because of strong policy support and the cost of batteries significantly decreasing over time: from about $500/kWh in 2008 to $181/kWh in 2018. Indeed, in the rich world, the prospect of EVs dominating the private car transport sector is now a case of when not if.

But what about electric vehicles in low- and medium-income countries? To be cleaner and greener, but also to help fight the volatile fuel price rises we are currently seeing worldwide, and that are particularly impacting oil importers in Africa.

It’s worth mentioning here the differences in how transportation looks in different places. Think about East Africa, for example, where 32 million journeys are taken every year by motorbike taxi. This affects how electric vehicles can not only look but can be introduced in these regions.

While low- and middle-income countries show great potential for electric vehicles to transform transport in clean, green, and cheaper ways, there are many challenges implicit in setting up electric vehicle systems, including finding the right vehicle for particular contexts, the low demand for electric energy that inhibits infrastructure growth, and finding the right business model for nascent electric vehicle offerings to thrive.

The Frontier Technologies Hub helps innovators test emerging technologies around the world, and has already supported two pilots to test the feasibility of electric vehicle systems in Kenya and Rwanda.

I’m trying to draw on some of the learnings from these two pilots and their relevance to an ongoing venture called ELEK TEY, our most recent pilot that's testing electric boat motor engines in rural Senegal. We have recently selected a partner, Joko Sun Energies, who will work alongside FCDO Advisor Tertia Bailey to put this into action.

We’ve decided that Joko Sun is the dynamic, locally placed partner we were looking for, and can’t wait to get to work with them!

The question now is: what can ELEK TEY learn from our portfolio and the two electric vehicle pilots that have gone before? Here are my nuggets of wisdom:

1. Test one fundamental at a time

EVs and Mini Grids was a pilot that ran in Kisii, Kenya, between January 2019 and November 2020. It was trying to test electric vehicles as “anchor loads” — that is to say, goods that carry with them enough energy demand to justify solar infrastructure — and as a way to bring mini-grids to rural areas. Mini-grids are essentially power units that generate electricity away from the centralised grid, often by solar power.

The Powerhive team in Kenya spent so long trying to find, source, import, test, and tinker with a variety of EV models that the big questions at the heart of the pilot went answered. Namely, whether EVs could be the anchor loads needed to make mini-grids viable in the rural context of Kisii.

In this example, the hilly terrain of Kisii offered much more resistance to the imported EVs than imagined, and the team spent the majority of the pilot encountering issues with performance, which ultimately required the retrofitting of two-wheeler vehicles.

For me, this experience suggests that the team at ELEK TEY could dial down some of the uncertainty surrounding the boat engine technology. Maybe they can do this by using boat engines that have been tested in similar contexts so that we could elaborate on other aspects of the business model first? Or perhaps we should be realistic about what we can achieve at the beginning of experimentation, and focus purely on proving the viability of the boat engines in the context of Casamance and Sine Saloum, where the pilot will be based.

2. If there isn’t any solar infrastructure yet, can you fake it until you make it?

Testing your most critical assumptions about a solution as quickly as possible is a key tenet of Lean experimentation that we advocate at the Hub. And when funding is finite (when isn’t it?), this methodology also influences the investments that teams decide to make.

When it comes to electric vehicle systems, hardware is often expensive so decisions have been made about the purchasing of the kit: how, why, and crucially, when, should you bring in certain pieces of hardware?

For example, electric vehicles are often associated with solar charging stations, because it’s the obvious way for them to realise their renewable energy credentials, but also because they might be introduced in remote or rural locations where conventional energy grids don’t reach (as was the case for our pilot in Kisii).

Ultimately, we know that solar charging technology works, but have less data on electric vehicles in these contexts. So why not use a diesel generator to charge the batteries first? It allows you to manage the risk of equipment failing earlier on and minimise any prolonged time setting things up.

“Faking it” is also much less expensive and allows you to focus on other aspects, such as the business model and crucial questions on the growth and sustainability of the solution.

This mindset is relevant to the ELEK TEY pilot, but admittedly quite bizarre when you consider that we have chosen to partner with a solar energy company. But you might argue that’s precisely why we should focus on the new, uncertain parts of the model first. If you want to learn about the difficult parts of a venture, don’t stick to the bread and butter and go out there to see what works.

Still, all this asks the question of when to introduce solar charging infrastructure? We can clearly see a difference between the pilots here that can inform us.

The second FTL pilot ran between February 2018 and February 2020 and was concerned with the introduction of electric moto-taxis in Kigali, Rwanda, with Ampersand.

It was clear from the beginning that Ampersand’s messaging wasn’t about solar or renewable energy per se. Even today the firm markets itself as providing a “no-brainer” solution for moto drivers, and of reducing local pollution over any explicit energy angle. However, when you consider that more than half of the grid energy in Rwanda comes from hydro-power sources, you realise that this was less of an issue for the pilot and that Ampersand’s climate credentials are either implicit or secondary.

For Ampersand CEO Josh Wale, infrastructure means the introduction and scaling of charging stations over any transformation of the energy system itself.

In Kisii, On the other hand, the whole point of the pilot was to introduce electric vehicles as anchor loads that could ultimately provide the financial viability for off-grid solar charging.

Finally, when it comes to ELEK TEY, this all depends on our access to grid energy: assuming we will be relying on off-grid solutions, we would be closer to the example in Kisii, as the boat engines are likely to act as anchor loads on what will essentially be solar mini-grid systems.

However, can we use the approach of Ampersand in Kigali to learn more about whether electric boat engines can reduce fuel expenditure by deciding how much to charge for a unit of energy on the proposed mini-grid system and appealing to customers based on that estimate?

3. The business model is king — how to create a virtuous system and what to do before the scale needed to get there

As I’ve mentioned, all these engines and charging stations are expensive pieces of tech. And you are trying to get people to replace how they act within a complex system to use them. So not only do you have to work out what this virtuous system of incentives and ecosystem building will be, but support your own operations in order to get there.

Ampersand sustained itself initially on FT Hub and other funding to go beyond a proof of concept — where you can at least be confident that the proposition works and can start offering it to customers.

Understanding unit costs should be the core part of the pilot because it informs when you might reach sustainability and how much time and money you might need in order to get there.

For example, in the ELEK TEY pilot, we believe that people can save about 25% on transport costs while leasing a battery, but we still have to prove that.

To start, you can model different costs through, for example, an Excel spreadsheet that tries to estimate the total cost of ownership for the different petrol and electric motor outboard engines:

Total ownership cost = Distance travelled x Cost of energy/km + (Hardware purchase + Maintenance costs) / Lifespan

On the other hand, when it comes to producer surplus if you identify that electric boat engines only become profitable at, let’s say, 100,000 units, you might have a real problem because of the market size or time needed to be able to reach such numbers given the need to sustain a business.

Overall, with unit cost data, you can start to test whether users respond to information such as price in a positive way. Communicating and convincing people on this data might give them the confidence to invest in the new technology for themselves, and “Hey presto!”, you’ve started your virtuous system.

However, what’s important not to miss here are the social and cultural understandings of how people purchase transport differently, which might also have an impact on adoption.

Think of moto-taxis in Rwanda, where people pay for their bikes incrementally. The pilot team found that 75% of motos in Kigali were lease-to-own and that 50% of all people preferred this model.

Additionally, learnings about how individuals and groups act often go beyond our traditional sense of “economically rational” and into the realm of “human”. For example, low-income communities in different parts of the world have been found both to put a premium on owning an item, and also be relatively disincentivised to take out loans to pay for hardware.

Understanding your users, their circumstances, and their preferences can help you hone in on which of the diverse options for payment you can test to make sure you find the right fit within the complex system you are trying to embed within. Only then can you truly know as a solution provider where you might be aiming for, and as a business, what you might need time and money-wise to get there.

4. Choose one segment of the market to test with and start there

For Ampersand, one of the key learnings from their time with FTL was about user preferences for existing motorbike designs or feels. The team was surprised to find that while testing different types of bikes with taxi drivers, or Motars, they preferred the bike that had fewer features and was closest to what was commonly used.

Let’s zoom in on Motars: they are usually in their 20s or 30s, working 14 hours a day and at least 6 days a week, covering on average 190km a day. They maximise fuel time and have economic strategies for doing so.

Understanding this particular group allowed the Ampersand team to flesh out their unit costs and other information on riders that they could use when building an initial business model.

For example, by simply following riders and identifying their driving and buying habits, the team was able to see how much of their income was spent on petrol and how much went to leasing the bike they operated.

The team also learned that the user experience of the battery swapping service was important, and tried to make it feel as close to a conventional petrol station as possible.

I was lucky enough to visit the Ampersand facility and see the riders use the battery swapping stations. There’s a constant rotation of sleek, silent bikes gliding onto the side of the black shipping container, then waiting as an attendant lifts the spent battery and quickly replaces it for a freshly charged one. The efficiency is impressive, and you can feel how this has become second nature for the riders that use them.

As the Motar riders spend half their lives on their bikes, you really have to work out a system that allows this ease and familiarity to come naturally. Working with this very particular user group has allowed Ampersand to build both a product and service around them and fit really well with their existing needs and expectations.

5. Whatever you buy/build, make sure someone locally can fix it

Back to Kisii, and as problems mounted with imported vehicles, the need for adjustments and repairs to the e-bikes became clear, Powerhive partnered with Bodawerk and Opibus, two local specialists who were able to retrofit standard petrol bikes in a process they called “bodafication”. While not flashy, the upside of this strategy is that the ubiquitous Honda and Bajaj bikes in Kenya are easy to fix and source spare parts for.

By emphasising local mechanics in any new hardware setup, including retrofitting, you can minimise changes you are trying to embed into the existing system and can capitalise on the markets that are already there, thus only leveraging a small part of the existing system in order to electrify your solution.

For ELEK TEY, retrofitting would mean replacing the existing petrol outboard motor (at the back of the boat) with an electric one. The consequence of swapping out these units, like any adjustment, is that whatever you change has to enable new systems (read: people) around it to troubleshoot, maintain, and even repair and replace it.

6. Batteries are heavy

And finally yes, a small but non-trivial thing about batteries… they’re heavy!

In low-income settings, where your customers might not have access to private charging infrastructure, you need to work out how they will be able to charge their battery; likely not by standing next to the vehicle for hours waiting for it to charge.

It’s for this reason that battery swapping has been suggested in low-income contexts. We’ve seen how Ampersand gets users to pay for % charge used, as opposed to the battery itself. The benefit of this model is that if the driver comes back with 55% charge, they can pay for the other 45% and get a fresh, fully-charged battery back in return. So here the tech (limitations) match the infrastructure, which matches the business model.

The question of what to do with the battery seriously affects what we might try with ELEK TEY because water transport adds another layer of complexity to things. While it seems unfeasible to charge up electric boat batteries while they’re connected to the motor, the sheer size and weight of the battery means that one would struggle to move it beyond the waterfront or towards the shore by hand.

This is something others have been thinking about: for example, can you use Tuk Tuks to transport the swapped batteries to locations where they get charged? However, might this idea create another layer of complexity that you would have to build into the system you are trying to work with?

Sometimes the simplest things need the most attention.

That was a few of the questions we are asking about electric vehicles based on our pilot portfolio. Do you have any for us? Or some stories you’d like to share?

Please comment below or get in touch at david@hellobrink.co