Lower EV financing rates are here

From the newsletter

New asset financing companies, such as Ridewell, which is backed by 4G Capital, might pose a threat to established companies like Watu Africa, Mogo and M-KOPA, who are offering EV financing. Ridewell has the lowest interest rates, less than 15% p.a., compared to competitors who are stuck at about 50% p.a.

• Ridewell has partnered with Powerhive, ARC Ride, and Roam to provide financing options. Their highest rate is 13% p.a. for financing a Roam Air with a double battery, while their lowest rate is 9% p.a. for financing ARC Ride’s Bidii Boda.

• Consumers and EV companies can benefit from Ridewell's low rates, available until 2027. These rates are supported by funding from the Mastercard Foundation and the Jiinue Growth Program, aimed at promoting electric mobility and improving livelihoods.

More details

• November saw turbulence in interest rates among two key companies. M-KOPA’s highest interest rate for financing the Spiro Commando decreased from 54% p.a. to 48% p.a., while the lowest interest rate for financing the Roam Air dropped from 40% to 33%. Similarly, Watu’s highest rate for the Spiro Commando fell from 83% p.a. to 56% p.a., and its lowest rate for ARC Ride’s Bidii Boda reduced from 51% to 26% p.a. This shift, largely driven by the Central Bank of Kenya’s rate cut, reflects the broader impact of monetary policy changes on financing rates.

• Daily consumer payments increased from an average of $4 in October (see here) to $5 in November. The lowest daily payment was $2.86 for ARC Ride’s Bidii Boda via Ridewell financing, while the highest rate was $9.29 per day for a Roam Air dual battery financed by Mogo and M-KOPA.

• Fortune Credit is offering asset financing for e-bicycles through partnerships with eWaka Mobility and eBee Africa. eWaka offers the lowest rates at 41% p.a., while eBee Africa’s rates are higher by a margin of 5% p.a.

• The EV financing landscape in Africa has been dynamic over the past month. Moove, a Nigerian-based asset financing company, recently entered the U.S. market to finance autonomous vehicles (Google Waymo) after launching in Mexico. Moove cited high default rates from customers as a challenge in its home market. Meanwhile, the Nigerian government has stepped in by offering a mobility fund to enable citizens to access EV financing.

Our take

• South Africa's EV market shows promise, but high e-motorcycle prices remain a significant barrier to adoption. Watu Africa and M-KOPA can view this as a lucrative opportunity by introducing affordable financing solutions tailored to middle-income buyers. Strategic partnerships with local assemblers and ride-hailing platforms could help reduce costs and boost consumer uptake, ensuring profitability.

• Retrofitting ICE vehicles and motorcycles into EVs offers a cost-effective option for consumers and is gaining momentum. Financing companies can capitalise on this trend by offering loans for retrofitting kits, bundling services, and warranties to increase accessibility and trust. This approach can attract environmentally and cost-conscious customers, especially small businesses.

• In Kenya, financing rates are likely to decrease further due to Central Bank rate cuts. Greater competition in the EV financing sector will also pressure lenders to offer more competitive rates. However, external factors such as inflation could introduce volatility, so consumers should act quickly to secure favourable terms.