Kenya EV report faults lack of financing

From the newsletter

Success in the e-mobility space requires collaboration. A report released last week by Siemens Stiftung shows that the three most valued partnerships are with financial institutions & investors, other e-mobility companies, and technology & research institutions. 84% of companies ranked the three as highly important.

• Kenya’s EV market is still in its early stages, and more money is needed for research and development, manufacturing setup, operation expansion, and distribution networks.

• Of all the companies surveyed by Siemens Stiftung, all aim to raise capital in 2024, with 58% seeking to raise less than $1 million.

More details

• Most companies expect to raise capital from equity (41%), followed by debt at 26%.

• At a granular level, government and other grants are the most preferred sources of raising capital. Equity from venture capital/private equity/impact investors follows next, and corporate debt and bank loans ranked least.

• Companies seek competitive financing options from institutions that understand the unique needs of the e-mobility sector.

• Interestingly, companies that provide financial services are the ones in more need of financing. They are followed by those in the manufacturing of batteries and assembling battery packs or body/chassis and charging point providers.

• All these areas have heavy capital expenditure.

• About 70% of the companies plan to invest in sales, research, and development. This is followed by investment in production, manufacturing, and services, as they scale up operations and increase production capacity to meet expected demand.

• Investments in working capital, technology, and expansion to new geographies ranked the least.

• Knowledge of carbon financing is scanty, with only 30% of the companies having experience with it and only 2% having raised it.

• In the supply chain, e-mobility players face the challenge of securing suitable financing options due to macroeconomic factors, including high inflation and the depreciating Kenyan shilling.

• Despite the challenges, there is optimism in the sector. Three-quarters of the companies are currently generating revenue, and 65% expect revenue growth in 2024. 

• About 40% of companies are in the early stage and generate revenue below $10,000, and about 10% of companies have crossed the $1 million mark.

Our take

• Your needs determine your partners. A primary problem for EV players is capital, as the sector is highly capital-intensive. The technology and business models are not fully developed, requiring considerable research and iteration to achieve a market-fit product.

• It is interesting that EV players don't value traditional energy companies and utilities. The alternative of setting up off-grid charging stations is becoming more affordable and reliable, moving away from the expensive grid. This is likely the future of EV charging, as we expect more charging infrastructure developers to partner with renewable energy companies.

• It is clear that e-mobility players need each other. But the market remains fragmented. At Greenrising, we are compiling the necessary information for e-mobility sector players.