Kenyan e-motorcycles market records 98% CAGR

From the newsletter

Kenya's EV market witnessed a CAGR of 98% and 77% for electric two-wheelers (E2Ws) and electric three-wheelers (E3Ws), respectively, between 2018 and 2023, according to a report released by Mideva Labs. E-motorcycles dominate the EV market with an approximate share of 53%, followed by e-bicycles at 43% and E3Ws at 4%.

• While the CAGR of E2Ws and E3Ws is rising, the CAGR of internal combustion engine (ICE) two- and three-wheelers is declining. For instance, between 2018 and 2023, the CAGR of ICE motorcycles stood at -18

• According to the National Transport and Safety Authority (NTSA), EV sales in the 2022–2023 financial year grew by 108%, accounting for 8.3% of the market share for new vehicle sales. These figures indicate an impressive rate of EV adoption in Kenya.

More details

• Kenya hosts 3.7% of Africa's motorcycles. The country’s e-mobility market for electric two- and three-wheelers is experiencing rapid growth, with 3,949 units sold in 2023, generating $5.83 million in revenue. This was driven by urbanisation, rising e-commerce, and supportive government policies.

• Unlike the outright purchase model dominating ICE vehicles, EV companies are focused on lowering upfront costs through innovative financing mechanisms. Kenyan EV companies employ diverse business models to meet varying consumer needs. Battery-swapping systems, costing between $1.16 and $3.49 per swap, are prevalent among e-motorcycles. Subscription-based models for e-bicycles, such as rentals starting at $66 per month, cater to cost-conscious consumers. Additionally, pay-as-you-go (PAYG) leasing models for buses and motorcycles, along with fleet management services, are enhancing affordability and efficiency.

• Kenya's EV ecosystem is supported by a robust network of financiers. Companies like Mogo, Watu Credit, and M-KOPA provide lease-to-own options, making EVs accessible to low-income groups. Financing mechanisms such as results-based financing (RBF) tie funds to milestones like CO2 reductions, job creation, and gender inclusion. These models ensure not only financial viability but also measurable social and environmental impact. Significant investments include $24 million by Ampersand and $63 million by Spiro in 2023, underlining investor confidence in Kenya’s e-mobility potential.

• Kenya hosts over 12 local EV motorcycle manufacturers and three EV bicycle original equipment manufacturers (OEMs), creating a vibrant competitive environment. Key players such as Ampersand, Roam, Spiro, and Ecobodaa dominate the market, while emerging companies like Ewaka introduce innovative offerings, including battery-as-a-service and flexible payment plans.

• Charging solutions are expanding, led by companies such as EVChaja and Chaji Energy, which offer time-based services and IoT-enabled smart sockets.

• Primary customers include logistics companies (e.g., Jumia), ride-hailing operators, and independent riders. The adoption of EVs for last-mile delivery and urban commuting is driven by affordability and flexible financing options.

• The Kenyan government supports EV adoption through VAT exemptions on Completely Knocked Down (CKD) units, reducing costs by 25%, and import duty waivers for electric vehicles. Furthermore, the doubling of VAT on petroleum products in 2023 has indirectly incentivised the transition to EVs by increasing ICE vehicle running costs.

Our take

• While supportive policies exist, the absence of universal standards for EV manufacturing, battery recycling, and charging infrastructure could hinder growth. Proactive engagement with regulators to establish these standards will be crucial for sustaining investor confidence and maintaining market integrity.

• Fragmented data in Kenya's EV sector creates blind spots for investors and manufacturers. Establishing a centralised data repository on EV adoption rates, energy consumption, and performance metrics will enhance transparency and help identify high-potential areas for expansion and investment.

• Rural areas remain underserved, creating range anxiety for potential customers. The EV market in Kenya must prioritise rural areas, which remain underserved due to limited infrastructure. Solar-powered charging hubs and portable battery solutions could be transformative, tapping into an unaddressed consumer segment while aligning with Kenya’s renewable energy ambitions.