Spiro expands operations to its third city in Kenya

From the newsletter

The Benin-based electric motorcycle startup Spiro has expanded to Kenya's newest city, Eldoret, after successful operations in Mombasa and Nairobi. This is according to an article published yesterday by Kenya Wall Street, based on an interview with the Deputy Country Head of Spiro Kenya, Raymond Kitunga.

• The company has been in operation since 2022 in Benin and has rapidly expanded to operate in Togo, Kenya, Nigeria, Uganda, Rwanda and Ghana and raised over $130 million in funding. 

• To date, they have sold over 15,000 electric motorcycles across the continent, including 1,500 in Kenya.

More details

• The company has structured its business model to not only manufacture electric motorcycles but to also provide battery swapping stations and capital to finance consumers.

• They have leveraged their business model to capture customers across the verticals and close the main gap slowing adoption – affordability and range anxiety.

• A battery swap costs about $2.25 and allows for an average travel distance of 75-80 km. This is comparable to the distance covered by 3 litres of fuel, which costs almost twice as much as a swap.

• To further enhance affordability, it has partnered with financing companies like Watu Credit in Kenya, enabling customers to access financing options for their electric motorcycle purchases.

• It has partnered with petrol outlets like Petrocity and Lexo Energy to establish battery-swapping stations across their outlets, providing convenient access for customers.

• Spiro is not alone in the Kenyan electric motorcycle market and faces competition from companies like Ampersand, which has sold over 1,150 electric motorcycles, as well as other competitors like Roam, Ecobodaa and Kiri EV. 

• However, the Kenyan electric motorcycle market is growing, and projections point to it reaching an annual sales size of 227,000 by 2030.

Our take

• Demand for electric motorcycles, particularly in cities, is steadily growing due to evolving lifestyles and an increasing need for last-mile delivery solutions. 

• However, obtaining affordable financing for electric motorcycles remains a hurdle. This market is still relatively new and considered risky due to a lack of clear regulatory frameworks and established practices. As a result, traditional banks, with few exceptions like KCB and NCBA, have been hesitant to offer financing options.

• Asset financing companies like Watu Credit are recognising the potential of this technology and actively financing consumers. This will likely tilt the sales scale.

• But success in this market won't be based solely on demand. There is competition. Companies that diversify their business models across various verticals, including financing, insurance, servicing and repair, and battery swapping, will have a competitive advantage.