Interview: How BasiGo is dealing with a huge demand for electric buses

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Founded in 2021, Kenyan startup BasiGo has quickly grown to become a leading electric bus company in East Africa. The company leases buses through a Pay-As-You-Drive model and has signed up 11 public transport companies. In an interview with Mobility Rising, BasiGo Kenya Managing Director Moses Nderitu revealed the company has more than 500 orders.  

• BasiGo has raised more than $55 million to date, which has enabled it to double its monthly assembly output to 20 buses. It needs further capital to increase its production capacity which still lags behind demand, leading to a months-long backlog of orders.

• “We are still raising more and that will help us grow to get to that point whereby what we are generating with the buses and vehicles on the road should be able to sustain the business moving forward. But at this point, like most startups, you have to rely on fundraising at this stage of the business,” says Mr Nderitu. 

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What does BasiGo do?

Mr Nderitu: We are a company that is revolutionizing public transport in East Africa through electrification of buses. On one hand, we are the company that is bringing the bus technology. On the other hand, because we lease our products through the Pay-As-You-Drive model, we are a financing company because we've brought an innovative financing model that's allowing people, these operators, to be able to acquire the vehicles. And on the other hand, we are, for all intents and purposes, a mobility company and an infrastructure company. Because we are building and have got the largest DC charging network in Kenya. We are also doing, together with KVM (Kenya Vehicle Manufacturers), assembly of the buses. We are a bit of a jack of all trades, but in reality, we are just a company that's trying to revolutionize public transport in Kenya. 

How do electric buses differ from diesel buses?

Mr Nderitu: The first difference is that our buses are built or designed from scratch as a bus to carry passengers. It is not a truck chassis that is being converted for purposes of carrying passengers. So, for example, the majority of the 33 seaters in the market have a truck chassis with the bus body built on top. Our buses are directly built from scratch. What does that do? The comfort levels are unmatched. Secondly, it's an electric bus. It's propelled through a motor, so you've got very few moving parts. The one thing everybody notices is how smooth and quiet the bus is. And then most of all is being electric. It's using locally generated power, as opposed to a diesel bus that will always use imported energy in the form of fossil fuels. Most of all, on average, the electric bus is making more profit for the owner because of the low cost of the total cost of ownership. It has a low cost of operation. Hence, even if you are earning the same amount of revenue, if your costs are lower on the electric you're actually making more money. We never start with the issue of climate; I could have said that one is friendly to the environment and the other one is not. But if it's not friendly to the pocket, then it becomes very difficult to convince somebody about the environment. 

How does your Pay-As-You-Drive model work, and how much do your customers pay?

Mr Nderitu: When we first started, we started by taking reservations. The idea why we opened reservations was one to be able to determine, was there demand? Was there a market for these electric buses? And we ended up having over 500 reservations at that point where we decided to close reservations because we did not want to take reservations beyond our capacity for the next two to three years. So, assuming the Sacco (bus operator) is on the reservation list and they are interested in acquiring a bus, what we then require them to do is give us their due diligence documents. We get their registration, and who their directors are. We will do a full due diligence, full KYC, if they've got filed returns, we'll go through them and make sure that they are a Sacco in good standing. And once they've gone through that process and passed our internal due diligence at KYC. We then are able to agree on a location, and what then we do is ask them to pay a deposit or an allocation fee, which right now it's standing at KES 1.5 million ($11,600), KES 750,000 ($5,800) of that is refundable.

And then after the bus has been manufactured and tested, we then hand over the bus to them to brand. Once that process is finished, it is for them now to put it on the road, on the preferred route. Before that we also agree on where the bus is domiciled. So, each bus we provide must have a dedicated charger. We've got quite a number of depots, but each bus must have a depot. In the event there's a power failure in that depot, we can relocate it to another depot for that day, yeah, but you have a dedicated depot and charger where that bus is domiciled.

Yes, then within that Pay-As-You-Drive fee, which ranges from KES 60 ($0.46) per km and KES 74 ($0.57) per km depending on what mileage you are doing. So, higher mileage clients pay less, and lower mileage pay a bit more. What is included is all charging and all routine service and maintenance. 

Do you plan to expand beyond mass transport buses into other categories like corporate buses?

Mr Nderitu: We are internally looking at that because there's been growing requests for corporate transport, especially with this business process outsourcing model. However, because we are not an operator, we hand those clients to some of the operators we've got. But the main challenge with school buses and corporate transport is the mileage. For our economics to work, we require a minimum mileage, and our minimum mileage ranges from 5,500 km a month, all the way to 7, 000 km. With a school bus, that mileage ends up being way below that. And that would mean the Pay-As-You-Drive would be so much higher and might not be economically viable for them. However, as technology is getting better and cheaper, and we know that we will be able to serve those markets, as we move into different types of vehicles, for example, with the 16 and 18-seater vans. Those would work very well for corporate shuttles and as well, school buses, one because their acquisition costs are lower, the mileage requirement is also lower, and therefore we'll be able to get into those areas. 

You recently launched electric vans. What informed the move, and is it working so far?

Mr Nderitu: Remember, we believe in decarbonizing transport. And when you look at transport, vans are the backbone of inter-city transport. So, what we then decided to do is to test the market, and we have put a charger in Nyahururu. Our idea is that the vehicle leaves Nyahururu every day, goes to Nyeri, comes back, and then goes to Nakuru and comes back to Nyahururu the following day. Two, we wanted to understand what are the dynamics of putting charging out of town. Three, is it competitive to a diesel equivalent? The next pilot we are doing is with Manchester Travelers Sacco, which operates from Thika to Nairobi, and again, that one charges in Thika. So far, our pilots have been pretty successful. They have met all the parameters we have seen, including profitability. Could an owner of that vehicle, acquire that vehicle, and be able to own one, have a good return, and be able to finance it? We are very excited that we've ticked that box and said, yes! Then, is there passenger preference? Yes. Can the vehicle operate on Kenyan roads? Yes. So now what becomes is, as we are moving into that, we have to do two things: We have to have a charging strategy that allows us to move into this peri-urban and rural towns and have charging and at the same time as you're then increasing the fleet. So, you will see us rolling out charging, but mainly charging together with oil marketing companies and at existing facilities. 

Which OEMs is BasiGo working with for the supply of parts and components?

Mr Nderitu: The choice of an OEM is really based on who's willing to support local CKD. So, for example, while BYD is a very big company, at the point where we were, we started with them. We bought fully built buses from them. But they did not have a CKD strategy for Africa. Therefore, our choice of OEM has to be somebody who's willing to put in the effort and work with the support and has the experience in doing CKD projects in different countries. So that's why we have now settled for King Long who have got a big presence in Africa, who have done other CKD projects in Africa, and are also a Tier One OEM because when you work with Tier One OEMs, what you find is you're getting the latest technology, and with that, then there's a lot of efficiency, both from an operational point of view and also from a spares point of view. That's why from now you will see King Long being our kind of long-term partner moving forward, and that's why you probably saw we did a big launch with them. So, moving forward, we have narrowed down to King Long as our main bus supplier. We then now can invest in tooling that is specifically for the King Long bus, which will help us accelerate that production of those buses. We'll follow a similar process for the van. Wherever we make the choice of an OEM it will always be an OEM that is willing to support CKD service and maintenance long term in Africa and is also willing to do technology transfer to the local market so that we can then build and grow from there. 

How is BasiGo’s performance in Rwanda and how does that market compare to Kenya?

Mr Nderitu: We pivoted to Rwanda just to be able to also take advantage of what we saw as a very conducive atmosphere for electric vehicles in Rwanda and started with the city buses which are doing well. But as you may know Rwanda is much more regulated in terms of public transport than here in Kenya and therefore the government is a big player in that. But that said and done, it's going well. We've seen our buses that are deployed in Rwanda doing quite well, doing good mileages, doing good returns for both operators and ourselves.

And now in Rwanda we are also looking at an inter-city model which has started and that's actually going extremely, extremely well. Remember how Rwanda is also in terms of geographic, it's a smaller country so easier to get from one end of the country to another. Distances are shorter, of course the terrain is something else but there's such a big preference for electric buses even for those inter-city travels.

Like every country there are challenges but I think the Rwanda team is doing an excellent job in navigating their local challenges and making sure that they are growing. 

What has surprised you the most about the Kenyan electric bus market?

Mr Nderitu: What has surprised me the most I would say is passenger preference. There's such a huge and open passenger preference for electric buses and that is directly translating to higher revenue for operators.

Now, if today you were to put a 33-seater diesel bus and our electric bus on the same bus stop, you will see that big preference. Now that preference of passengers is the one that's driving demand from operators. So that's what we are seeing. But then once the operators have started, they have followed their customers because everybody is customer-centric, what follows is we then see higher profits for operators. Then it's almost like it's driving itself.

And then most of all is, let's not forget why we are doing this. We have a climate, we have a planet that is under threat of climate change. And if we can increase the number of vehicles that are not polluting, because for countries like ours, cities like ours, transport is a big polluter. If you can even just reduce that by 10%, you're making such a big difference to a country like Kenya.