Q&A: An interview with Ampersand CEO Josh Whale

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A lack of equity capital is the biggest challenge facing Africa’s electric mobility startups, according to Josh Whale, the founder and CEO of Ampersand, an electric motorcycle and charging company operating in Rwanda and Kenya. In an interview with Mobility Rising, Mr Whale argues that capital constraints are limiting the ability of EV startups to meet rising demand.  

• Mr Whale believes that the EV market in East Africa is big, and that existing players are yet to start cannibalising each other for market share. Additional capital injection, he says, is what is required to unlock a new level of growth for the emerging sector.  

• The Ampersand CEO foresees a consolidation of the market on the horizon. “That's a normal process. I think there's a broad consensus that there might be three, four, five companies doing the (electric) two-wheeler business.” 

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What have been the major funding shifts in the electric mobility space in Africa over the last few years?

Mr Whale: There was a big wave in 2020 and 2021 that was part of a global big wave of investment in e mobility. This was partly off the Tesla IPO and the valuation of Tesla in the way it rose and rose. That's very much come back down to earth. So, there is still investment, but there's much more focus at the global level on quality. 

The challenge in Africa has been kind of twofold. One is that a lot of the capital has gone into the private equity side of things. So, the really big raises have been from the likes of LeapFrog and Helios, Lightrock to some extent. But the challenge has been getting for the companies to actually get the capital in between and the value of debt to get through to the level where they're actually appealing to those entities, to those investors. And in general, across the board, the PE lens has been much more prominent than a VC lens. And by that, I mean that, PE lens deals tend to take longer, and they're not focused on super high growth technology companies. 

And typically, the folks who work at those funds are coming at it in a very different way, especially from a very risk-oriented perspective. And so, if you're looking at a new sector that does have new technology, where there's regulatory risks and you're doing it in Africa, I mean, finding risk is like shooting fish in the barrel. 

The majority of electric vehicles in Africa are imported, mainly from China. Is Africa ready to produce these vehicles locally? 

Mr Whale: I think the local assembly narrative is a bit of a dangerous one. And there are some vested interests in the sector that are pushing for local assembly. But, frankly, it's a bit of a distraction, like putting the cart before the horse. And I was saying this is, we build our batteries and we fully assemble our motorcycles. We even do steel fabrication, but we do it because we do this in Rwanda where there are no import duties, no VAT. We could import fully built-up vehicles, right?

We do it because it helps us, it helps us to iterate on the products quickly. There are other cost advantages to doing that. We believe in vertical integration, but we're not doing it because of any import use and incentives. So, I think putting up roadblocks and licensing and assessing companies based on, are they doing local assembly or not? And frankly, like, bending some tube steel and welding and cutting metal is pretty, like, Victorian era kind of level of tech. This is not creating lots of jobs. It's not creating a lot of value addition. 

We have seen a number of electric motorcycle companies actually pivoting from one product to another. What are the biggest drivers of the spectrum changes? 

Mr Whale: I think, like, in any tech sector, there's a natural consolidation. It's sort of like you start, we were the first company back in to sell a motorbike, an electric vehicle in Africa back in 2019.

And since then, there've been hundreds. But this is normal. You have a proliferation of companies and then you have consolidation. And part of that consolidation is also specialisation in different parts of the value chain, maybe different geographies or subsegments. We saw that with Stima. They were running swap stations very similar to what we did, but now they're focusing really just on the on the on the tech and making sure, and providing data to finance companies and, others that like, are the batteries actually standing up? Are they a good credit risk over time?

And so that's a normal process. I think there's a broad consensus that there might be three, four, five, companies doing the two-wheeler business. But the way we see it is that we're primarily an energy company. That's where we've created the most value. 

With recent development in battery technology, when will we see price parity between fuel motorcycles and electric ones? 

Mr Whale: I think that it'll take time to get to that point. The more range you want to build into it to get to a point where you're actually able to serve this market, you're going to be carrying a lot of battery to carry battery, to carry battery. It’s the rocket problem, if you like. Why do rockets have stages? It's because otherwise, you have all the fuel to get the whole rocket into space. You're carrying fuel to carry fuel to carry fuel. That's why you dump the lower stages as you get into space. 

And the whole beauty of the two-wheeler market is that it's just far, far cheaper and more convenient to have to build a battery that can do either 250 kilometers in a day. That's a big battery and it's an expensive battery. And even if you can, even as energy density gets higher and higher, you've still got a lot of battery to carry in. And the cost of that battery is always going to be more for at least for a long time than just swapping that battery.

Customers, when they buy fuel, they'll usually buy fuel two, three times a day anyway. And so having customers definitely always want more range and that's coming and it will increase, but not a battery that can get through the whole day. And then if you try to have that and actually make the sticker price the same as a petrol motorcycle, I mean, that's a long way away. And price ultimately, is what matters is what matters to the customer.

What are your demand projections for electric motorcycles in the coming few years?

Mr Whale: I mean, demand for all of us (electric motorcycle companies) has always exceeded supply by a wide margin. We've never spent anything on advertising. In Rwanda, when we put our first bikes on the road in May 2019, then the next day, the second bike, and then so on and so on over six weeks. I think after six weeks, we had 10 bikes on the road. Within those six weeks, just from word-of-mouth, we had 1,300 customers just come and find us and have us write their names down on the waiting list.

Their margins are not very thick for a boda boda rider. And they're intimately familiar with all of their costs. Like, this is how much I spend on the bike per day. This is how much I take home. This is how much I spend on this is how much I spend on fuel; this is how much I spend on oil changes. And if you come to them with a proposition, the bike costs the same as the petrol bike, except, comes without the battery. But the fuel, that is your energy cost, including the battery, is 35% cheaper. The overall cost is much less and you don't need to do oil changes. So, there's another $200 a year you don't have to spend.