Q&A: Why demand for electric taxis is skyrocketing

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The online taxi business in Kenya is booming, which has attracted not only multinationals like Uber and Bolt but also local startups like Faras. Amid high fuel prices, taxi operators are switching to electric cars to save costs, which has led to high demand. In this week’s interview, we speak with Dennis Wakaba, the founder of BEV, a Kenyan EV company. 

• Mr Wakaba started by importing four units of electric taxis from China, which sold quickly, leading him to import a further 20, which also sold fast. He continues to gradually increase the quantity of imports to meet the growing demand.

• Despite this initial success, major challenges remain, especially high taxation by government agencies. Banks are also still reluctant to lend to the EV sector, limiting the pace of growth. 

More details

How did you get your start in the electric mobility industry?

Mr Wakaba: Mobility has been almost part of my life since I was a kid. I used to make toys with motors and batteries. Back in high school, I was the organising secretary of the physics club. My project on science during the Science Congress was an electric car. Later I went to the university to study urban planning and found myself developing public transport systems for counties.

I later joined Roam (an electric motorcycle startup) where I was the head of product and public affairs. In that role you get to learn all the ecosystems, meaning you're talking to customers, suppliers, and the internal staff on what product can succeed outside here.  We also formed the Electric Mobility Association of Kenya (EMAK), which now started lobbying for tax incentives and other things, the National mobility policy, and zero emission zones.

I also got my own first electric car.

How did you move from that to creating your own company that now sells and leases EVs?

Mr Wakaba: I got together with a Chinese investor to bring one or two sample units so that I can do the marketing for them, because I understand policy, the market, and the product side. I was sort of an interlinkage between the market and the users to help them to bridge that knowledge gap. We tried off with four units and they went very well so we brought in another 20 units and they also sold very fast. We brought in 52 units of taxis again and now we are working on delivering other orders.

We lease the electric cars which are used as taxis, we only charge KES 50,000 ($387) as a booking fee. From there, you pay KES 2400 ($18) per day, except Sundays and public holidays. And if you take a fleet, we are going to install a charging point. However, most of these vehicles will come with a portable charger that will plug in from a preinstalled three-phase socket, single-phase socket, or even your normal wall socket.

Due to the high demand, we now also have bicycles, motorcycles, small taxis, bigger taxis, vans, and trucks coming. We also have buses.

What is driving the demand for the small electric cars which are mainly used as taxis?

Mr Wakaba: The demand is high because as soon as it (the electric car) hits operation, savings start trickling in, and then the operator will see the difference almost from day one. For instance, if you use the van for one month, you will notice a difference of KES 60,000 ($465) in the fuel cost. Those are the savings now, if you now go to the cargo business, people doing logistics, those are the segments that will have the biggest growth.

How are buyers currently financing their EV purchases?

Mr Wakaba: Currently, no bank has been able to tie up any of our products, but they are, they are microfinance institutions that are looking to finance. They are not financial, but they are looking at it because for them, they are more risk averse compared to banks. And banks want to see a product that has hit the road eight years before they get confidence, unfortunately. All we have to do is do internal financing. We pool money from investors, then guarantee investors a particular rate of return, about 10% of 15% which is higher compared to 9% or 7% in fixed deposits. That's what we are trying to do and also for the accessibility we are telling people just pay a small deposit, then you choose to rent the vehicle to do a higher purchase, the 20% deposit you clear the balance in under 46 months. 

What are the main challenges that you face especially when it comes to taxation?

Mr Wakaba: There has been no significant incentive on especially passenger EVs. For bicycles, motorcycles and buses there is, which is zero-rated VAT. But for passenger cars you pay the full 16%. So ideally, the taxation issue, we've seen countries like Rwanda, Ethiopia, our neighbours here and Uganda, try to remove taxes. For Ethiopia and Rwanda it's zero.

With the high demand that you are recording, do you have access to sufficient capital to scale?

Mr Wakaba: I can guarantee you that we are always looking for money because you have demand. But now bringing EVs requires money. Again, the task is convincing investors so they need something proven. Yet, EVs are very new here. So, you end up bootstrapping or you borrow money from friends just to prove a concept so that the investor later comes in. It's still a steep hill to climb.

But we are getting more places with that. But it's not easy. We're always looking for money because we have a client who's looking to electrify his fleet. But he doesn't have the full amount up front. The banks are asking ‘how do we know it will survive in two years?’ It's part of life. Remember when the automatic cars came? People were used to driving manual cars and they were dismissive of automatic cars. Right now, nobody can buy a manual car. This will also happen on EVs.