Q&A: Zeno CEO Michael Spencer on turning away investors

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As the majority of electric motorcycle companies struggle to get investors, Zeno finds itself on the opposite end, having to turn away some investors. Such is the potential that investors see not only in the company but also the sector, Zeno’s CEO Michael Spencer tells Mobility Rising in an interview. The startup recently opened its motorcycles for pre-orders globally. 

• The motorcycles, which are targeting a wide spectrum of buyers including personal users, adventure riders, safari guides, and commercial riders, have received instant demand, said Mr Spencer. Zeno similarly plans to make a splash in the EV charging market, targeting to set up 120 stations in Kenya before expanding to Uganda, Tanzania, Rwanda, and Ethiopia. 

• Mr Spencer previously worked at Tesla, where he was involved in automotive manufacturing, and led product teams in the energy business. He has spent more than two decades building businesses in East Africa, which is a launchpad for Zeno’s Africa growth plan.

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What reception has the Zeno electric motorcycle received since the global launch?

Mr Spencer: It's been very strong.We've been working thoughtfully and carefully on an EV and energy ecosystem that we're really excited about. And we've been fortunate to have a lot of industry observers and journalists and influencers spend time with us and then give us really good reviews.

But all of those, everybody that's spent time with us or is covering us is excited to see the focus area that we've had with our product, sport, utility, motorbike segment, and the engineering and product achievements we've accomplished with the product that we've launched for the price that we're launching it at especially. And then they are really excited about our multimodal charging ecosystem that creates a lot more flexibility for our consumers and a lot more viability for us as a company. So generally, all is going very well.

Who are your target customers?

Mr Spencer: Really anybody that wants a great affordable sport utility motorcycle. We've got thousands of boda boda customers on our waitlist and hundreds that have them. So it ranges the spectrum from personal users, adventure riders, safari guides, boda boda drivers in Kenya, Uganda, the boda boda equivalent drivers in India, personal use commuters in India, anybody, families in India that are excited about a product you can put three kids on, take them to school, pick up groceries. And so we've seen interest from definitely a lot of commercial drivers, your boda boda or ride hailing drivers and delivery drivers but also recreational users.

We launched, teased the launch of last week, our Zeno Adventure, Emara Adventure bike, which is a higher performance, higher spec motorbike, more premium priced, definitely more expensive than a typical bike that you'd see in Kenya and have a lot of people excited about that product for road tripping and adventure riding. So it covers a spectrum of customer types and profiles across markets.

We've lost count of the number of people now reaching out to us from the US European markets asking when we're going to be launching there. We're very focused on the markets that we're most excited about in East Africa and India.So not going to the US or Europe any time too soon, but lots and lots of interest from those markets as well.

What is the cost of your motorcycles in Kenya especially, and which purchase options do buyers have?

Mr Spencer: Our introductory pricing right now is Ksh189,000 ($1,400) for the Zeno Emara and that is on a battery as a service model. You also have the ability to purchase the bike inclusive of batteries. So safari camps, conservations, ranches usually have a preference to buy their batteries. The Indian market pricing is different, it's a different market with different import costs, and manufacturing costs, but generally we offer three different ways to buy and use our products: One is upfront, full ownership, buy the bike, buy the batteries, buy a home charger. Then battery as a service for personal use, so buy the bike, subscribe to batteries, buy a home charger. Probably for somebody who doesn't drive high high mileage and is happy to charge at home or charge at but they're still just done subscribing to the battery to make it more affordable. And then lastly, our most popular offering is buy the bike, subscribe to batteries and pay as you go. On a kilowatt-hour purchase basis you have access to our fast chargers and our swap stations as well as a home charger if you want to purchase more.

What drove Zeno’s decision for the motorcycle specification and launch in the specific markets you have chosen, particularly Kenya?

Mr Spencer: We wanted to solve for the most sought-after two-wheeler segment globally. So the best-selling and largest two-wheeler segment globally is the 100 to 200 cc standard motorcycle segment.

That's more or less the same bike that you see on the street in Kenya, Colombia, Mumbai, Kathmandu, Dhaka, Mahur. That's the product around the world that people really value because it has functionality and good durability and strength. And so we designed for that product in a sport utility kind of segment and then wanted to ensure when people make the switch, the cost saving switch from petrol to electric, that they are not constrained by charging challenges.

So you'll be familiar with a lot of companies in the East African market today who only allow you to swap batteries. So if you want energy, you have to go to a swap station, swap batteries. If you want to go home to the shamba (farm) and visit your parents in Eldoret, you've got to leave your electric bike in Nairobi and you've got to find a petrol bike to ride on.

And we think that when people buy motorbikes, they buy it for freedom and for independence, both commercial independence and commercial freedom to make a living, but also freedom to be able to go places, sometimes just down the street, but sometimes five or six hours up country or to the shamba.

And so we wanted to solve charging solutions that work for everyone. So our bikes today, I regularly will get on a bike in Nairobi at my house, and I'll cruise up, I'll check in on our team in Nyeri, I'll carry on, I'll meet with our team Nanyuki, then carry on to Meru, Isiolo, Embu and drive back to Nairobi.

What charging standard do your motorcycles use? 

Mr Spencer: Our team, along with TVS and Bajaj, OLA all worked together and developed the Type 6 Fast Charging Protocol.  It's a standard that's fairly ubiquitous across all of the large OEMs in India. Our team helped develop it. It's an open source standard, like the North American charging standard is, that's now primarily used there. It's an open source standard for South Asia and it allows anybody who meets a certain firmware protocol requirement and has the same connector and the right voltage to be able to pull in and charge their batteries with a plug-in. 

Now, how the vehicle is designed and how the battery is designed can determine how quickly the battery will charge. Some products might take two and a half, three hours to charge. We've designed our bike and accomplished some pretty cool engineering accomplishments. You can charge from 80% in about 50 minutes. And so our fast chargers, which complementary to our swap stations and to our home portable chargers, are a solution that we can deploy a spot like Karatina, where on a drive from Nairobi to Nyeri, I can stop, plug in for 30 minutes, I can have a cup of chai (tea), check my emails, and then be on my way again. And so it's interoperable with all the other large OEMs with TVS and Bajaj and their EVs and it's a protocol that's open for anybody that wants to adopt it.

With your demand projections in the markets that you are operating, do you have enough funding in the pipeline to be able to deliver that type of growth? 

Mr Spencer: We are fortunate to be backed by several of the world's largest investments that have multiple billions of dollars of capital to allocate. We regularly turn away new investors on a weekly basis saying we're not raising right now, thank you for your interest to check back later. So we're fortunate to have capital when we need it and have options for where we source it from as and when we need it to grow. But right now we're about halfway done with rolling out what will be the largest charging network in the region. That'll be done in the next several months. You'll have 120 charge points across Kenya that allow you to drive to Eldoret, Kisumu, drive all over Nairobi with over 100 locations in Nairobi. And we are well capitalized, well funded, and backed to continue rolling out.That's our starting point before we start delivering the largest charging network. And we'll grow from there across more of Kenya, Uganda, Tanzania, Rwanda, and Ethiopia.

Is it easier to assemble your motorcycles locally or import fully-built units?

Mr Spencer: So any OEM anywhere today sources parts from all over the world. At Tesla we had over 100 countries that represented the sources of all the components that went into a car. Sometimes you'd have a component that would start in the US, that would go to Turkey for one part of its assembly, go onwards to South Korea for another portion of its assembly, come back to the US for assembly into the car. So any OEM today is sourcing components from all over the world. I think we source components for our five different products from about probably 15 to 18 countries. A lot of it comes from India. India has a very good reliable two-wheeler supply chain for everything from tail lights and suspension to brake pads. So a lot of our assembly and component sourcing and production lies in India, but all of our final assembly happens in Kenya.

We have two assembly facilities in Kenya. We've gone with a smaller hub model, similar to how Bajaj or other companies have operated markets around the world in the past. So we have two assembly facilities, two assembly hubs in Kenya where we do our final assembly, our SKD )semi-knocked-down) assembly of our motorbikes, before we deliver them to our customers. We also have one of those assembly facilities here in India. We operate probably most analogously or most similar to a mountain bike shop. So if you walk into a bicycle shop in lots of parts of the world, at the point of sale where somebody is selling you a bicycle, they have their bicycles that have been shipped to them broken down into a semi-knocked down box of components. So the wheels will be off, some of the body panels etc will be off. And for us, we operate in that same way, which is the way that a lot of Indian OEMs and Chinese OEMs operate.

What is your assembly capacity in Kenya? 

Mr Spencer: We can assemble around 10 bikes a day. And in another one that we're ramping up right now, you can do around 50 to 100 in a day. And as you roll in to do new communities, new counties, you get to create jobs, good assembly jobs and service technician jobs at the point at which you're selling rather than trying to do big centralized assembly locations, kind of big production lines. That's one of the exciting aspects and components. Most of our components are still coming from India. It's very difficult in Kenya to find brake pad manufacturers, power electronics, silicone-producing chip plants. And so we are still very reliant on components that we source from elsewhere around the world. But then we put together a kit at our facility here in India and ship it to Kenya for final assembly. And could we, if we extrapolate from what you said about, you know, 10 in one place, 50 to 100 in another. 

Is that a good approximation of what your sales forecast would be for Kenya for the next 12 months or are there actual numbers you could have, in addition to those facilities?

Mr Spencer: We also plant in India that we can ramp up to 50,000 to 60,000 units a year. And so we can operate quite flexibly on fully built imports, semi-knocked down imports, and completely knocked down imports. We build out infrastructure that supports what we know we need and then can flex up.

I think one of the challenges that we've seen in the Indian context and in the African context is only one company that's manufacturing or assembling in Kenya right now. That is a large investment and then the underutilization of that production facility can end up being a pretty expensive decision to make. And so we've built a system that's a lot more flexible, more like Apple and Apple phones. A flexible, multi-node kind of ecosystem that allows you to flex up and adjust your demand and your production as it needs to.