Tiny electric vehicles pack a bigger climate punch than cars
BIG Oil faces a tiny foe on the streets of Asia and Africa. The noisy, noxious vehicles that run on two and three wheels, carrying billions of people daily, are quietly going electric – in turn knocking down oil demand by one million barrels a day this year.
In Kenya and Rwanda, dozens of startups are vying to replace oil-guzzling motorcycle taxis with battery-powered ones. In India, more than half of all new three-wheeled vehicles sold and registered this year were battery-operated. Indonesia and Thailand are also encouraging electrification of motorcycle taxis.
China dominates the market. Its government began promoting electric vehicles decades ago in a bid to clean its smog-choked cities, which explains why a vast majority of the world’s electric two-wheelers are in China.
The shift to electric mobility overall has reduced global oil demand by 1.8 million barrels every day, according to BloombergNEF, a research arm of Michael Bloomberg’s financial data and media company. Two and three-wheelers account for 60 per cent of that reduction, or 1.08 million barrels.
Taken together, cars and smaller electric vehicles are projected to displace only 4 per cent of total oil demand this year. Still, their growth is vital to the energy transition because transportation accounts for about 20 per cent of global greenhouse gas emissions. Of all the changes the world is making to slow further warming, electric vehicle sales are the only category on track to meet climate goals, according to an exhaustive independent study.
Electric vehicles also solve the more immediate problem of air pollution, which the World Health Organization links to an estimated seven million premature deaths annually.
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The big shift to tiny electric vehicles is underappreciated in the United States and Europe, where, despite the popularity of electric bicycles and scooters, the focus has been mainly on cars.
The global majority, though, doesn’t roll on four wheels.
In Nairobi and in Hanoi, Vietnam, motorcycles serve as taxis. In Mumbai, India, scooters can carry a family of four. In China, electric bicycles are how millions commute.
“Electric bikes are quieter, much more efficient and good for the environment,” said Jesse Forrester, the founder of Mazi Mobility, which has 60 electric motorcycle taxis, known as boda-bodas, on the roads in Nairobi. “There’s a quiet revolution now in Kenya driving this transformation for the future.”
Forrester’s firm is among several competing to establish an electric two-wheeler ecosystem, selling or assembling imported bikes, installing chargers and working with lenders to offer cheap credit.
Elsewhere, established motorcycle manufacturers are rolling out battery-powered models, including an electric scooter for under US$1,800 by India-based Hero MotoCorp. Ride-sharing companies, such as Ola, also based in India, are getting in on the business. And Honda recently said it was investing US$3.4 billion with the aim of selling four million electric motorcycles a year by 2030.
The biggest obstacle to small electric vehicles is government policy. Countries such as Mexico that subsidise oil rather than batteries have few electric two and three-wheelers – or as Karla Ramirez, a motorcycle dealer in Mexico City, put it, they are “a niche product”.
Future of transportation
At a gas station on the side of a highway near Nairobi, a team from ARC Ride, one of the city’s leading electric boda-boda startups, was putting up a shiny new cabinet that opens with a phone app.
Put a spent lithium battery into an empty locker, take out a fully charged one from another and you’re good to go for at least 90 kilometres – nearly enough for a full day’s work for the motorcycle-taxi drivers.
ARC has installed 72 swap stations in Nairobi, and it has plans to set up over 25 more in the coming months, one for every couple of kilometres on the city’s busiest routes.
“We are interested in a solution that’s going to enable mass electric transport,” said Felix Saro-Wiwa, head of sustainable growth at ARC Ride.
Boda-boda sellers such as Mazi and ARC have teamed up with creditors offering cheap loans, which is the only way most drivers in Kenya can afford an electric motorcycle. Uber is testing Nairobi as the first African city with electric two-wheeler options. Kenyan President William Ruto has set a target of 200,000 electric motorcycles across the country before 2025.
Many hurdles remain. Electricity is expensive. The government exempted electric motorcycle sellers from import duties, but the policy needs approval every year, which makes it hard for companies to plan. There’s a cumbersome bureaucracy to import parts. The depreciating Kenyan currency doesn’t help.
Electric bikes from different startups run on incompatible batteries and operating systems, hindering widespread use. Saro-Wiwa, though, is bullish that when the dust settles, the shift away from oil and gas will take off. “This is what the future of transportation in Kenya looks like,” he said.
A price-sensitive market
Shankar Rai is on the cutting edge of India’s electric vehicle transition.
A 45-year-old father of three, Rai drives a three-wheeled electric rickshaw nine hours a day, six days a week through Darbhanga, a mostly poor Indian city near Nepal. He makes roughly 1,000 rupees (S$16) a day, nearly half of which goes to a friend, who owns the rickshaw and charges it overnight. The rest goes to food and school fees.
“We are poor people so we manage to survive,” Rai says.
He is part of a US$1.2 billion push by the Indian government to make sure 30 per cent of vehicles on the road are battery-powered by 2030.
Much of that government largesse goes to auto dealers, which pass on the savings to buyers of rickshaws by lowering prices.
In Darbhanga, a new acid-battery rickshaw, such as the one Rai drives, sells for around 175,000 rupees. That’s half the price of a new rickshaw powered by natural gas. Charging the battery costs 20 rupees, one-fourth of the price of filling a gas tank.
The rebates seem to be working. Reliance Industries, India’s biggest company, is converting its three-wheeled cargo vehicles from gas to electric. Food delivery services are going electric as quickly as possible.
Chetan Maini, whose company Sun Mobility builds charging infrastructure, said business was growing fast. Battery prices are dropping, helping to push down the cost of electric two and three-wheelers. “When the crossover point happens here,” Maini predicted, “the effect is very quick, hockey stick-shaped, because it’s more price-sensitive.”
In Darbhanga, around 200 electric rickshaws are sold a month, according to Balaji Motors, a dealer. In two years, a sales manager estimates, electric rickshaws will dominate the streets.
Stuck in the slow lane
Balloons and reggaeton brought an all-day-party vibe to Karla Ramirez’s motorcycle showroom in the posh Polanco neighborhood of Mexico City. Of the 30 motorcycles on offer, one electric model – a grey-and-white bike called the Voltium Gravity – was displayed prominently.
On a recent Friday, when a slight, serious-faced customer named Jose Antonio Palmares strolled in, Ramirez gamely guided him to the Voltium.
“It’s a completely different concept,” she said. “You don’t use gasoline, and it doesn’t pollute. And you can test ride it for free.”
Palmares said he liked the bike “for the environment”. But then doubt rolled in like a cloud: “I have a lot of hills in my neighbourhood,” he said, “so I need power and some weight.”
Ramirez, a consummate salesperson, led him to the model charging station, explaining that the battery could be swapped with a card swipe.
Palmares raised an eyebrow. “What if my battery goes dead in the middle of a ride?” he asked. He wanted to look at fossil fuel models.
Ramirez was accustomed to such misgivings. Of the roughly 55 vehicles that she sells on average every month, one is electric. It doesn’t help that the cheapest electric model is pricier than conventional bikes. Only 1,000 out of 1.25 million motorcycles sold last year were powered by batteries, according to the Mexican Association of Motorcycle Manufacturers and Importers.
Price is the biggest barrier for electric two-wheeler enthusiasts, including Ramirez, who rides a petrol-powered motorcycle and is eyeing an electric one. “But I need to save up the money first,” she said.
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