Overview
We’ve got a very interesting interview this week, one that brings together using modern technology with a compelling market need.
It’s all about electric vehicles.
Now, you’ve probably heard about Tesla and some other companies building cars that don’t run on petrol.
It turns out that, for now at least, these vehicles don’t work in the East Africa context.
Opibus is a Swedish company founded by a group of engineers looking at how to get more electric cars on the road.
One route is the Tesla approach of building an electric car from scratch.
The approach of Opibus is to take existing vehicles, rip out the petrol engine, and put in an electric engine instead.
What that leaves you with is a much quicker and more flexible way to get electric cars being driven in different conditions.
Interestingly, despite being a Swedish company, other than a few prototypes the company’s operations have been almost entirely in Kenya.
Several factors, such as the presence of lions and elephants, have made it the ideal place for the company to start.
Mikael, the head of the commercial side of the business, and I discuss this, and all manner of things in this episode which I hope will leave you feeling positive on the role and room for innovation in the region.
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Starting with safari
The big challenge with electric vehicles is the charging infrastructure. Battery-powered vehicles have a range they can manage and, especially if you’re making unpredictable trips, it’s unclear where your next charge is coming from. Safari lodges don’t face this issue. It’s typically a relatively short trip that begins and ends at the same point. It’s also a market where customers are willing to pay a premium for an environmentally friendly experience.
International cars not fit for African roads
The quality of roads in Kenya mean that many international car companies don’t want to have their cars being driven here. These cars are made for smooth roads, and things such as the suspension, bearings etc. will break more frequently on East African roads. This is a bad image, as well as affecting things like the length and depth of warranties that are given. Anyway, all this means that many modern electric cars can’t be put on Kenyan roads. The solution that Opibus have decided on is to take cars that are already built for Kenyan roads (e.g. suped up Land Cruisers) and fit them with an electric motor.
Pay back in 1-6 years
Beyond environmental concerns a big selling point is lower operational costs. This comes mostly from not needing to buy petrol, but also ongoing maintenance. Petrol engines have innumerate parts, cogs and pistons that need fixing. Electric engines are just one. All this means that the upfront price of buying the engine can be recouped in saved costs. The savings are greater the more the engine is used (i.e. saved petrol) and this varies from 6 years, all the way down to a year.
The engineering
Electric engines have better torque (power) than petrol engines as well as being lighter in weight. There’s therefore no issue with them being deployed in tough environments (i.e. the savannah)
The road from assembly
Right now parts are imported into Kenya and put together by Kenyan welders and engineers. In time Opibus is looking for more of the manufacturing to be done in Kenya.
Hiring engineers from university
The CTO has been training up smart engineers on the particulars of electric engines. Kenyan universities produce good engineers, it’s now a case of finding those excited by electric vehicle engines, and training them.
Fixed points for charging
As Opibus (and indeed the electric vehicle market in general) looks to expand it’s offering the fixed points of charging are important. As such, public buses are being viewed as the next step, as they typically transport people back and forth from regular spots. There’s not technical reason why trucks can’t be fitted with electric engines too.
Corruption is frustrating
It’s real. There have been instances where Opibus have had cargo shipments stuck at the port for six months. Apparently regulation changes mean that the battery components can’t be allowed into Kenya and the only way out of the predicament is to pay an official $8,000. Opibus have taken the stance to never engage in corruption, though this has definitely slowed business.
Financing expansion from grants and elsewhere
A company like Opibus will need capital to scale. Right now they’ve been largely self-financed adopting the approach of selling the solution before it’s been made, and then making sure the design fits what the customer wants. As such, they have decent cash flow. When it comes to getting grant money for, say, promoting environmentally friendly solutions they’ve not quite got the track record that donors want yet, but that should come soon.
Social Media Links
Website: https://www.opibus.se
Facebook: https://www.facebook.com/opibusltd/
Twitter: @opibus1
LinkedIn: https://www.linkedin.com/company/opibusab/
Transcript
Sam: 00:00 Intro
Sam: 02:02 Cool. So we’re here today with Mikael From Opibus. Mikael, welcome to the show.
Mikael: 02:06 Thank you very much Sam. It’s lovely to meet you.
Sam: 02:08 Yeah. So just to get started, could you tell us a bit about you and a bit about Opibus?
Mikael: 02:13 So I’m one of the co-founders of Opibus and we’re a company working with energy solutions and electric mobility here in east Africa. And our vision all along was to bring electric vehicles down to Africa. So we started this company back in Sweden about three years ago. And then today we deal with everything from electric vehicle conversions without which I would probably talk more in detail with you later. And then making solar panel installations and also working with lithium battery technology.
Sam: 02:43 Got It. Okay. So you’re a Swedish company, you, Mikael, you’re from Sweden? Right. Is the company operating in Sweden as well or is it just operating here in Kenya?
Mikael: 02:52 So we did all the developments and started the company back in Sweden three years ago, but right now we’re only operational in Kenya. We do have plans though because, as I’ll tell you more abit later, this technology is very versatile and scalable. So we’re probably looking at opening up businesses in Sweden. And all around the world as well. Yeah.
Sam: 03:13 Very cool. Very cool. So we’ve actually just come from your workshop. Would you call it a workshop would you call it a factory? An assembly plants an probably, yeah, but it’s kind of like a, a factory unit is, how would you, how big, how big is it? I can’t really gauge its about 6,000 square foot, 6000 square foot. So it’s kind of like, it feels like you could fit a small airplane in there, I guess you can. Yeah, it’s sort of that sort of a…
Mikael: 03:36 we fit about eight to 10 vehicles, where we do these electric conversions instead, and then of course keeping stock of everything and yeah, it’s a, we, we recently moved there from a smaller place and I think we’re going to move in the next upcoming six months again, actually.
Sam: 03:51 Very cool. And the core business that you do at the moment is, and which I think is fascinating. So you take vehicles and you take out the petrol motors and you put in an electric motor and that then makes the car an electric car.
Mikael: 04:05 Correct. So the sort of technology or the process, it’s called conversion technology. So the idea is to utilize vehicles that already are running on diesel or petrol. And then instead of of designing something from scratch where you make a new chassis, a new car, you can simply take those vehicles and you make the drive chain electric instead. So that means removing the petrol engine, diesel engine, fuel tanks, gearbox. And then we utilize that space to put in battery boxes and electric motors. So with this technology, you can actually turn any vehicle into electric. And the idea from the beginning was to, to have a strategy where we can quite, you know, quick implement electric vehicles into Africa. And the problem is that, you know, there’s not many vehicles that we have in the European market or American market that actually works here because the road ratings are different.
Sam: 04:58 So would we say the car doesn’t work here?
Mikael: 05:01 I would say that many of these big companies, they, they feel it’s a risk to deploy these vehicles here because of the, the bad roads, for example. So one of the most popular models is called Nissan Leaf. It’s a, it’s a Japanese company and they will not simply deploy these vehicles here because the roads are too bad. Right? So that in that way we can take vehicles that are designed for this terrain, for this area, and we can make them electric instead.
Sam: 05:25 Okay. So Nissan Leaf is a electric car, which is on the roads in Japan.
Mikael: 05:32 Right. And all around the world even in Europe, America…
Sam: 05:35 But the quality of the road, is there like an indices or an index for roads, how’s that measured.
Sam: 05:46 So yes, a lot of these automobile companies, you know, they look at how would the vehicles perform and how much problems would there be with the you know the bearings and the suspension and everything. And if they, if they find, you know, a country where the roads aren’t good enough, they simply won’t take the risk at the moment.
Sam: 06:01 Cause, like in Japan for example, they might say we’ve got a three year warranty and assuming that the roads are smooth, one in 10,000 cars is gonna need to go in or whatever, whatever…
Mikael: 06:11 If all the cars break down in one year, that’s a bad image for, Nissan leaf as well. Right? Yeah. So I think the important is that, you know, we want to design and build something here for the African market. We work with transfer technology. So we bring the technology of electric vehicles and electric drive chains, but we want to incorporate the, the African design. So we make a vehicle for Africa.
Sam: 06:31 Okay. So why didn’t you design, did you, I’ll rephrase it. Did you ever consider designing an electric car for Africa or for, for bad roads from scratch?
Mikael: 06:42 So, as I told you, the idea was to bring something quite quick to the market and that’s why we start with this conversion technology, but obviously, the idea in the future is to maybe go from an assembly plant to more actually production. So maybe five years down the road and we can actually produce, you know, complete new electric vehicles here in Kenya, perhaps as an OEM solution to Nissan for example. Maybe they don’t want to touch this market because they don’t know how it works. Maybe we can be the guys they work with for electric drive chains for example. But yeah, so if I just roll back a little bit. So right now we deal with electric safari vehicles. Oh, okay. So there’s different markets for everything. But, why we started with this market is because, there’s no electric vehicles in Kenya at all and there’s no charging infrastructure and those two goes hand in hand. You can’t have the other one without having the other one. Right. But there’s a foreign industry, they drive short distances less than a hundred kilometers a day, which sort of reduces the range exciting that we have in Europe and everywhere else. And then they also start from one point in the, there’s a foreign lodge, so to speak, and they drive out with these tourists and then they come back to the same point. So we only need one charger. So it’s an easy investment in a car, in one charger, and then it fills the whole application. Right? Yeah. So that’s where we start to showcase. And then also, yeah, show people that, you know, this works. And then this year we’re also moving towards other types of vehicles, which we might speak about more today.
Sam: 08:20 Yeah. I mean, the safari thing, that sounds like quite a smart idea. Was that like a light bulb moment or was that a, okay, we need to find parts of the industry which have these particular characteristics.
Mikael: 08:32 Yeah. We, when we assessed it, the market back in Sweden, we realized we need to find a market where it makes sense today. And when it comes to city cars, you need to make huge investments in charging infrastructure to make it, you know, possible. So, yeah, we simply identified this market as an entry market where we can, you know, start doing this business, we can showcase the products and get all the experience that we need for the next several months.
Sam: 08:57 So Opibus is operating in Kenya. Like if, if Kenya didn’t have lions or elephants, you probably wouldn’t be here. Yeah. And so you’ve gone to the safari lodges and I take, you’ve got to pitch to them and say we can turn your current vehicles into electric vehicles.
Mikael: 09:21 Definitely. So I’m the sales chief, right? So I mean, the, the main part is that, you know, they want to be able to attract tourists, right? And now we see a trend in the tourist industry in East Africa for ecotourism. So it’s simply customers that have a little bit more understanding of, of the, you know, the conditions of the world and in how we can make it a better place. So think more about, you know, environmental choices where we might not, you know, put more emissions in there. So many of these camps have already started installing solar panels to show customers that they really care about this and they care about the wildlife and the environment. And the next step for all of these, these camps is to bring, bring the vehicle electric, make it make it electric. So one of the main points when I sell these vehicles is, of course, pushing on, on the environmental aspect. You know you can market this as an ECO solution for tourists. But then, the important thing is also that this terrain is quite demanding. You know the Maasai Mara during the rain period, they get the black cotton mud, which is one of the worst one in the whole world. And you need to have a vehicle with a lot of torque and performance. Maybe many people don’t know about it, but electric vehicles are actually more powerful than normal conventional vehicles. And I, we can go into depth later about the technical specifications, but that’s actually the truth. So it’s about the environmental, you know, advantage. And then also about the performance. And then they actually reduce their running costs as well because electricity is cheaper than diesel, especially if you were generated through a solar panel system. So our customers today have a payoff time of about six years, four to six years, depending on how much they drive. So, you know it’s a cocktail of all of these different advantages, but of course the incentive for, for using the running costs is a big one as well. So I think they get hooked by the, by the vision and the idea, but then practicality when they actually look at the model and the they see the, they save money, that’s when they go for it. Yeah.
Sam: 11:31 Okay. So if we can, can we just sort of talk a bit about the economics of, of how it works. So how much does a Petrol safari, cause these are kind of like big land rovers…
Mikael: 11:46 Land Cruiser and Land Rovers can work with right now.
Sam: 11:49 And it’s kind of like eight or nine people who sit in the back.
Mikael: 11:53 Yeah, its nine people. Yeah.
Sam: 11:54 Um, so how, how much does one of those cost if you were to have yourself a petrol motor?
Mikael: 11:57 So is it just to, to buy or to operate?
Sam: 12:00 To buy. Upfront.
Mikael: 12:01 So right now with the, with the local assembly plant, order cars here in Kenya, it’s maybe an end price of about 60, $70,000.
Sam: 12:10 Okay. And then what sort of the, the rough on ongoing costs with that per year?
Mikael: 12:16 So when there’s two things, one of course is the, is the petrol or diesel. And one of the problem is that these camps, they’re quite secured. They’re in the middle of nowhere. So first they need to transport all these few out in the middle of nowhere, which costs, you know, an extra extra costs on the diesel. But then, with the conventional, because you also have a maintenance needs, you need to change the oil filters, you need to work with the, with those maintenance on the gearbox and the engine. And there’s a lot of moving parts that can go wrong, right? But when it comes to electric vehicles, you only have one moving part. And that’s the electric drive shaft. So, the different things that, that make them, you know, save money and it’s a, it’s quite a lot. We usually have a reference saving costs of about 80% of the normal running costs. Yeah.
Sam: 13:06 Okay. Cool. Okay. Um, and so roughly is it like when you do the calculations, when you say, when you add up petrol and calling out a mechanic and all that stuff, do you say it’s like, what, $10,000 a year or something? What’s
Mikael: 13:19 so the service we usually, eh, we calculate, I think it’s about, um, yeah, about $5,000 a year probably. And then petrol, it’s, it’s, it’s probably about eight to $10,000. Yeah.
Sam: 13:35 Cool. And so you can go to them and say, we’ve got this, yeah. This kit, this solution. So if you don’t mind, like how much is it, how much does it cost to?
Mikael: 13:42 Yeah. So for us, we, we would like to offer our customers you know different options, right? Because some of these camps, they might have a, a big, a bigger demand for range. There might go longer distances. So we have options where we can put in more battery packs. We can put in faster charging, but the, the main idea, a normal conversion starts at about $37,000 today. Yeah. And that’s when they bring their vehicle and we converted to electric. So that’s not the whole card service of making it electric. Yeah.
Sam: 14:15 Yup. And cash up front duty financing.
Mikael: 14:20 So we have a verity of different options, but, it’s a mix of deposits to be able to secure all the components and then, you know, loan or we’re actually working on PPA solutions as well.
Sam: 14:32 whose PPA?
Mikael: 14:32 So it’s a, you know, when you, when you pay for and the distances you drive. So imagine if a finance company, they take investment and then, they have, a contract with the customer. So if they drive a hundred kilometers, they pay for those a hundred kilometers. Right. So they pay off as. They go. Yup. Yup. And this model has been, it’s been very popular in Europe, in other regions of the world. But I think in Africa it’s really picking up the PPA to actually be able to, to pay it off as you go.
Sam: 15:05 So what does PPA Stand for?
Mikael: 15:07 So it’s power purchase agreement,.
Sam: 15:09 Power purchase agreement, and it basically means pay as you go.
Mikael: 15:12 Right. Correct.
Sam: 15:12 Very cool. Okay, has it been a tough sell?
Mikael: 15:18 Um, so I’m the sales chief and it’s been going great. I mean the idea of bringing, you know, fully carbon neutral vehicles to this foreign industry, everyone loves it. It’s, it’s been, it’s been very, very good support. And…
Sam: 15:35 How do your meetings, you just call people up?
Sam: 15:37 Yes, it’s a mix of, you know, in every sales organization it’s about, you know, reaching out, doing all the cold calls and then you try to market and network as much as you can. And then right now it’s been, it’s been mostly trying to meet up, bring them to the workshop to show them everything. We do perhaps have a small demo where we show the car, we drive it around a little bit, but yeah, it’s been very successful so far. Yeah.
Sam: 16:02 Nice. How many safari lodges are there in Kenya?
Mikael: 16:05 So when there’s a lot of them. I would say it’s a, it’s more than a hundred in Kenya. And so every lodge has everything between five to 50 vehicles. Right. And there’s also some companies doing only the tours. So some companies have their own camp where they offer accommodation for the tourists, but some other companies, they only offer the drive. So they, they start from maybe Nairobi and then they go out to the national parks and they, they come back to Nairobi. Right. Yeah. So in total, there is a, as probably a, you know, several hundred thousands of these land cruisers and Land rovers out there. Yeah, it is. And I mean, this, this sort of model with, with Land Cruiser, it’s been very popular, not only for the safari industry, but for any type of purpose because the roads are bad. Right. Then when you, for example KPLC, the, big power generation company in Kenya, you know, they do a lot of utility rounds where they go out to the, you know, the off-grid systems they have and all these power stations where they need to have vehicles where they can, you know, get through the terrain. So these types of vehicles are very popular in Kenya
Sam: 17:19 Is part of the set, I’ll rephrase. I remember hearing that one of the things about electric cars is they hardly make any noise. Right. Do vehicles that have been converted, do they also not make much noise or is that, do they still sound quite quite loud?
Mikael: 17:35 Yeah. So it’s actually funny that I missed this point because it’s also a, you know, a big advantage for the safari industry because I mean, you know, having a ride where you don’t have to listen to the rumbling engine, but you can, just be close to the nature and experience everything. That’s also a very, very good selling point. Yeah, some, I’m surprised I missed it. But yeah, and obviously electric vehicles, they don’t have any, any pistons that move in the engine. And then there’s a lot less things moving so there’s less noise, but there is a humming noise. So when you exert energy from the motor, you get a humming noise, but yeah, it’s much less than a normal convention vehicle and it’s very good for the safari industry. Yes.
Sam: 18:12 Yeah. Very cool. And so the vehicle that’s being converted, it sounds just like a Tesla, for example, when that’s been built from scratch.
Mikael: 18:22 Yeah. So obviously when you convert, there are some things that you can’t… You can’t design everything because there’s already a, you know, an existing drive axles and differentials and everything that we can’t touch because that’s the part of the original solution. So of course there’s a lot of mechanical sounds that can come from our solution that doesn’t come from Tesla. But in general, it’s silent and it’s much less than a conventional vehicle. But yeah, that’s the picture. Yeah.
Sam: 18:50 Very cool. Now I’m not an engineer, right. But, I’m interested in sort of some of the mechanics of how this works. I mean, how, how technically complex is it? Cause we were in the workshop, like the Bonnet was open and it was just, it had been gutted out completely, putting in a new one and it looked like, I’m going to simplify, you were just connecting up the wires, like what’s actually going on there?
Mikael: 19:13 Yeah. So right now, as I told you in the beginning, we’re more of an assembly plant. So we work with the different suppliers all over the world. We buy batteries from China, like everyone else. We have motor suppliers from Switzerland, really high quality. We’ve got Palestinian units from America, but all these units, we make sure that they fit together and they fit with our design. So we simply, we disassemble vehicles, you know, removing the combustion engine, the fuel tanks and everything. And then we use that space to design and put in our drive chain. So, of course there’s a lot of electrical work. You know we need to make all the cables and the wiring of a battery management systems and high voltage cables for the motors, but then there’s also some productions that we do. We do, for example, the battery boxes here in Kenya and also mounting points for the motor. So there are some elements of production and metal work that we do as well, but yeah, right now we’re more of an assembly company, but I think more years down the line we would like to move some of the production of some of these components to Kenya. So maybe doing partly assemble, assembly of the motor, the electric model and maybe some other, yeah, PCB boards and BMS systems as well. So yeah.
Sam: 20:34 Cool. I’ll be honest, this again, it might be because I’m quite inexperienced, but it didn’t look that, it looked quite complex, still. It’s, you know, the’re people there that were welding, there was like pretty high spec stuff going on.
Mikael: 20:48 Yep.
Sam: 20:48 How easy is it to find people to do that? Like, is this a completely new skill set? As I said, it’s an existing skill set that you’ve had to tweak it. Like…
Mikael: 20:59 Right. Definitely. It’s a new skillset. There’s a lot of good engineers here in Kenya, right? Yeah. Electrical and mechanical engineers. But when it comes to the electric vehicle side, we’ve simply had to, you know, teach everyone from the start, you know, what is a battery, what is electric motors? How do they work together? So when it comes to sort of recruitment of all our employees, it’s been a lot of interviews. It’s the only way to do it. You reach out to the, to a lot of different engineers.
Sam: 21:31 How do you do that? Is it going…
Mikael: 21:33 Right. So one of our strategies from the beginning was to have collaborations with universities here in Kenya because they have a great knowledge pool of engineers and you know, these young guys, young people, young girls that are really excited to do things. So, this is sort of where we started. We started targeting these sort of engineers in the beginning. We had a lot of different interviews and we ended u, with a few people, the people that started with an internship with us. And then these people, they get more, you know, knowledge and more experience in the, in the company and they go towards smarter than employment and then, you know, maybe even a, a management position as well. So yeah, it’s been, it’s been fairly easy to find people that are excited and really good at engineering stuff and, and just us giving them some pointers and teaching them about electric vehicles has been more than enough. So we’re very happy with the people that we looked at. Yeah.
Sam: 22:31 How do you have to like, give them a practical thing as in like, here’s some metal and some wire and like, can you make it into something or is it, you know…
Mikael: 22:42 It’s more of hands on practical things You know, doing all the connections for the battery cells, making sure that they don’t connect two of the terminals at the same time because then it goes, you know, a small spark and stuff like that, but yeah, it’s, it’s a, it’s been… One of our co-founders is called Phillip and he’s our CTO. So he’s sort of the mastermind behind the whole design and all these different components. So He’s been taking a lot of different classes so to speak with our engineers in the workshop and teaching them how to do everything. Yeah.
Sam: 23:13 That’s good. Does Phillip, does he have a background in cars?
Mikael: 23:16 Yeah. So actually all of us in the management team that started this company back in Sweden. We have a background in engineering and it’s engineering with less physics, but a little bit more energy cause it’s an engineer, energy engineer. But Philip has even more experience from the electric vehicle side, he’s been doing hobby projects since he was a little boy, converting an old Porsche and stuff like that. So he’s really, really good with these type of components, yeah.
Sam: 23:46 I hope there’s a picture of Little Philip in your pitch deck.
Mikael: 23:49 Huh?
Sam: 23:49 I hope there’s a picture of Little Philip with his porche in the pitch deck. Are there other people doing this at this sort of thing around the world?
Mikael: 23:59 Yeah. So I think this sort of technology and processes is picking up in you know, Europe, America all over the place, but it’s been mostly on a, on a hobby level. So people wanting to convert their vehicle into electric and they’re doing it as a hobby project at home. But the commercial businesses hasn’t been around for that long. So in Europe it’s starting to pick up and we actually have some collaborations with other European companies doing it on a commercial scale for city cars, but in Africa it’s quite new. It’s very new and we know of two or three other people doing it in Africa, but it’s been also on more of a hobby level. So we’re actually one of the first one in Africa to do this on a commercial scale for converting vehicles to electric. Yeah.
Sam: 24:49 As you sad, one of the limiting factors seems to be this infrastructure of charging points. And so I guess it’s a case of, you know, one can’t put one before the other. And if you’ve got these instances where there’s this fixed location where people basically do round trips, right, that works out quite well. Have you begun thinking about what your next market is going to be?
Mikael: 25:13 Yeah, I don’t know if I mentioned it yet, but there’s a foreign industry at the entry market. And then today and this year we will move towards electric motorcycles and also electric public transport buses, which is called ‘Matatus’ down here in east Africa. And the reason why is because their vision all along was to bring the solution to Kenyans. Right. And actually when you think about it, the safari vehicles, the electric safari vehicles, It might affect more the tourists than actually Kenyans. So it had to be our entry market because of all the reasons I’ve been discussing about before. But we really want to move towards, you know, the cities and give a solution that everyone can benefit from. And as you probably know, it’s, it’s quite struggling for many people in Kenya working with, you know, Taxify and all these taxi services and also a motorcycle taxi service. And if we can give them a solution where they can save, you know, $3 or $4 extra everyday, that just massive for them. So I think, um, we really want to bring this to Kenyans. That’s the goal. Yeah.
Sam: 26:18 Cool. What’s the pitch going to be to motorbike taxis? So say for context, like a very common way to get around Nairobi is to hail a motorbike and then you’ll sit on the back and the driver will give you a helmet and you’re going to drive around, but you’ll be sort of sat on the back of this motorbike.
Mikael: 26:38 Correct. Yeah.
Sam: 26:38 That’s a very common way of moving about. So you’re saying that you’re going off to that market or all the personal people who own motor bikes for their personal…
Mikael: 26:45 No. So it’s the, it’s a commuter, the commuter business. Yeah.
Sam: 26:48 Okay.
Mikael: 26:48 So, um, yeah, as you, as you said there, there is a lot of motorcycles or ‘boda bodas’ as we call them down here, that you know, makes the transport industry work in Kenya because they drive people all over the place. It’s very cheap form of transport. And as I said as well, there’s a very big group of, you know, low wage people that do these services and I think if we target that market, it’s partly, you know, the volumes. There’s a lot of these ‘boda boda’ businesses and then also targeting a group that really can benefit from this. So it’s important for us to make a social impact, right? Yeah. But I can tell you more about the motorcycles if you want. So the idea is to target this market and make an electric motorcycle, they can go about 50 to 80 kilometers on one charge. But the difference is that we want to have a battery swap system. So you can, you can actually, when you charge the vehicle, you remove the entire battery from the motorcycle you’re putting into our charging rack. And you take a new one and putting into that motorcycle and this means that we effectively charged the vehicle in 10 seconds instead of waiting hours. Right. So by having this system, it’s really good for us because we can sort of implement the new charging infrastructure that works for our bikes and it also good for the consumer because they can quickly charge and just continue with their services everyday services instead of waiting.
Sam: 28:16 Consumer here being the motorbike driver?
Mikael: 28:18 Yeah, correct.
Sam: 28:19 Yeah. Okay. And so what’s you pitch to the motorbike drivers?
Mikael: 28:23 So it’s a, it’s simply, we want to offer them a solution where they can lower their operational costs because for these guys, they don’t care that much about the environmental aspect, but they do care a lot about their finances and everything they spend on fuel every day. So we offer them a solution where they lower their running cost from day one because we will work with financing options and leasing and everything and asset finance companies and then offer them a solution where they can go with electric motorcycles and swap them with battery sale.
Sam: 28:56 So will this also be a conversion? Will this be getting a motorbike if it’s built specifically for this?
Mikael: 29:04 Right. So in the beginning it will be a sort of converted bike. So we will take frames that are already assembled here in Kenya and then putting our electric motor and controller and batteries, but a few more months down the line, it’s going to be a completely new design that we manufacture from scratch. Cause this is a, it’s, it’s easy to design and produce a motorcycle than a whole car. It takes in less money in development and it’s more easy to do it here
Sam: 29:34 Cool so if I’m a, an existing motorbike taxi driver, if I come to Opibus, I will be basically, will I be still using the same motorbike I’m driving in?
Mikael: 29:46 So, no, what I’m saying is that the first customers that we have right now will not be the, the battery sub system. It will be targeted more towards maybe commercial businesses to do logistics, specifically for their own company. And that’s where we’re going to get all the pilots out or the first products. And we’ve already have an order of about 50 motorcycles going out now in October. But the next sort of the big phase for the, all the commuter bikes will be a complete new solution with a battery subsystem. Yes.
Sam: 30:17 Okay. So if, if I’m, if I’m a motorbike driver and I’m wanting to be part of the Opibus system, I will have to get a, a bike specifically made for the Opibus?
Mikael: 30:28 Yes, correct. And the idea is that already today there’s asset finance companies that finances these motorcycles on the market. So an asset finance companies takes the risk of investing in the motorcycle and then the, driver pays it off daily. Everyday. He pays a little bit every day. And since these financial solutions already exist and these drivers are used to it, we can just tap into the same system. Right. So we can then offer a motorcycle, within asset finance companies. So they don’t have to pay anything upfront. Yes.
Sam: 31:01 How much does the motorbike cost?
Mikael: 31:03 So if we were to sell it as a one off to maybe these logistic companies that I talked about in the, in the beginning, it’s probably about 2000 to $2,500 for the most.
Sam: 31:14 This is not.
Mikael: 31:15 No. And a new, a new really cheap TVS that is imported from India. It’s about $1,300 today on the market. Okay. But then they would pay quite a lot in petrol and the maintenance cost, right?
Sam: 31:30 Yeah. Do you like, I can’t get the economic argument. Do you foresee any or has it been any resistance in just the notion of an electric vehicle and like what if it rains or like what if we run out of power every, those sorts of like other challenges or things that you’ve come up against?
Mikael: 31:51 Yeah, I mean we always get the same question about, you know, if it rains, what if the, what if there is night, there is no sun can they, can it operate. Yeah. There’s a lot of these questions and obviously it’s about teaching people how it works, show them how it works as well. But the main, the main idea for this market is that they want to save money and if they see a solution that you know, brings down their operational cost, they will jump on it. They love it. Yeah.
Sam: 32:16 Very cool. Okay, so you’ve got actually, the safari cars, we’ve got ‘bodas’ are the motorbikes. Did you say something after that?
Mikael: 32:25 Yeah. The, the last, or the next market would also be public transport buses.
Sam: 32:30 Yep.
Mikael: 32:31 Yep. So it’s very interesting because the more you drive every day, the more you actually save because that’s, you know, more kilometers that you don’t have to put petrol into your car and you put electricity instead and it’s cheaper. And these Matatu so the, the public transport buses, they drive long distances every day. It’s up to 500 to 700 kilometers a day.
Sam: 32:55 Really?
Mikael: 32:55 Yeah. Which is insane. Some of them operate inside the city, but some of them operate, you know, into connection between cities. So maybe Nairobi up to Machakos or Nairobi to Narok or, or stuff like that. So since they drive so long distances, the economic model for them is, it’s crazy. And if we offer a solution today to these, public transport buses companies or a Sacco as they’re called, they would have a pay off time in one year.
Sam: 33:25 Wow. Okay. And the battery engine is able to move up to 500, 600 kilometers a day.
Mikael: 33:35 So there’s a few things we need to do to make this, you know, application work for them. I think the range for one of these public transport buses would probably be maximum 250 to 350 kilometers. But the good thing is that they don’t drive 700 kilometers in one go. The drive may be 150 or 200 in one go, and then they stop, they wait for people to get on the bus and then they go back. So while they do these routes in total, they make about 700 kilometers a day. And this means every time they, they stop at one of these end stations, they have time for charging. And when we’ve been talking to these companies today, they wait about one hour before they fill the vehicle for the next round. And this hour is perfect for full charging.
Sam: 34:22 Okay. And I guess, yeah, so I suppose again, this is another example of you don’t need the full network of charging stations. You’ve got the, in this case, just the two points.
Mikael: 34:31 Correct. And this is so interesting because usually if we want to implement charging infrastructure in Kenya, we need to have huge governmental support. You know, a lot of grants and money and investments and right now the market isn’t that mature. So I think the Kenyan government, which we might talk about later as well, they are not ready to do, you know, these sorts of investments. So this means we have to do it ourselves. And the ‘Matatu’ or the public transport bus industry is quite interesting for this because we don’t have to have chargers everywhere because we have to have one charger at one station and one charger at the other end station. So it’s two charges for one route and that can can make, you know, one route be operational on electricity instead of diesel or petrol. And if we do that for the other lines, right, we can organically build the charging infrastructure of Kenya and maybe opening up these charging stations for other types of vehicles in the future as well. So actually the public transport bus industry is one of the solutions to lock up the, to unlock the, the infrastructure of charging. Yeah.
Sam: 35:42 So you see I’ve never, yeah, I’ve never sort of quite thought about the little steps you can take before actually sort of building up. I’m trying. What’s, what kind of comes after a ‘matatu,’ what’s between a ‘Matatu’ and a private car?
Mikael: 35:55 Yeah. So I think the end result is to do any vehicle like, you know, comes into our workshop and if it’s city cars, if it’s a big year, 50 seat bus or a, you know, even an airplane in the future as we talked about in the workshop. But, these are the natural steps to, approach the market today.
Sam: 36:12 Can you trucks?
Mikael: 36:13 Yeah. Everything. Yeah. But right now we can’t do it because every time there’s a new model we need to develop, you know, battery boxes, the right design for the Moultrie power and, everything.
Sam: 36:24 But is there like an upper limit as to how much power a battery engine can like produce?
Mikael: 36:34 No. I’ve, I would say today with all the different components and, you know, companies that produce these components, there’s no, there’s no limits. I mean you can buy an engine with 3000 horsepowers that is perfect for a truck or you can buy a small electric motor for only a motorcycle. So these components definitely exists.
Sam: 36:53 And the 3000 horsepower one, it’s not so big that it can’t be fitted into a truck.?
Mikael: 37:00 No, it’s actually the opposite. Electric vehicle components are much more power dense. So, for example, when we, when we retrofit or convert the safari vehicles, we remove about 400 kilos and we add about maybe 300 kilos. So actually when we’re done, we actually reduced the weight of the vehicle and this is going to be the same for trucks, because they have huge fuel tanks. Right. And every lead during that fuel tank weighs a lot of, yeah, it weighs a lot.
Sam: 37:29 Yeah. Wow. Okay. So you say trucks is a plausible next step, cause that’s another one where you have a start point and end point.
Mikael: 37:35 Correct. Yeah. Yeah, so trucks and the city cars will definitely be the next step.
Sam: 37:39 Very cool. So far it’s quite expensive. How, how have you sort of financed the business so far?
Mikael: 37:44 So, yeah, it’s incredible. We’ve actually managed to do a lot with a little, and I think that’s one of our companies, you know, models to do as much as possible with as little as possible because not always, you can, you know, you can have support of a big grant funds and all this. And so our sort of main thing has been to work with sales because we want to sell first and then develop. This is very important for entrepreneurs in every business because if you develop something first and then you show it to the customer and try to sell it and they say, no, you need to go back and redevelop and redesign and everything. But if you sell an idea to someone and they buy it right and they need develop what you say, what you’ve sold to them, it’s already done right. The sort of downside is that it might be a, you know, issues with delays and also, there might be some design steps that we need to do, you know, while we’re delivering the vehicle to the customer, but this has been one of our approach because we can very quick, you know, show the proof of concept, start getting, getting revenue into the company and yeah. And show people that it works.
Sam: 39:04 Okay. So have you been self-financed the whole way?
Mikael: 39:08 It’s, it’s almost, we’ve taken loans from different Swedish banks and we haven’t done any equity round at all so far. And right now we sell about six of these vehicles a month, and we sell ’em perhaps about a thousand solar panels every month. And we’ve been awarded a big project of 300 lithium battery storage systems going to be installed all over Kenya with the auto valuable but $1 million. So everything is really picking up. But yeah, it’s been a, it’s been almost only self funded from the start.
Sam: 39:43 Is it, is this a sort of business that needs to have investment to kind of take it to the next level or is it something where you can kind of grow…
Mikael: 39:55 Investments are definitely needed. Yeah. So this is sort of the, you know, the proof of concept showing everyone that we can do this. We know what we do, we also get experienced in the market, but we, yeah, in the near future we will do some big equity rounds to bring in the capital needed to, scale up and also to scale up to other countries. Cause it’s very interesting that the markets in Kenya are very similar to markets in Tanzania, in Uganda. You know, they have the same sort of public bus system with the Matatu, they had the same motorcycles and everyone is in need of, you know, reducing their running costs. And they also have a lot of sun four for charging of, you know, through solar panels. So I think, yeah, definitely in order to scale up, we need to have investments. Yeah. Okay.
Sam: 40:41 Okay. Now, to me, this seems like a good use case for like grant money.
Mikael: 40:49 Definitely.
Sam: 40:50 If you, I don’t know anything about it, but I can imagine there’s, a big fund or report money somewhere, which is saying we need to promote, energy efficient or like environmentally friendly solutions in developing parts of the world. Are they, do those things exist?
Mikael: 41:07 Yeah, definitely. And we thought the same from the beginning that, you know, this is the perfect, the perfect project for grants and funding to, to put their money on. But I think we’ve been applying for probably, you know, five or 10 of these applications and some of them are still in progress and I think we’re probably gonna get a few of them quite soon. But so far we haven’t got that much. And I think the reason is that everyone talks about bankable projects, how you can find projects that actually, you know, make a profit and are a good investment in some way. And these are the projects that they tried to find. And when we have is sort of, you know, destructive and very innovative idea that is quite risky because we bring in a product to Africa that has never been here before, even though even though it sounds really good, you know, some of these institution and the, and funding might not like the risk. Yeah.
Sam: 42:05 Oh, it’s a shame isn’t it?
Mikael: 42:06 It’s such a shame. Yeah. We’re really close to getting a few of these. I think so, yeah.
Sam: 42:10 I’m sure if you can, you’ll get some good use cases. It becomes more bankable
Mikael: 42:13 definitely then. And that’s the way, because we need to, we need to show the proof of concepts so they know that, you know, the grant will actually do some impact socially and environmentally. So we need to show the proof of concept, which you’ve done now and then, you know, have a scalable idea of, how to proceed. Yeah.
Sam: 42:30 How does, like how technical do you need to be in terms of the efficiency gains in terms of, from an environmental perspective? Is it, can you just kind of just say like a petrol engine emits this amount of fuel fumes? We don’t, here’s this, here’s a calculation, we’re better, or do you need to like actually take readings of stuff like this?
Mikael: 42:54 Yeah, it depends on how you want to do it. But what’s really important if you want to get the whole picture is to look there, look at the design life of the product. So, for example, when we put in batteries and electric models, these batteries and motors needs to be produced somewhere, right? And in the manufacturing process and even in the resource process where we get all these resources out from the, from the ground, because some motors in some batteries requires some really rare earth metals, which are quite difficult to, to get. So if you look at the whole picture, you know, it’s, it’s definitely, it’s not, you know, it’s not the, the miraculous solution to everything, but, it still makes sense. And I think it’s very important to build the infrastructure. And the, how should I say it? The mindset of, you know, we shouldn’t put petrol or diesel anymore in our cars, which use electricity because you know, years down the line it will get more efficient, the batteries will be, will be more efficient as well, and we’ll get everything to be more and more environmentally friendly. So yeah, even though if you look at the whole picture, it still looks really good in comparison to continuing using petrol. But obviously I would say electric vehicles has a little bit more carbon footprint in the manufacturing process. But then in the use, it’s almost nothing except when you, when you change the batteries. So it is definitely much better than conventional vehicles. But when you look at the whole picture, you need to take some things into account. Yeah.
Sam: 44:25 Correct. Okay. So with this all being said, even when you’ve been able to demonstrate that this is a, a bank or like already bankable investment, is that, do you feel there’s an, is there enough grant money out there where you can just kind of keep it up and not give away too much of your business? Or do you think you are going to have to go behind? What type of investor are you going to sort of go around?
Mikael: 44:51 it’s going to be a mix of, you know, impact investment and just, you know, when we look at the investment that we really want to work with the investors in the region, we just, we don’t want to bring in someone that only comes with money. We want to have someone that brings, you know, maybe some knowledge or experience or in our business perspective on everything. So we’re very picky when it comes investments and I can say that, you know, we’ve had a lot of different opportunities but we’re very picky to choose the right ones. And I think you shouldn’t, if you have enough Cash flow and you know, everything works well, you shouldn’t stress it out too much. Obviously everyone wants to bring in the money to make the big expansion of the scalable project. But I think as long as you, as the other viable product that brings some revenue, I think you can, you can take it a little bit slower. And then other VC companies usually say, they always say, you know, if you don’t bring in us now for 50% of your company, you’re screwed. You can’t do anything. But, I think that’s wrong.
Sam: 45:52 Okay. Weird question. As grants involve getting money into the company, is that your responsibility or… Cause you’re head of sales?
Mikael: 46:01 Yeah, so…
Sam: 46:02 Cause it’s because it’s to do with like bringing in money, right? You have to do it or can someone else do that?
Mikael: 46:06 So first of all, to define the company properly, we are sort of in the, the, you know, the, in between being a startup and a really, you know, established company in Kenya. So obviously in a startup, you know, there’s a, there’s a lot of different things to do. So usually, you know, we have our responsibilities and our departments, but you know, if something needs to be done, you know, everyone helps out. So yeah, I’d be working, I’ve been working on these grants as well, but it’s not, it’s not my, my only only thing, my main purpose. Yeah.
Sam: 46:33 Yeah, yeah. Okay. And why is it called Ou Bus?
Mikael: 46:36 So Opibus means resources in Latin.
Sam: 46:40 Okay.
Mikael: 46:40 And I think the idea is that we, you know, we like to work with the resources and how we can, how we can make the most of out of the, you know, the smallest things.
Sam: 46:50 Yeah.
Mikael: 46:51 And, yeah, that said. Yeah. I guess, yeah.
Sam: 46:55 What was the, was it easy to come up with that name? What did you have like a big selection and your like, cool…
Mikael: 47:00 It’s the same in every startup, but you know, it’s, it’s like you almost agree on everything with the business idea and the concept, but like, when it come to the name, it’s always, you know, it’s difficult to, to choose. But yeah, we, we stuck with this one and then, we haven’t had time to, you know, pause and actually think about, and maybe there’s a better name or something. And so, yeah. It stuck with us?
Sam: 47:21 What were some of the other names you considering?
Mikael: 47:24 You know, I can’t really remember, but you know, some of the really classic ones, like, you know, electric safari vehicles practical ones, but yeah. We really like the name now and I think whatever, whatever name you choose and when you, when you become an established company and more people get to know you and the company and the image, it just sticks and everyone likes it. So I think, I think Opibus is quite, quite established now in Kenya.
Sam: 47:55 Um, cool. So we’ll just do a few more questions.
Mikael: 47:57 Yeah, sure, sure.
Sam: 47:58 So company is going for a few years now, you’ve been in Kenya for 12 months per se. What have been some of the surprises, both positive and negative you’ve had? So if you compare, roll back the clock 12 months, if you were to say, yeah, in a year’s time, this is what Opibus will look like. What are some of the surprises you’ve, you’ve had in terms of positive and negative?
Mikael: 48:21 Yeah. So, positively, I mean, the market has responded really well. There might be, we haven’t, you know, we haven’t got that big yet, but there might be a push in the future from, you know, oil companies that have connections. Maybe some, some ministers or someone up in the government that might, you know, want to, you know, quiet us down or maybe want to push us in another direction. So there’s a lot of these forces that we thought could be an issue, but it hasn’t been so far. And I think we’ve had sort of a stealth strategy where we, you know, we develop and then we just go big. So no one has time to, really, you know, put us in place so to speak. But yeah, positively, the market has responded really well and it’s actually, it’s been, it’s been quite, quite good having a company in East Africa and obviously we didn’t know that much about it from the beginning because there’s so many, you know, different things, both the cultural and financially. And then, you know, the rates, interest rates in Kenya is like, you know, eight to 12%. And in Sweden it’s 2%. So there’s a lot of things that they’re really differs from Sweden for example and Europe, but negatively. There’s so many things that don’t work out in the same way as in Sweden for example, logistics, you know, the Kenyan government, when they impose these new customs rules, for example, they can do it overnight and it can, it can just screw up the whole, you know, logistics chain. And we’ve had batteries. There’s been stuck in the port for six months. Like, no one can clear them because they changed the regulations on which papers they need, but the parks has already been sent before they changed it. So there’s just these nightmares that are so difficult to, you know, foresee. And then obviously corruption. Is a, very, it’s a big problem in Kenya and Africa as a whole.
Sam: 50:20 How much have you faced it?
Mikael: 50:21 Yeah, so, you know, you face it every day almost. It’s everything from, you know, traffic police officers to, at the customs or stuff like that. But, we have a policy where we don’t do anything that has to do with corruption. So for example, this example when we had to wait six months, you know, we could probably, you know, pay someone off or stuff like that to make it happen faster. But we just simply said no, like we we’re not going to do it. And finally it worked out, but it takes longer time and it really, it screws up the whole plan. But, corruption has been a really, really negative thing for, yeah, for operations down here. And, I think we’d been managing it so far. But you know, they, they can be a time when just other companies would pay off the government and they get all the products and projects, you know, a Chinese company coming in and doing exactly the same thing, but they give a, you know, $200,000 to the top minister and then maybe we will be out of business. And these things are so difficult to foresee. Also the elections, I don’t know how much you are informed about the elections. Last time it was quite aggressive and it really affected the tourist ministry in all the businesses in Kenya. And this happens every four years, if I’m not mistaken. Yeah. And that’s also a risk, you know, every fourth year maybe you just shake the market completely and you can’t do business anymore. So there’s a lot of risks. But we’ve been managing everything so far and we’re really happy to work here and really, you know, put these new solutions to to Kenya and East Africa.
Sam: 52:00 Fantastic. And people who are listening who might be interested, you know, in Opibus, either for themselves, let’s say they own a Safari lodge, or they’re interested in just learning more about the company. What are the best ways in which people can sort of learn?
Mikael: 52:12 So I think, going into our website, the Opibus.se as in Sweden, we are going to get a, yeah, we’re probably gonna get a Kenyan as soon as, well, I’m actually the guy designing the website and I’m doing all the design work for the brochures and everything. But sometimes it’s difficult doing the big deals and doing the design at the same time. So we’re probably gonna kind of improve that? But going into the website, you know, sending us an email, there’s contact details to all of us in the, in the management team. So if you’re interested in sales, you can contact me if you’re interested in something about the, you know, the technical stuff, you can probably talk to our CTO. But yeah, in general, send us an email or call us. That’s the best way.
Sam: 52:49 Very good. Awesome.
Mikael: 52:50 Cool.
Sam: 52:50 Mikael, thanks so much.
Mikael: 52:52 Perfect Sam, thank you very much.
Very interesting and highly important to reduce the use of petroleum fuel. Oponía a ounds like the perfect solution both for safari cars and public transport!