In 2021, Nigerian mobility startup Metro Africa Xpress (MAX) became Africa’s most-funded startup in the electric vehicle (EV) space when it raised $31 million in a series B round to expand into Ghana and Egypt. The company set a goal to provide vehicle-financing loans to more than 100,000 drivers over two years and build EV infrastructure in its new markets.

Two years on, however, industry advocates believe the company’s goals are too ambitious given the high EV prices, unfriendly government policies, lack of charging infrastructure, high customs duties, and bad roads in African countries.

“There is a future for EVs in Africa. However, the market conditions and business models must be appropriate,” Uche Okoro, an energy analyst, told Rest of World. “Building large-scale EV infrastructure [will] require huge investments and innovative solutions to the unique challenges of operating in Africa.”

EV startups have found little success in Africa so far. In November 2022, NopeaRide, a Kenyan EV taxi service, stopped operations following the insolvency of Ekorent Oy, its Finland-based parent company and majority shareholder. About 6,000 out of the 12 million cars in South Africa are electric, and an estimated 350 of the 2.2 million vehicles in Kenya run on electricity. In comparison, globally, EV sales have skyrocketed globally, with 7.8 million EVs sold in 2022 — 68% more than the previous year. By the end of 2021, there were 16.5 million electric cars on roads worldwide.

Launched in 2015 as a logistics company, MAX pivoted to motorcycle ride-hailing in 2017. In 2019, MAX ventured into electric mobility.

The company believes EV adoption in Africa will happen faster than in most parts of the world, David Hoyme, MAX’s international growth and expansion director, told Rest of World. Two- and three-wheelers will lead this revolution, he added.

“This position is based on historical purchase data compared to four-wheelers. Generally speaking, for electric vehicles, two- and three-wheelers are cheaper and more affordable for users; from a business perspective, they are also easier to finance,” Hoyme said. “There’s also the fact that charging and battery infrastructure are more readily available.” Okoro disagrees. “A few factors will limit the scaling of EVs apart from the poor electricity supply on the continent. [They] are expensive,” he said, citing the example of an electric-powered tricycle that can cost up to $3,300, without even factoring in the import-duty costs. “The current vehicle market is another limiting factor. Different countries have different market dynamics, which mean that EVs [will] grow at a different scale across countries.”

In 2020, MAX debuted its electronic motorcycle, the M3, in Nigeria and later in Ghana. It is also testing its three-wheelers across Lagos with companies like Jumia, according to Hoyme, and has installed charging stations in hotspots across the city. Hoyme refused to share figures on the number of motorcycles MAX had sold or the charging stations it had installed.

It is so rare to see an electric car on the roads in Nigeria that those who own one become mini-celebrities. For instance, Nigerian tech entrepreneur Ezra Olubi told Rest of World that driving around Lagos in his Tesla Model S Plaid can be a spectacle. “One evening, on my way back from work, I noticed a car parked in the middle of a major road, blocking traffic,” Olubi said. “I thought his car had broken down. On closer inspection, I realized he was filming the Tesla and me.”

“Different countries have different market dynamics, which mean that EVs [will] grow at a different scale across countries.”

Tesla, which has sold more than 3 million EVs globally, has minimal presence in Africa. Early adopters like Olubi struggle to fix even minor damages in their EVs.

“I drove into a large pothole, lost two tires, and had to import replacements,” Olubi said, adding that Tesla has no official outlet in the country. “After they were fixed, I discovered an error message on my dashboard that had to do with the Adaptive Air Controls, and as there is no Tesla service center, I had to research and fix it myself.”

According to a report commissioned by the Shell Foundation, scaling electric two-wheelers in five African countries by 2030 would cost between $3.5 billion and $8.9 billion. In February 2022, MAX raised an additional $24 million in a venture round. The company is in the market to raise another round of funding in the second quarter of 2023, Hoyme said.

The company’s fundraising plans are coming at a time when there has been a significant slowdown in venture funding, with a 53% year-over-year decline in the third quarter of 2022, according to Crunchbase News.

Joseph Benson-Aruna, a partner at DFS Lab, a firm investing in early-stage African startups, told Rest of World that the market is “undergoing a correction,” and investors are either holding on to cash or becoming more disciplined about the kind of investments they make.

“Already, Africa lagged behind other markets in fundraising figures, so one can imagine that the continent would feel the pinch too,” Benson-Aruna said. “The fact that lots of capital inflow into the continent is foreign doesn’t make it any easier.”

Hoyme said MAX is confident in its business model and prospects despite such a climate. “There has been a lot of restructuring in the capital market, but business models like ours that are cash-generating and have a long operating history will curry favor with investors,” Hoyme said.