Arc Ride raises $33.3m to expand battery-swapping network across Africa

Kenyan electric mobility company Arc Ride has successfully raised $33.3 million in funding, with Novastar Ventures and Norrsken22 leading the round. This investment will help the company expand its battery-swapping infrastructure across sub-Saharan Africa and make its debut in the South African market.

The funding includes contributions from a diverse group of investors, such as the International Finance Corporation, British International Investment, Proparco, and existing supporters like Musashi Seimitsu, a Japanese supplier of automotive parts, and Talanton, an impact investor focusing on Africa. Additionally, the financing includes a debt facility from BII’s Kinetic program and Mirova, a sustainable investment manager linked with Natixis, highlighting the significant capital required to build a large-scale battery-swapping network.

Arc Ride operates with a “battery-as-a-service” model for electric two- and three-wheelers. Instead of purchasing a battery outright, riders lease one and can easily swap it for a fully charged unit at automated stations when needed.

This approach greatly reduces the initial cost of switching to an electric motorcycle, addressing a common barrier for riders, especially in regions where motorcycle taxis provide essential income. Their infrastructure is designed to be compatible with various vehicle manufacturers, including Yadea, a Chinese electric two-wheeler producer.

Similar read: Kenya’s EV startup, ARC ride secures $10 million from Mirova

With the new funding, Arc Ride plans to add 5,000 electric motorcycles to its fleet, improve battery lifecycle management, enhance its automated swapping technology, and integrate more renewable energy into its charging stations. The company will also expand its operations to Ghana, South Africa, Tanzania, and Uganda, going beyond its roots in Kenya.

Why investors are betting on Arc Ride’s infrastructure model

Arc Ride is focused on being an infrastructure provider instead of a vehicle manufacturer, and this distinction is important for its investors. The company’s battery swap stations are designed to work with multiple vehicle brands rather than just one, allowing for network effects. Essentially, the more brands and riders that utilise its battery swapping standard, the more valuable and robust the network becomes.

Ngetha Waithaka, a partner at Norrsken22, emphasised this approach. He believes that Arc Ride’s technology, data, and network effects could establish it as the go-to standard for the entire electric mobility ecosystem.

In many sub-Saharan African cities, two- and three-wheelers, particularly motorcycle taxis, are vital for transportation due to the limited public transit options. This makes electric mobility in this sector a significant climate solution rather than just a niche opportunity, which is why development finance institutions like IFC, BII, and Proparco are getting involved. Chris Chijiutomi, BII’s managing director for Africa, identified electric mobility as a key component of the institution’s climate investment strategy.

Arc Ride’s entry into the South African market is one of its most crucial tests yet. This market has higher vehicle ownership costs and more advanced transport infrastructure than many of Arc Ride’s current locations, but it also faces strong competition from established logistics and mobility players.

The company will need to compete with other battery-swapping services like Ampersand in Rwanda and Spiro, which operates in various West African countries.

For Arc Ride, gaining market share will depend on achieving a dense rider base and solid unit economics in this competitive landscape.

Also read: Spiro secures fresh $55M from Chinese investor NewTrails Capital for African EV expansion