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Electric Futures: Getting into bed with the government.

Chris Haining November 7, 2017 All Things Hoon, Terrible Ideas 13 Comments

In June 2009 Tesla was approved to receive US$465 million in low-interest loans from the US Department of Energy’s $8 billion Advanced Technology Vehicles Manufacturing Loan Program. It seems reasonable for a government to support a company or initiative that has the potential to raise the global profile of an entire country in a given specific field, and Tesla – current issues aside – has certainly done just that.

The fear with such financial support is, always, whether a loan will be paid back in full, or even in part when it comes to some cases. But at least Tesla has a portfolio of legitimate, well-conceived products to offer. If it can build enough, the customers appear ready to buy. This isn’t always the case, though.

The headline-grabbing nature of the EV is such that it’s almost a surprise that start-ups are so few, but the truth is that making a decent fist of starting your own car company is such an expensive and involved endeavour that you really need bottomless coffers and a truly world-class product. That is unless you can find an investor who isn’t especially clued up and will fund your efforts, no matter how obviously futile.

Of course, private investment is one thing – I don’t really care about a rich man making a daft bet – but tax dollars need to be gambled responsibly. A look at what’s going on in Uganda makes me thankful that government investment in unproven businesses is doled out relatively sparingly.

Kiira Motors Corporation is, or purports to be, an automotive manufacturing company in Uganda. Its equity partners are the Uganda Development Corporation (UDC), a Ugandan Government quango that has a 96% majority stake, the other 4% covered by Makerere University. A lazy journalist might cite the institution’s Wikipedia entry, which states that “President Yoweri Museveni declared it closed indefinitely” on 1 November 2016 to be cause for concern, but the university’s own website assures that it’s very much thriving.

This is important, because Makarere has been responsible for the research and development required for every one of the cars Kiira Motors produces. Or hopes to produce – so far no actual production run has been achieved for any of the vehicles. The problem is, it’s not especially easy to imagine the three cars that Kiira has developed – or has been developing so far – being produced in marketable quantities.

The brochure, the actual, official brochure for the as-good-as-vapourware Kiira Motors EV POC (real name), quotes that the Ugandan President pledged $7.6m of support for Makarere University’s faculty of Technology prior to its development. The brochure contains many CAD renderings of the most rudimentary quality, showing a vehicle resolved to a standard that surely wouldn’t be acceptable in a school-level project, let alone one with the backing of a country’s premier technical institution. And that’s before we get to the prototype, which isn’t shown in the brochure but is on the accompanying web page. It bears only passing resemblance to the CAD renders, yet takes a form no more or less aesthetically acceptable – excellent Toyota Yaris doors notwithstanding. The brochure also discusses how the finished car was constructed – and mentions Isopon. Not an ingredient that you’d expect in a vehicle destined for large scale production.

Perhaps the latter was never the intention, though. The website states that “The first tactical goal of the KIIIRA EV Project was to design and build a 2-seater Electric Vehicle as a proof of concept to demonstrate that it has the talent, discipline, and leadership to contribute meaningfully towards the development of high-tech transportation solutions”. Oh, well, objective well and truly achieved, then. It was only a warm up for the main event, the development of an entirely new – and far more ambitious model – the Kiira EV SMACK (again, real name), for which another US$43m has reportedly been ploughed in.

This is a five-seater sedan with Hybrid powertrain. Again, a full online brochure is live on the website for all to see, but this time it contains images of the SMACK in what appears to be its ultimate form, a driveable prototype. Perhaps it’s immaterial that, again, the finished vehicle bears scarce resemblance to the renders contained within the same brochure. These, incidentally, have lost a pair of doors since earlier versions, but at any rate, the car that takes pride of place in the images looks more like a development mule than a finished article – the problem is there’s precious little evidence that suggests otherwise.

Not only does the appearance of this potential mass-production candidate show little sign of proper development, but its powertrain seems rather ill-conceived, too. Instead of the expected Prius-style hybrid or plug-in hybrid drive system, the SMACK claims to use a range-extender set up. Except it really doesn’t. A BMW i3 – which I accept has been subject of a rather more costly development programme – had a claimed all electric range of 120 miles in its first iteration, which has increased in later models. The i3 REx range-extender model sensibly offers a lightweight two-cylinder petrol engine that can charge the batteries or power the electric motor directly, should needs be, but the SMACK doesn’t appear to have been quite so carefully thought through.

Like the BMW, the SMACK’s electric motors always provide its motive power and the petrol engine never directly drives the wheels. Unlike the German machine, though, the brochure claims an all-electric range of just 20 miles, far less than most regular plug-in hybrids can achieve. When this range is used up, the engine fires up to generate more electricity, but what kind of lightweight, fuel-efficient, energy saving engine are they using? A high-tech turbocharged triple? A tiny twin? Nope, the 1.8-litre GM Ecotec, but connected to a generator rather than a gearbox. Even if this manages to eliminate some of the mechanical losses of conventional gearbox, this does not strike me as a recipe for world-beating fuel-efficiency. In fact, it might well be more efficient with a regular gearbox instead of heavy motors and batteries to lug around.

There may be economies in SMACK production that mean it makes sense as low-cost domestic transport, but the infotainment systems and lavish specifications promised by the brochure hint that finding buyers in cash-strapped Uganda isn’t really an aim. To achieve its goal of producing 840 vehicles every month, Kiira needs to export, and to do this, it has published plans for a world class development, research and production centre, for which a few wholly fantastical ‘artists impressions’ have been formulated. Apparently, it only needs another US$300m or so.

Of course, we must assume that the car shown here isn’t actually indicative of the production car. Surely the thinkers behind Kiira realise that a hand-built spaceframe clad in glassfibre and filler is not a viable mass production method, and that a car must fulfill various safety demands before it can even be offered for sale on many of the world’s markets. Not only that, but to actually succeed it needs a USP, and for a start-up that typically means a very low purchase price or an exceptionally desirable image. With a target price of $20,000, the EV SMACK Doesn’t really have either.

Even if the export of SMACK doesn’t take off, Kiira has a third vehicle up its sleeves, which sounds eminently more suited to domestic use, and that’s the Kayoola Solar Bus. This is a 35 seater of entirely routine design, but for its solar-electric power supply. Again, a lavish brochure (of which a disproportionate chunk is devoted to the design of the seats) has been published online, and quotes that the Kayoola offers “a range of 80 km, with latent range extension from the real-time charging enabled by the roof-mounted solar panels. The range might stack up – there’s 70kWh worth of battery to power a 150kW motor, and which is recharged from a 50kW fast charger, but the solar claim seems rather ambitious. Its nine 150w and three 50 watt panels total just over 1.3kw, delivered at 12 volts, and it’s hard to see how this could make much of an impact on charging such a serious power pack.

The obvious lack of proper joined-up thinking behind all three prototypes gives me a headache, and the government owned / funded nature of it all strikes me as severely ill conceived. The SMACK brochure states: “This innovative and iterative development programme is envisaged to realize [Kiira’s] flagship production vehicle, the associate infrastructure, systems and requisite competences for the relevant and beneficial institutionalization of an automotive industry in Uganda”.

We’ve seen how car companies have previously started up in emerging economies. Typically, they’ll find a way of replicating or licensing existing technology and then reproduce it in sufficient volumes to be cost effective, before exporting and selling at prices that undercut the local market. It would be pretty ambitious for Uganda to achieve that, but to try and compete in the EV / alternative powertrain market, an industry that sees the investment of billions of research dollars every year, is surely an endeavour that the not exactly fluidly financed Ugandan Government ought not get involved in.

If Uganda really wants a car industry, wouldn’t the least risky approach be to try and attract an established car manufacturer to set up shop in the country? And, if the government has already thought of this, surely the factors given by those who have declined Ugandas offer would present even more of a challenge for a home-grown company than it might an international company with big financial muscles.

Or perhaps I’m being terribly naive and  (and we’ll whisper this in case we get in trouble) the whole thing is just a quasi-legal scam by which all those businessmen involved will make a handsome sum of money. Corruption? in Uganda? Maybe the Ugandan Government is hoping for praise for investing in home-grown, environmentally sound technology for the benefit of the people, and will turn a blind eye to the odd substantial backhand transaction, just to keep the wheels greased. Ho hum. Maybe the entire endeavor is simply a ruse by a bunch of canny financial thinkers to sell the Ugandan Government a handful of magic beans.

Or perhaps, just perhaps, it’s all just a colossal, but honest mistake based on innocent good intention, wishful thinking and misjudgement. Whatever happens, it seems unlikely that the Government will see any of its investment back – it’s essentially been a somewhat indirect method of funding a second-rate universtity car design course, unless some kindly overseas manufacturer sees a glimmer of potential and establishes that ‘Motor Industry’ that Uganda has its heart set on.

Fortunately, we can look at the Kiira Motors situation from a safe distance, knowing full well that it’s only further crippling a weak economy thousands of miles from our own. But the fear is of a similar thing happening closer to home. There are a great many city authorities out there, in search of the next great white employment hope, who could be tempted to make life very comfortable indeed for an EV start up with big ideas and lofty profit forecasts, but only a tenuous grasp of how they’re going to be realized. Nevada’s hope that Faraday Futures would be a big local employer has crumbled to add to the desert dust, but at least the Las Vegas officials ensured that tax incentives offered didn’t send money on a one-way trip, and the city lost no money in the debacle.

It’s not unusual to see local councils fall over themselves to entertain new and exciting business opportunities with world-beating ideas, many of which will fail within minutes of a big, expensive corporate premises being built. If this were the 1950s, you could bet that hundreds of ambitious EV-focused ‘entrepreneurs’ would crawl out of the woodwork, seeking investment, like the huge number of attempts at economy cars seen during that period. But the scary though is that such funding can probably be found even today – you just need to find a source of cash controlled by people who don’t quite understand what they’re investing in.

Meanwhile, Uganda – one of the poorest countries in the world – will continue pouring millions into a vanity project that might never bear fruit.

(All images copyright Kiira Motors, www.nairobiwire.com and www.256business.com)

  • “…but the scary though is that such funding can probably be found even today…”

    This is the all-electric TechnoLab Teener from Italy:

    https://www.inforbahia.com/wp-content/uploads/2015/04/SERO-ECO-CAR-4.jpg

    Or is it, in fact, a Movitron Teener or a Startlab Open Street, both also from Italy?

    Perhaps it’s an AEVCO Kurrent NV, an Innova Dash UEV, or a Zap Intimidator LUV, all from the US?

    No, wait, it’s a Girasole Elettrica from Japan. Or maybe a Sero Electric from Argentina. There may be other iterations as well. I suspect someone managed to secure a bit of funding each time around.

    • P161911

      Is there an EZ-go product hiding under there?

      • As an HMV Freeway owner I am deeply offended by the suggestion of shared parts between it and the TechnoLab/Movitron/Startlab/AEVCO/Innova/Zap/Girasole/Sero.

  • Rover 1

    From what I’ve heard of the corruption and intimidation in Uganda, “Smack’ is an entirely appropriate name. Perhaps they have ‘truth in marketing’ laws to adhere to?

    Panel fit not being to Lexus standards, (or any, for that matter), may affect marketing. Are these vehicles already crashed and repaired in a school project?

  • Sjalabais

    Awesome post! That’s some of the worst finish I’ve seen. Can’t really identify all “borrowed” parts like lights either. There’s a Chinese coach manufacturer that uses the same grille – King Long possibly? Couldn’t really figure out which one.

    Norway has had three car startups that I know of, which actually produced at least a rolling chassis. There was the Troll, the “Elbil” (“electric car”), and the offensively named Th!nk, that actually had a production run and was owned by Ford for a little while.

    The Th!nk company went bankcrupt in various iterations nine times. They received all sorts of government subsidies, not least when the Norwegian government post service bought lots of them for deliveries. Cars without a proper heater in an arctic country, mind you. Their production run stopped when California changed its subsidy focus from zero to low emission vehicles.

    Imho, this is another case of blatant waste, in an otherwise supposedly well-governed country (an endless topic in itself). It could have tipped over to becoming a success story, but it’s still a strange way to identify an industrial champion: Countries without a car industry struggle to attract the talent and capital you’d find in existing industrial clusters. And if it all depends on public handouts and policy…doesn’t sound like the way to go.

    • Thank you. Yes, it’s all rather heartbreaking. The worst thing is that the project’s ultimate failure is so obvious that it shines as an international beacon of hopelessness. Not what Uganda needs.

      I have a Th!nk brochure, somewhere. Ought to dust it off for The Carchive.

  • neight428

    For all its .gov subsidies, ample private investment, and access to the absolute best design and production technology on earth, TSLA hasn’t yet proved to be a profitable enterprise, though I wish them luck as I try to not have hard feelings over sunk costs and their cars are intriguing products. I can’t imagine that GM or Nissan’s electric efforts will be cash flow positive either for quite some time.

    There is no legitimate reason why a place like Uganda should try to spend its people’s scarce dollars on something that the best financed companies in the most advanced countries in the world choose to lose money doing. Build a modern power plant, hospital, water treatment facility, agriculture college, highways or railroads, anything but unproven tech. If this is anything but another way to filter Ugandan taxpayers’ money in to offshore accounts of Uganda’s rulers I’d be shocked. These guys don’t have the industrial or economic wherewithal to make a decent bicycle. Electric vehicles are to some extent embraced as inherently cutting edge and virtuous. I’m guessing these jokers are trying to ride that bit of window dressing all the way to the bank.

    • Summed it up more succinctly there than I could in my whole article.

    • Rudy™

      Tesla runs more on Musk’s endless stream of empty promises than it does producing a profit…and it makes zero sense why they are Wall Street darlings. They actually believe his empty promises?
      It’s like the national debt–because they keep digging that hole bigger and deeper, it will be harder to claw their way out of it. Their crash is going to come, and come hard. Musk needs a serious reality check. Good products don’t stand a chance if the company beneath them is rotting away.

  • Harry Callahan

    “but tax dollars need to be gambled responsibly.” No.

    History is pretty clear on what happens when governments get involved in manufacturing anything. The products are subpar and the economics never work out.

  • cap’n fast

    having read the latest news flash, the concept of driverless cars has taken hold in uganda. unfortunatly, the concept of driverless car control system had not…..