Japan-based electric motorbike startup Terra Motors has been a pretty busy company over the past year, with branches opened in Vietnam, the Philippines, and India. In addition to those, the company is partnering with dealers all around the world, just last week announcing a big partnership to sell its e-bikes in Nepal. Admittedly Nepal isn’t the biggest of markets. But when I visited Terra’s office earlier this week, overseas sales director Koshi Kuwahara told me why it is an ideal market for an electric vehicle company. He explained:
There are several aspects to deciding whether or not to enter a market, whether or not to set up the company or a factory. Yes, there is a big market in China. Yes, there is a big market in Indonesia. But we have to consider the competition, how eager partners are, and we also have to consider the government. In the country’s where we have our own branches, local governments are very eager about electric vehicles. In Nepal, the reason they are so interested in EVs, is because Nepal has the highest petrol price in Asia.
From a Western point of view, the decision to go electric is often made with consideration to the environment. But Kuwahara showed me a list of countries, along with corresponding fuel prices and GDP per capita, noting that in places where gas prices are relatively high and GDP relatively low, it really has nothing to do with saving the earth.
It’s all about saving money.
A huge gap in import duties for conventional versus electric bikes means that Terra Motors can sell for about $100 cheaper than their gas-guzzling competition. For example, Terra’s A4000i e-scooter sells for a mere Php 8,030 (US$180) in the Philippines. And the startup is very optimistic about prospects in Nepal, where gas and diesel prices have spiked in recent years . The press conference for their opening in Kathmandu attracted about 150 people from most major media, a reflection of that optimism and enthusiasm.
Kathmandu is a small city spanning about 15 kilometers edge to edge, says Kuwahara, so a Terra Motors e-bike, which can get about 45 kilometers from a full charge, is more than adequate for getting around. And the city’s notorious air pollution, which is among the worst of all the world’s cities, means that they will be very much welcome by the local government.
The startup is aiming to sell about 1,000 bikes in the next year, and has already sold 500 from this new dealership. While most of the market conditions are great for Nepal, it is still a pretty tiny market with about 200,000 motorcycles sold per year. But at this early stage for Terra Motors, it’s a perfect place to expand without overextending.
Currently the company’s headcount sits at 27, but they are hiring staff for local offices.
The Japan advantage
Perhaps the most interesting aspect about Terra Motors, in my view, is how greatly it benefits just from being a Japanese company. Kuwahara explains that they are not the first company to push electric bikes in the markets where they operate, but coming from Japan carries credibility that serves the brand well. Many competitors quickly developed a bad reputation due to poor battery performance or some other quality issue. He adds:
[Those companies] just imported from China and then assembled bikes, and sold them. People were interested in electric motorcycles, but they were not satisfied with that quality. We are the only company manufacturing electric motorcycles from Japan. And people know Japanese cars and products are good. If some Japanese company manufactures some electric vehicles, then it must be good.
Even as many of Japan’s electronics giants flounder, the nation’s reputation for quality seemingly endures, with overseas business partners approaching cooperation without reservations. As I have written previously, this is an obstacle that China is still struggling to overcome, and will be burdened with for quite some time still.
In addition to its overseas offices, Terra Motors now has dealers in Singapore, Turkey, Mexico, Italy, Egypt, and Nigeria. And Kuwahara himself has been busy trying to expand that list in recent months:
I went to Africa for two months, with stops in Ethiopia, Tanzania, Kenya, Nigeria, Egypt, South Africa. I’m a bit baked now. (laughs) My colleague went to South America, Guatemala, Peru, Columbia, where there are many three wheelers. So we are focusing on some other markets beyond Asia where we can sell our three wheelers.
Will we see Terra Motors bikes in the US anytime soon? Kuwahara tells me that America is not such an interesting market for them right now, since the motorcycle market is not so big and restrictions on bikes differ from state to state.
Asia certainly looks to be their primary focus, and with solid progress in India as well. The company was very well received when recently presenting at India’s biggest auto show, Delhi Auto 2014. Like Kathmandu, Delhi is plagued with a pollution problem, so the Indian government is especially keen to increase the amount of electric vehicles on the roads, shooting for a 300% increase by the year 2020.
We look forward to watching Terra Motors as it grows outwards. It’s certainly one of the most interesting young Japanese companies out there, one that has wisely adopted an international strategy from the very start.
(Editing by Steven Millward)