In large swathes of the developing world, the current transport solutions that exist are widely inefficient and expensive, resulting in issues such as increased goods cost, wasted produce and inequitable trade.
Because new trucks are too expensive, Africa, for example, imports end-of-life trucks from other markets which are notoriously unreliable due to the rough terrain and are expensive to fuel and maintain, making the continent well suited to the roll out of electric trucks.
The alternative is using bicycles, people or animals to move goods. The drawbacks to these methods, of course, is that goods can’t be moved fast or far enough to build a prosperous business. This causes low incomes, food waste and inefficient value chains. On a mission to change this situation is start-up company and electric truck manufacturer, OX Delivers. We spoke to Founder and Managing Director, Simon Davis to find out more.
Are you a growing manufacturing business with a turnover up to than £100 and looking for necessary resources and skills to make it a priority in your company? Be sure to book your place at the SME Growth Summit today.
Tell us about OX Delivers
SD: We’re developing technology solutions to deliver on-demand transport in emerging markets. Our clients are the three billion people in the world who don’t have access to motorised transport today. That’s something of a giant niche, but it’s also a chunk of society that the automotive industry has largely ignored for over a century.
If you think about the trends in the sector, Henry Ford kicked it all off when he began building cars for the masses, followed by subsequent revolutions in safety and quality. But then, in the 2000s, when it came to the principle of making cars, the industry had essentially cracked it. Since then, cars have merely been made to be more expensive, shiny and digital. Nothing has really been done about making the car better at moving things from A to B.
That’s meant that countries which don’t have access to decent roads, dealership networks, financial services etc., have been left behind. In Rwanda, where we’re piloting, people are still moving things around on bicycle or via animal power. Indeed, 70% of the goods in Africa are still transported on the heads of women and children. That’s insane.
We’re doing something completely different to everyone else, because we’re focusing on the people who don’t buy cars, not the people who do.
What are the geographical challenges that exist for OX?
Transport is the number one problem for every entrepreneur in Africa; whenever we tell someone who does their business in Africa that we’re in transport, they’re immediately hooked.
Due to a limited amount of capital, the only choice of motorised transport for much of Africa is to use imported trucks that have come to the end of their life in other parts of the world and have been repurposed.
However, these second-life trucks tend to be unreliable and counter-productive. Seventy-percent of the roads in Africa are still dirt, so imported trucks are often not fit for purpose, and therefore get damaged.
That means breakdowns, breakdowns mean produce doesn’t get to market and goes to waste, and the rural nature of the continent means that repairs are very expensive. What we typically see in Africa is the same amount of money is spent on maintenance as it is on fuel, which is ridiculous when compared to a UK context.
Going electric
There are very few electric trucks running in Africa. We’re very used to Mr Musk telling us that EVs are great for going really fast. But actually, if you think of the example of an electric milk float, EVs are also really good at going slowly – they have lots of torque and really low running costs.
That makes them perfect for logistics, and we’re starting to see the van sector in Europe head towards EVs. The HGV sector is also on the same path with the Tesla Semi and the numbers are way better than a conventional ICE truck.
Our vision is to serve entrepreneurs in the logistics of doing business. We will do this by delivering clean, affordable goods transport in emerging markets, creating a self-reinforcing cycle of economic growth and social impact.
To achieve this, we are developing the world’s first clean-transport ecosystem that combines goods shipment with financial, trading and marketing services. This OX ecosystem will be enabled by our purpose-built technology; the electric OX truck and our digital platform.
The zero-emissions OX truck is purpose built to enable our on-demand logistics service and is specifically designed for emerging market conditions. The truck is more than capable of navigating extreme terrain thanks to simple, effective and durable design.
It features high-carrying capacity, extreme durability, all-terrain capability, yet has minimal parts, low-cost manufacture and the ability to be shipped flat-pack. Because OX is electric, we gain the benefits of a battery-electric vehicle; zero tailpipe emissions, ultra-low energy costs and low maintenance costs.
We’re building a truck for on-demand operations where uptime, efficiency and energy consumption matters. Getting stuck on the dirt roads of Africa means your customer doesn’t get deliveries.
As such, we’re looking at fast repair time and efficient drive train, which obviously is where EV comes into its own. We’re also keeping things simple; the purpose of the truck is to move stuff from A to B, not to look smart or to make a fleet manager feel great about buying it.
In terms of infrastructure challenges, for commercial vehicles, the destination and mileage is known before setting out – a driver doesn’t decide to take his payload on a random journey. Therefore, infrastructure is not as much of an issue as you might think, and certainly not as problematic as it can be for personal EV users, who may be faced with an impromptu dash to the end of the country to visit a sick relative, for example. Commercial transport has its own infrastructure; trucks get charged and then get sent out on the distances they can do.
The big challenge for many of our customers is that they don’t produce enough product to use motorised transport. In Rwanda, most goods are moved by bicycle which can take loads of around 100/150kg and travel around ten kilometres. That doesn’t create a very productive business model, but people can’t afford to use a truck which needs a payload of at least two tonnes.
So, we enable people to put that 100/150kg in the back of our truck, and then we aggregate the demand. It’s a shared truck that’s moving around. We own and operate it and that provides transport solutions that are more accessible to the masses. Instead of necessitating renting an entire truck to move your goods, our customers can pay just for what they need on a per kilogram, per kilometre basis.
In addition to the truck, our OX ecosystem combines goods shipment with financial, trading and marketing services – all enabled by our purpose built technology. This allows OX, its users and their local communities to access new markets, increase their income and develop new business opportunities.
Much of the developing world might not have net zero as a high priority. Is OX looking to change that?
Carbon doesn’t come with a country code – carbon is carbon wherever it’s emitted. What people have to realise with the transition to EVs is that we’ll certainly see an improvement via current practices, but there are still constraints around existing business models.
So we need to start rethinking industry and technology, and EVs are a prime example. In Europe, if you switch to an EV, you’ll have lower fuel bills. But when you buy a car in the UK, your predominant cost is depreciation; it doesn’t really matter how much you spend on repairs or fuel.
However, by shifting to operating as a service, EVs are really well aligned with a great business model. You spend a bit more capital upfront, but you get a total cost reduction of around 70% less fuel over the lifetime of the vehicle.
So, in commercial as a service operations, EVs are perfect. What they’re not very good for is a sales model. A dealer will have to try and sell a vehicle which is more expensive on day one, their customer can’t afford it and the dealer loses margin. We need to change business models to make sustainability work.
How is OX looking to grow?
Two years ago, there were just nine of us, today there are 104. So, we’ve seen quite rapid growth to date. The market is just so big. We serve about 2,000 customers at the moment and there are probably 300 million potential customers in Africa, let alone other parts of the world (we recently had an invite from a team in Tajikistan to have a look at the opportunities there). There is just so much opportunity. So we’ve grown very quickly, and we are going to continue to do so.
We’re very fortunate in that we’ve got a great story. If you come and work for us, you get to work on really interesting projects, and you get to save the planet. It’s such an interesting and exciting project.
The great thing about OX is it’s a win-win-win solution. When we provide transport for someone, it enables them to build their business, so they make more money, which means they move more product, which makes us more money.
It also creates social impact, because when people have more money, they can afford to go to hospital and put their children through school etc. Also, Africa has the world’s most polluting trucks because they’ve been taken there towards their end of life. Often, they will have been modified and had pollution control equipment removed, so they’re pumping out carbon. Because the OX truck is an EV, we’re not polluting the world.
We can have a massive impact. And that’s where rethinking business models within automotive is so important, rather than just replicating existing solutions.