Fill Me In
ION Mobility, a local electric motorbike company, recently secured US$3.3 million in seed funds from seven investors, namely kipleX, Village Global, TNB AURA, Seeds Capital, Monk’s Hill Ventures, AngelCentral, and 500 Durians.
Four of the investors (kipleX, Village Global, TNB AURA, and Monk’s Hill Ventures) are venture firms, one is a Southeast Asia fund (500 Durians), another is a syndicate (AngelCentral) and the other is Enterprise Singapore’s investment arm (Seeds Capital).
The sustainable, technological automotive firm was founded in November 2019 by James Chan, who is the chief executive officer (CEO), and Joel Chang, who is the chief operating officer (COO).
Prior to the induction of their e-motorcycle company, the former had served companies like Silicon Straits (a tech venture that focuses on Southeast Asian startups and early-stage companies) as its founder and CEO for 3 years and director for almost 5 years, and Neoteny Labs (an early-stage fund that focuses on consumer internet startups in Asia and the Middle East) as its co-founder and principal for almost 11 years (still ongoing).
At the same time, the latter had spent most of his 12 years in the automotive industry as CEO of a BMW dealer group where he had played a crucial role in setting up its operations in Singapore and China. He had then moved on to Scorpio Electric in 2017, ION Mobility’s main rival, serving as its COO and co-founder.
ION Mobility’s mission is to harness cutting-edge technology and provide seamless user experiences in order to promote clean air in Southeast Asia. Furthermore, it touts itself as the leading innovator of the automotive industry since it is developing mobility solutions that will provide clean alternatives to alleviate urban air pollution and to act as the forerunner of the next generation of electric vehicles in Southeast Asia.
Internal combustion engine vehicles versus electric vehicles
In 2006, Asia was responsible for 19% of the global transport sector-related carbon dioxide (CO2) emissions. This figure is expected to increase to 31% by 2030 as the vast majority of projected increases in CO2 emissions are foreseen to arise from developing Asia.
The problem lies in internal combustion engine (ICE) vehicles.
Not only do ICE vehicles release a cocktail of greenhouse gases upon the combustion of fuels, but they also have poor fuel efficiencies — only 16-25% of energy is extracted from the fuel to move the vehicle. In other words, they consume more fuel which inevitably leads to greater emissions of greenhouse gases, thus harming the environment even more.
On the other hand, electric vehicles (EVs) are not only more efficient (59-62%) but also do not release any greenhouse gases.
Motorcycles more harmful to environment than cars
While we may think that motorcycles are more fuel-efficient than cars, the opposite is actually true: they produce twice as much CO2 per passenger-kilometre as cars when measured from well to wheel.
This could be the main reason why ION Mobility is banking its business model solely on electric motorcycles — simply because motorcycles are much worse polluters than their four-wheeled cousins.
Curbing particulate matter emissions
Given that Southeast Asia is home to the world’s third largest market for motorcycles after India and China — there are currently more than 200 million ICE motorcycles in the region — the massive volume of such vehicles has also resulted in copious particulate matter (PM2.5) emissions, thereby contributing greatly to health costs and premature deaths.
Breaking into the Indonesian motorcycle market
The company aims to launch its Model 1 e-motorcycle in Indonesia by early 2021 or sooner, instead of by the third quarter of 2020, due to COVID-19.
Considering that 6.5 million new ICE motorcycles were sold in the country in 2019 alone, it also plans to capture 1% of the country’s market within the first two years of sales.
Expanding across the region
Apart from Indonesia, the e-motorbike firm aims to eventually expand across Southeast Asia. In preparation for this, it is looking to first expand its team and operations in its three global offices, upgrade its in-house capabilities and solidify its supply chain and manufacturing partnerships.
Affirming his eagerness to tap into the regional markets, CEO James Chan declared, “We are committed to offering riders across Southeast Asia superior alternatives to their petrol-based motorbikes with our next-generation, smart and connected electric motorbikes that are clean, aspirational, and affordable.”
Off to a bumpy start
Due to the pandemic, ION Mobility has faced several challenges which have been compounded by its startup status.
Delayed expense assumptions forecast
The firm has had to push back its forecast for travel, hiring roadmaps, rental and renovation expense assumptions, so as to extend its Plan C further into next year and buy itself more time to prepare for its Series A raise.
Low investor confidence
Prospective investors have been playing it safe with early-stage tech companies like ION Mobility, by avoiding illiquid, higher-risk and harder-to-price investments; funds that are high and dry have been withholding investments from said companies due to the looming uncertainty.
Distanced cross-border communications
As a result of social distancing measures and travel restrictions, ION Mobility’s core team has faced a setback in terms of its members having to resort to Whatsapp, WeChat, and Zoom to communicate with one another, who are spread out across Singapore (headquarters), Jakarta and Guangzhou.
Supply chain disruption
The firm’s supply chain has also been affected, though only slightly as the firm is not yet in the production phase of its market entry, and has therefore already begun recovering.
Zero Cash Date extension
All of the above factors (with the exception of distanced cross-border communications) have forced the company to change its business strategy and conserve cash so as to extend its Zero Cash Date, i.e., the day it will exhaust its cash.
Delaying the Zero Cash Date will make the firm look less desperate to potential investors who are interested in knowing its cash-out date (the end of its funding round). It will also give employees, both current and prospective, an overview of the risks of staying on and joining the firm respectively, and allow them to make well-informed decisions.
In a non-pandemic environment, the firm would have rightfully spent on and accelerated its product development and acquired new customers until it is able to profit per customer from its sales and prepare for its next venture raise.
Pros of ION Mobility’s e-motorcycles
- No tailpipe emissions; this means that its e-motorcycles will not release any greenhouse gases or PM2.5, thus making it eco-friendly
- Incorporate smart technology to enhance user experience; while the company has not revealed the specifics of the smart technology it is intending to incorporate into its motorcycles, we can assume, based on its main competitor, Scorpio Electric, that it will be along the lines of artificial intelligence and data analytics
Cons of its e-motorcycles (and e-motorcycles in general)
- Cost more to produce than ICE ones; this is mainly because of the high upfront costs of batteries and its lack of at-scale production compared to ICE original equipment manufacturers
- Batteries can catch fire and explode if mishandled
- Have high acceleration but lower top speeds than ICE ones; there are tradeoffs between top speeds and usable range in a single charge and cost
- Motors and drivetrains are much quieter than those of ICE ones; this could pose as a safety risk since sound plays an important role in alerting pedestrians and other vehicles of approaching motorcycles
- Have lower range per charge than ICE ones with full tanks and batteries take longer to charge than it would to refuel its ICE counterparts
- Singapore’s EV charging stations are suited for EV cars, not e-motorcycles
In line with Singapore government’s eco-friendly policies
E-motorcycles are already set to become the new transport norm in the foreseeable future. In March 2020, the Senior Minister of State for Transport, Dr Janil Puthucheary, announced that those with power ratings of more than 10kW would be allowed on roads from 1 April. Furthermore, those with top speeds of at least 50km/h would also be allowed on expressways from April onwards.
He explained his reason for easing restrictions on the type and usage of e-motorcycles, saying, “Motorcyclists can then now do their part for the environment by choosing an electric model.”
In his Budget 2020 speech, Minister for Finance, Heng Swee Keat, detailed a three-pronged approach to progressively phase out ICE vehicles and promote cleaner alternatives, like EVs and hybrids, by 2040. In summary, he plans to rebate, upfront, car buyers and taxi operators who choose cleaner car models up to $20,000 and $30,000 respectively, rebate those who buy fully-electric cars and taxis up to 45% on the additional registration fee (capped at $20,000), and work with the private sector to deploy around 28,000 charging points for EVs at public carparks by 2030.