TL;DR
Bolt has partnered with China’s Dongfeng Motor Group to roll out electric vehicles on its ride-hailing platform in South Africa, starting in Cape Town. The Estonian company claims to have more than 50% market share in the country after investing around $180 million. The deal combines Dongfeng’s Box hatchback and 007 sedan with the Bolt’s drivetrain as rising fuel prices make EVs increasingly attractive for the driving economy.
Estonian company Bolt Technology, which has spent about $180 million to establish a dominant position in South Africa, has signed an agreement with China’s Dongfeng Motor Group to expand its fleet of electric vehicles in the country. Partnership Launching in Cape Town, Dongfeng’s Box hatchback and its more premium 007 sedan will be available to drivers via the Bolt platform. A fleet management company called Yugo Rides will operate the vehicles.
The deal is a bet on two converging forces: Growing global demand for Chinese electric cars and economic pressure from rising fuel prices, caused in part by the Iran conflict, is driving drivers in emerging markets to move quickly. Simo Kalajdzic, who runs Bolt’s operations in South Africa, said the company is taking a phased approach to the rollout due to infrastructure constraints, particularly the need for sufficient charging stations.
Why is South Africa important to Bolt?
Bolt It claims more than 50% of the ride-hailing market in Africa’s largest economy, a figure that, if true, would make South Africa one of the few markets globally where Uber is not the leading platform. The company has invested nearly $180 million in local business development and reports that South Africa is consistently ranked among the top 10 markets in the world. Kalajdzic called the country “is a strong strategic priority.“
This is part of the investment wider expansion it currently covers more than 50 countries and 850 cities. Bolt, which offers ride-hailing, food delivery and scooter rentals, was valued at €7.4 billion in a 2022 funding round after raising €628 million from Sequoia Capital, Fidelity Management and other investors. It has since moved to East Asia, launching in Taiwan, and entering Canada under the sub-brand Hopp. He also launched scooters in Washington.
EV account for driving
The logic behind the electrification of South Africa’s ride-hailing fleet is simple, but not simple. Fuel costs are one of the biggest expenses for drivers on any platform, and the increase in oil prices due to the Iran conflict has added to this burden. Electric vehicles offer significantly lower operating costs per kilometer, which in theory should increase driver profits and make the platform more attractive to new drivers.
The limitation is infrastructure. South Africa’s charging network remains sparse compared to those in Europe or China, and the country’s power grid has historically been unreliable, although load shedding has eased in recent months. Bolt’s phased approach, starting with Cape Town, which has better charging infrastructure than most South African cities, shows the company is aware that expanding its electric vehicle fleet will take time.
Dongfeng, in turn, gains a distribution channel in one market Chinese manufacturers are increasingly competing but it has yet to build the consumer brand recognition that BYD and others have built in Europe and Southeast Asia. The partnership with the ride-hailing platform allows Dongfeng to put its cars in front of millions of drivers without having to build a retail network from scratch.
The IPO question
The South African deal comes as Bolt withdraws its initial public offering. Kalajdzic said that the company “consider options when market conditions are right,” formula typically used by venture-backed companies when an IPO is being planned but not yet committed. Private valuation of €7.4 billion Market conditions for 2022 dates and IPOs have changed significantly since then, not least because Uber’s own shares have demonstrated the difficulty of sustaining high growth in the sector.
The Dongfeng partnership can serve a dual purpose in this context. Demonstrating its ability to electrify its fleet in a mainstream market will strengthen Bolt’s narrative for public investors, particularly those focused on environmental, social and governance criteria. It would also help differentiate Bolt from him the company he always operates in the shadow of: Uber has invested heavily in autonomous vehicles, but has been slower to electrify its traditional fleet in emerging markets.
Whether the economies of scale work remains to be seen. The deal is small, a phased sale of two Dongfeng models in one city, and Bolt did not disclose the financial terms of the partnership or the number of vehicles involved. But it points to a strategic direction that, if successful, could be replicated in Bolt’s African and emerging market footprint. For a company that established itself in markets that were cheaper and faster than Uber, the American company considered secondary, electrification is the next logical step.
