In energy-starved Ethiopia, where electricity reaches less than half of the population, a local startup’s unconventional bet on battery-powered motorcycles has hit the spot.

In less than a year of launch, Dodai has emerged as the East African nation’s fastest-growing electric vehicle maker, selling 850 units in the face of regulatory and supply-chain challenges. The company’s two-wheelers have become the preferred mode of transport for businesses with delivery needs because of their ability to run as many as 150 kilometers (93 miles) on a single charge.

The company’s runaway success has caught the eye of the government as the country’s sovereign fund, Ethiopian Investment Holdings, looks to establish a network of 300 battery swapping stations in the next three years. Battery swapping allows electric vehicles to quickly exchange a discharged battery pack for a fully charged one at designated facilities. The battery-swapping infrastructure aims to make EVs more accessible in a country where electricity is unstable and charging points are scarce.

“The involvement of the sovereign wealth fund, which is traditionally conservative, is a massive validation for Dodai,” Warren Ondanje, managing director at electric-mobility think tank Africa E-Mobility Alliance, told Rest of World. “The partnership is certainly not common. Its relevance speaks to the way government agencies are getting more involved and hopefully supportive of power consumer segments like Dodai’s EV.”

Founded in 2022 by Japanese entrepreneur Yuma Sasaki, Dodai’s electric two-wheeler has become popular among businesses.

Sheger, a wedding store in Addis Ababa, switched from fossil-fueled bikes to Dodai last year. The savings from replacing three delivery bikes, which used to cost $150 each per month in fuel and maintenance, were significant, owner Kibrom Hagos told Rest of World.

“We charge the bikes at our store and give a better service to our client at no fuel cost and low maintenance cost,” Hagos said. “Dodai’s battery is strong enough to serve us for longer range. They are easy to drive.”

Dodai’s bikes sell at $1,800 apiece, about $500 more than competitors such as Yadea and Transsion. Given the higher price point, the company’s mainstay has been both small and large businesses. The Ethiopian Postal Service became an exclusive partner in 2023, even before Dodai began selling bikes to the general public. It remains the company’s biggest customer.

Dodai’s competitive edge comes from its use of lithium-ion batteries instead of the lead-acid batteries offered by competitors such as Chinese EV company San Polo. The market has had two new entrants from China this year: Electric two-wheeler maker Yadea, and Transsion, Africa’s top smartphone maker.

“The fixed battery model works because a lot of people have home-charging capabilities and a lot of customers for such bikes will be enterprises,” Sam Rosmarin, an Addis Ababa-based climate entrepreneur focused on Ethiopia, told Rest of World. “Enterprises have big needs for motor bikes — delivery companies, especially.”

Dodai’s growth strategy extends beyond selling bikes. In a regulatory environment where motorcycle registration is notoriously difficult, getting a license plate number can take as long as six months. Dodai has created solutions to beat the competition.

It has partnered with Beatrix, one of the few authorized GPS providers in Ethiopia, to facilitate the installation of tracking systems — a mandatory requirement for the registration of new vehicles, which is expensive. The partnership allows Dodai to subsidize license plate costs for its buyers. The company has also formed an EV bike association for gig workers to ease the registration process.

“We have a 100% share of EV bikes with number plates since all other EV bike sellers can’t give enough support to customers to get number plates,” Sasaki said.

For delivery companies, Beatrix can reduce the registration time from six months to two, he said.

Even as these additional services have helped justify Dodai’s premium pricing, regulatory challenges continue to hamper growth. Sasaki estimates Dodai could have put as many as 5,000 bikes on Ethiopia’s roads in a more stable environment.

Supply chain difficulties have further hindered efforts: Customs officials, unfamiliar with electric parts, often take more than three weeks to clear shipments.

The difficulty in obtaining registration numbers has discouraged banks from giving loans, putting them out of reach for most independent gig workers. 

The battery swapping model will ease charging concerns, as riders can exchange depleted batteries for fully charged ones in no more than a couple of minutes at swapping stations.

Experts believe the partnership with Ethiopian Investment Holdings will help Dodai navigate regulatory hurdles more effectively.

“This partnership will increase revenue for Dodai through more sales directly to the government and ease regulation by normalizing electric motorcycles, which have been banned at various times over the last few years,” Rosmarin said.

The alliance with Ethiopian Investment Holdings also represents a strategic pivot for Dodai. While the company will manage the operations of the swapping stations, Ethiopian Investment Holdings will provide stable power supply and land. The model, already popular across Africa through companies such as Spiro in Benin and Ampersand in Rwanda, allows riders to pay as they go rather than bear the full cost of the battery up-front. This approach could cut the initial cost of acquiring an e-motorbike by about half, Sasaki told Rest of World.

“The battery swapping model follows a winner-takes-all approach, allowing us to establish a strong market position before competition — especially from major Chinese players like Yadea and Transsion — intensifies,” Sasaki said. “Investing in this model now ensures we remain ahead in the evolving e-mobility landscape.”

Dodai, which has received $7 million primarily from Japanese investors including Nissei, Musashi Seimitsu Industry, and Inclusion Japan, will raise another $10 million for the new venture, Sasaki said. This funding, he believes, will cement the company’s leadership position.

Sasaki, who worked at Uber in Japan before founding Dodai, chose Japanese backers for their long-term perspective.

“In Africa, regulation change, political stability, supply chain infrastructure are issues,” he said. “Unless you are a long-term investor, you won’t be happy.”

Ethiopia’s unique status as the only non-colonized country in Africa, with no specific historic ties to any particular nation, also helped the fundraising effort, he said.

The battery swapping initiative requires significant investment in both hardware and software to track battery locations and manage performance. Dodai claims its software systems are ready, and it’s preparing the initial sites, with the first 100 stations scheduled to open this year.

Dodai plans to continue offering its fixed battery model, independent of the move to battery swapping.

“We anticipate a natural market segmentation, where delivery riders will predominantly adopt battery swapping, while commuters may prefer fixed batteries,” Sasaki said. “Our approach will remain flexible, continuously adjusting our focus between the two models based on customer preferences and market dynamics. The goal is to strike the right balance to serve both segments effectively.”