VMT multibagger, page-12

They aren't operating in a fixed market, Throwaway: it is a 'growing pie'. There is room enough for the big players like Honda as well as niche companies such as Vmoto.

Keep in mind there are around one billion people in the world today who lack a basic level of access to electricity, not to mention the even greater number of people who have to cope with an extremely unreliable electricity supply.

This is not a new problem, of course: energy poverty has been a problem across much of the world for decades. But there is reason to believe that the countries that make up the last of the 'bottom billion' could electrify very rapidly over the next ten to fifteen years, largely thanks to the revolution taking place in renewable energy.

The energy deprived regions of the world also happen to be amongst the sunniest, and so the falling cost of solar is a massive boon to these countries. To give an example, one report earlier this year found that in Tanzania, one of Africa's largest countries, electricity access in rural areas improved from 6.1% in 2011 to 16.9% in 2016, the increase being mostly down to off-gird solar. So it is a shift that is already underway.

It is important not to underestimate the significance of this. When nations shift from low levels of access to electricity to majority access, they tend to enjoy a significant jump in GDP per capita.

I was doing some research on this topic earlier this year, and compiled the table below, which compares the GDP per capita of poor countries based on their level of access to electricity.

The first column shows the poorest countries in the world with the lowest level of access to electricity. The second shows the poorest countries that have reached a point at which the majority of their inhabitants have managed to attain at least a basic level of access to electricity.



You can see from the above what a difference increasing levels of access to electricity can have on the wealth of nations. The poorest countries with majority access to electricity have on average four times the GDP per capita of those countries with the lowest levels of access to electricity. So, effectively more electricity equates to more money.

Thanks to the rapid advances we are seeing in renewable energy, particularly the falling cost of solar, it is likely that in the near term we are going to see a significant reduction in energy poverty in deprived parts of the world, and as noted above, this tends to correlates with increasing prosperity.

Vmoto is potentially a beneficiary of this trend for a couple of reasons. Firstly, an electric scooter is useless if you don't have any access to electricity to power it in the first place. So those populations rising out of energy poverty represent a new customer base for any company that sells electrical goods, which would include Vmoto.

Secondly, thanks to the correlation between electricity and wealth, those nations escaping energy poverty will also be wealthier, resulting in greater numbers of people being able to afford to purchase electric scooters.

This is one of the reasons I am particularly intrigued by the apparent popularity of Vmoto scooters in Nepal: As shown in the table above, Nepal is one of the countries that have been steadily moving out of energy poverty, and so you would have to assume that as other energy poor countries follow in Nepal's footsteps these could represent a whole new cohort of potential customers for Vmoto.