African Startup Plans Hybrid Car Line

KAMPALA, Uganda—Each prototype car that rolls off Kiira Motors Corp.’s assembly line moves Chief Executive Paul Isaac Musasizi closer to his dream of building Africa’s first homegrown family of electric vehicles.

The electrical engineer says his factory on the outskirts of Uganda’s capital annually could build 7,000 of its EV Smack sedan and a 37-passenger van by 2018. “We are on course,” Mr. Musasizi, 36 years old, says as he surveys a prototype of a navy blue coupe in the factory yard. “We have already sidestepped many hurdles.”

Yet a lot of roadblocks remain, including shortages of reliable power, roads, and production financing. Mr. Musasizi’s project will test whether up-and-coming African companies can overcome the hardships that have dogged manufacturing on the continent for so long.

“The automotive industry presents one of the fiercest competitive market environments,” says Mr. Musasizi, who was inspired to design an electric car after a visit to the Massachusetts Institute of Technology a decade ago. “We need to remain focused, courageous and committed.”

Mr. Musasizi, a former Makerere University engineering lecturer, named Kiira after the Nile River dam that provides electricity to his factory and thousands of Ugandan consumers. He hopes his next car’s price tag, less than $20,000, will lure customers away from pricier imports brought overland from ports in Kenya and Tanzania.

Other African startups hope to challenge global players with a strong presence on the continent, including Nissan Motor Co. and Toyota Motor Corp. Kenya’s Mobius Motors started producing a car designed to withstand Africa’s rough terrain in December. Nigeria’s Innoson Vehicles Manufacturing Co. began building budget commercial autos from a mix of local and imported parts in January.

Angus Downie, head of economics research at Togo-based Ecobank Group, says many of these manufacturing projects reflect “an awakening continent,” but that policy makers and governments need to prioritize areas where Africa has a comparative advantage, such as food production and processing.

“These are capital intensive projects. Where will this investment come from?” Mr. Downie asked. “Infrastructure including schools, roads and health care facilities need to be given first priority.”

Kiira is already facing challenges that spotlight how hard it will be for Africa’s aspiring manufacturers to gain steam. Its prototype runs on batteries that must be charged every 80 miles in a country grappling with power shortages. The coming Kiira EV Smack and a van, are electric- and gas-powered hybrids to reduce reliance on a thin network of electrical charge stations.

Kiira’s costs are also heightened by the same high fees that make imported cars more expensive in Uganda than many coastal African nations. The chassis and body are made of locally fabricated steel and fiberglass, but electrical components like headlights and batteries must be imported.

Mr. Musasizi says demand from Kiira’s factory could spur local producers to get better. “This is about building a better Uganda through automotive technology,” Mr. Musasizi says.

Kiira has struggled to procure $400 million in financing that Mr. Musasizi says he needs to build a fresh factory on a 100-acre parcel of land 45 miles east of Kampala. The factory would allow the company to achieve commercial production.

South Africa’s long-standing vehicle manufacturing is foundering due to widespread power outages and labor strikes that are wreaking havoc on the continent’s most developed economy. Ford Motor Co., which has extensive operations in South Africa, plans to assemble a pickup truck in Nigeria starting in the fourth quarter.

Kiira hopes to succeed where others have failed. The company has secured $51 million from government officials who want to jump-start a weak manufacturing industry. Uganda’s long-serving President Yoweri Museveni has implored investors to back the project.

Uganda made auto parts into the 1960s, before civil war and misrule killed off industry in the East African country. Mr. Museveni has rebuilt some of the economy since taking power in a 1986 coup, but he is under increasing pressure to create jobs for the 80% of Ugandan youths who are unemployed.

“This is more about Mr. Museveni leaving behind some sort of legacy,” Angelo Izama, an analyst at Ugandan think tank Fanaka Kwa Wote said of the Kiira car project.

Still, some foreign investors are joining Kiira’s efforts. In June, Kiira signed a memorandum of understanding with Indian auto company Ashok Leyland Ltd. to jointly manufacture passenger vans. Kiira also hired Michigan-based vehicle engineering firm RLE International to provide business development support. Talks with at least two Chinese investors are in advanced stages

“It’s one forward step at a time,” Mr. Musasizi says.