Generation Start-up: How Neo Mobility is helping to decarbonise logistics in the UAE

The UAE is making significant strides to transform and redefine mobility as part of its net-zero goals, with demand for electric vehicles in the Emirates on the rise.

To entrepreneurs Abhishek Shah and Anish Garg, the concept of sustainable transportation and the role of EVs in the clean energy transition appealed as a business opportunity, as it echoed their desire to create a long-lasting contribution to society.

The duo leveraged their varied industry experiences and launched Neo Mobility, an all-electric logistics, mobility and infrastructure solutions start-up in Dubai in February.

“Sustainability and decarbonisation goals were on top of our minds when we launched this company. What really inspired us was the desire to create a greener future that we want to leave as a legacy for the coming generations,” says Mr Shah, the company's chief executive.

“This is also in line with the decarbonisation initiatives at the continuing Cop28 event.”

Neo Mobility’s fleet of electric motorbikes and drivers offers logistics solutions through a captive EV infrastructure business model, Mr Shah says.

The company has started rolling out its battery charging and swapping stations across Dubai which allow delivery riders to swap batteries quickly.

The start-up is targeting primarily B2B customers such as food aggregators, e-commerce platforms and logistics companies by including its fleet in their operations.

“We want to have the first-mover advantage as a full-spectrum service provider. While there are various other companies in the UAE that are offering green logistics and app-based delivery solutions, no one is addressing the problem in its entirety. We feel that the solution lies in creating a full stack platform rather than solving it on a piecemeal basis,” says Mr Garg, chief operating officer at Neo Mobility.

The two co-founders have worked in different industries in the past but with overlapping skill sets.

Mr Shah was part of the corporate finance and investment banking division at PwC Middle East, where he focused on energy, logistics and resources. He has also angel-invested in start-ups across India and the Middle East.

Mr Garg was group chief operating officer at Dubai-based logistics company TruKKer. With an executive MBA degree from Stanford University, he has spent years in fund-raising, mergers and acquisitions, project and supply chain management, sales and managing operations.

“Currently, in the UAE there are either original equipment manufacturer companies selling or leasing out electric fleets to third-party logistics [3PL] firms who offer last-mile logistics, or players who are only interested in doing either battery swapping as a service or charging as a service,” says Mr Garg.

“Our strength lies in the fact that we have our own fleet of EV vehicles as well as back-end swapping infrastructure to support the fleet. We get drivers on board, we train them, we are setting up the entire battery swapping infrastructure which is critically required to boost green mobility ecosystem.”

EVs contribute significantly to decarbonising road transport, which accounts for more than 15 per cent of global energy-related emissions, according to the International Energy Agency.

The global electric cargo bike market is projected to grow at a compound annual growth rate (CAGR) of more than 34 per cent between 2023 and 2028, to $11.86 billion by 2028, according to ResearchAndMarkets.com.

EV sales are rapidly increasing in the UAE.

In May, the Ministry of Energy and Infrastructure launched the Global EV Market project to turn the country into a global market for EVs. The project supports the shift to green mobility and aims for 50 per cent of cars on the UAE's roads to be electric by 2050.

Demand for EVs in the UAE market has witnessed a steady rise over the past years and is projected to see a CAGR of 30 per cent between 2022 and 2028, according to the Global Electric Mobility Readiness Index published last year by consultancy Arthur D Little.

Having a fleet of electric bikes, therefore, makes a “good business case for our target customers, as the operational expense of petrol-driven two-wheelers is much higher compared to an electric motorbike. This also saves riders' time and offers them enhanced road safety”, says Mr Shah.

Petrol bikes are cheaper than e-bikes but require regular maintenance every month, he adds.

Besides, engine oil and petrol incur additional costs for fleet owners. In contrast, e-bikes are priced higher but the cost of maintenance is much lower.

“In case of electric bikes, the capex [capital expenditure] is high but opex [operating expense] is low, in contrast to petrol bikes. That's where we are trying to balance out the cost structure so that it remains the same for our clients,” Mr Shah says.

The company says its e-bikes are certified by the GCC Standardisation Organisation and are approved by the Roads and Transport Authority as well as the UAE Ministry of Industry and Advanced Technology.

The e-bikes have a driving range of about 175 kilometres on a single charge and come fitted with many safety features, such as safety gear, smart helmets and telematics (eliminating mobile phone usage), and crash detection warnings.

Then there is a Neo app that allows drivers to find the nearest swapping station and book batteries in advance.

“In the UAE and the wider region, the average temperatures go high in summer. This means the battery powering the two-wheelers needs to be resistant enough to withstand that type of heat,” says Mr Shah.

“This requires battery specifications and the capacity to be different from other markets and in tune with the local climatic conditions, which our two-wheelers are equipped with.

The delivery vehicles need to also have a higher driving range, which is essential for riders to fulfil their travel needs seamlessly, he adds.

Delivery bikers in the UAE and the region typically drive an average of 200km daily, says Mr Shah.

“In terms of number of kilometres driven as well as the battery capacity, this market requires a different kind of product approach, which we have brought in. We believe that electric motorcycles are better suited for this market, instead of electric moped bikes, which many players have deployed in the market.

“Electric motorcycles not only allow drivers to drive comfortably, riders can also cover longer distances because of higher battery capacity,” he adds.

The company recently secured seed funding of $10 million from Delta Corp Holding, Psye Sustainable Fund and a few angel investors.

“The seed capital is dedicated towards the development of key focus areas. These include the launch of our services, the development of technology and solutions, recruitment of talent, deployment of our initial fleet and our plan to scale up to 5,000 vehicles within the next 24 months,” says Mr Shah.

Mr Garg adds: “We have received the first set of 100 electric motorcycles and are setting up the swapping infrastructure required for that. We are also in talks with several of our potential clients to get them on board."

Neo Mobility’s services are operational on its last-mile delivery fleet across all districts in Dubai. The company plans to expand its operations to other emirates as well. It plans to launch in Abu Dhabi in the second quarter of next year and expand across the UAE by the fourth quarter.

“Looking ahead, we have set our sights on international expansion, with plans to launch overseas by 2025. Our goal is to expand to a robust fleet of 1,500 vehicles and drivers by the close of 2024,” says Mr Shah.

It also plans to tap into the ride-hailing sector with its fleet of Tesla cars, with a phased roll-out of EV charging infrastructure across the Emirates.

“If you use a Tesla car commercially in the UAE, you cannot use the public charging infrastructure to charge your car. We therefore plan to launch a captive charging network, similar to bikes, so that the fleet can quickly charge the vehicle and there's resource optimisation for those vehicles,” he adds.

Q&A with Abhishek Shah and Anish Garg, co-founders of Neo Mobility

What already successful start-up do you wish you had started?

Abhishek Shah: We loved what Spiro has done in Africa. Implementing a swappable fleet of more than 5,000 in difficult terrain and with less power stability is something worth appreciating and motivating.

What is your next big dream to make happen?

Anish Garg: We want to be the pioneers and torchbearers in disrupting the entire GCC towards its decarbonisation and net-zero goals and are keen to play a small role in our capacity for the same.

What new skills have you learned in the process of launching your start-up?

AS: The most important skills that we have learnt in the process are based on empathy for the captains and on creating the right mindset within the team to be customer-focused and design and execute the right solution. Another is to be relentless in execution and take things by the day instead of bulking all in one go.

If you could start all over again, what would you do differently?

AG: Our journey has been very exciting thus far and would not change anything.

Who is your role model?

AS: I don’t know about a role model as such but I draw inspiration from Mudit Paliwal, founder of Delta Corp who has built a brilliant profitable global business with more than 500 strong and aligned human capital base that has led Delta to its initial public offering within three years of the journey.

Where do you see yourself in 10 years?

AG: We want to improve the lives of at least 10,000 captains and their families by 2030. If we achieve this, I think we will be definitely in a great place.