Chinese manufacturers are looking to make a splash in the e-bike boom

August 23, 2022 0 Comments

Not only is electrification transforming the automobile business, but also the bicycle industry. E-bikes are, in reality, at the vanguard of the electrified transportation future since they are accessible to a broader consumer base.

Faster, smarter, and more sustainable, e-bikes are taking over the EU and the US

As you take a stroll through New York City, you’ll notice that e-bicycles are constantly zipping by you. There are all sorts of people out on bikes, from delivery guys carrying brightly colored pizza bags to commuters and even fitness aficionados.

Last year, the US, a car-obsessed nation, imported 790,000 e-bikes, a 70% increase over 2020, according to data from the Light Electric Vehicle Association. Although these are not precise sales figures, considering that the majority of e-bikes in the US are imported, they offer a reasonable indication of the market’s performance. By comparison, 434,879 EVs were sold in the country in 2021.

In Europe, where cycling is substantially more widespread, e-bikes are also gaining popularity. According to a study conducted by Deloitte in May, e-bikes hold a pioneering position among e-vehicles in Germany. When questioned about their current e-mobility mode, 18% of respondents claimed they ride an e-bike, far outperforming other e-mobility options. 7% said they drove an electric vehicle, and 7% said they rode an electric scooter.

In the coming years, e-bikes are likely to consolidate their position. “We assume that both the market penetration of e-bikes within the bicycle market and sales will continue to increase,” says Karsten Hollasch, partner and head of consumer business at Deloitte.

When the COVID-19 pandemic hit the US and Europe in March 2020, people had been opting for bikes over public transportation due to safety concerns. For instance, in 2020, bicycle traffic increased by 50% from the same time the previous year in New York City, while numerous metropolitan regions adjusted traffic patterns and opened more miles of roadways to accommodate cyclists and walkers. 

People ride bicycles not only for commuting but also for recreation and fitness, as it is a safe and socially disengaged form of physical activity.

Sales of e-bikes, which can travel farther and faster than conventional bicycles, have also climbed due to COVID-19. Meanwhile, improvements in motor performance, battery capacity, and cost have led to higher adoption of e-bikes. Lithium-ion cells have decreased in price, and their energy density has grown by 7–8% annually. Base models now cost less than $1,000, and mid-range models cost around $3,000.

According to Pedego, a California-based e-bike brand, the batteries used to last approximately 100 to 200 cycles and 10 to 20 miles, but today they are capable of 2,000 cycles and 50 to 60 miles without pedaling.

Most recently, as the cost of automobile ownership, gasoline, and insurance continues to rise, an increasing number of individuals, primarily city residents, are turning to electric bikes as an alternate means of transportation for commuting and other short journeys.

Compared to the expense of fueling an automobile, the cost of energy to charge an e-bike is negligible, ranging between $30 and $50 per year, depending on the cost of electricity where you live and how frequently you ride the bike.

Like EVs, e-bikes are growing smarter. Some brands are devoting more resources to software, enabling users to remotely control their bike’s handlebars, fine-tune the power settings to suit their satisfaction, and sync their riding data to health management software, among other capabilities.

According to Ed Benjamin, an industry analyst at eCycleElectric, while conventional bike sales have declined dramatically in 2022 due to waning pandemic-driven demand, e-bike sales remain rather robust.

The shift in consumption brings Chinese firms the opportunity to transition from behind-the-scenes manufacturers to more well-recognized brands.

On “Bob is the Oil Guy”, an outdated internet forum, one user inquired, “What bike brand can I buy that is not made in China?

“Unfortunately, this is akin to attempting to buy a laptop that isn’t built in China. It’s possible, but extremely expensive, since many firms have relocated that production offshore (to China),” another user replied.

The Chinese bicycle industry has a substantial manufacturing and supply chain advantage. China is the largest bicycle manufacturing hub in the world, accounting for almost 70% of worldwide yearly output and nearly 50% of global exports. When it comes to the e-bike era, the situation remains unchanged.

The entry hurdles for the e-bike sector are lower than those for the EV industry, allowing conventional bicycle manufacturers to enter the market with relative ease. By manufacturing far more expensive e-bikes, manufacturers may transition out of the conventional bicycle industry, which has a razor-thin margin, and into a more lucrative market.

In 2021, the export value of e-bikes from Jinhua City, a key production hub for bicycles in China, increased by 99.6% year-over-year in response to the boom in demand for electric-powered bicycles.

The revenue of Joykie, China’s leading bicycle and e-bike manufacturer, hit 3.71 billion yuan in 2021, a 62.3% increase year-on-year. Overseas clients, predominantly bicycle brands, bicycle wholesalers, and supermarkets, etc., accounted for 97.78% of the company’s total revenue. Sales of its e-bicycles climbed from 36,000 in 2018 to 110,000 in 2020, and are projected to reach 400,000 in 2022.

The Shanghai-listed company produces some models for several renowned bicycle brands, including Giant, although it is relatively unknown among overseas consumers.

The shift in consumption is providing Chinese firms with the potential to transition from behind-the-scenes manufacturers to more well-recognized brands. Previously, it had been difficult for Chinese brands to compete with international brands in terms of popularity as they relied heavily on OEM and ODM contracts while still in the early stages of building their own brand awareness.

Manufacturers like Joykie are gradually improving brand awareness by increasing their focus on e-commerce. Although its cross-border e-commerce income, primarily from Amazon, is currently quite low, it represents a promising area of growth. Joykie has also built its own e-commerce website in order to increase profit margins and expedite the construction of its brand image.

Meanwhile, newcomers with more experience in internet marketing are rapidly growing in popularity. One promising contender is Niu Technologies, a Chinese electric two-wheeler brand.

​​Witnessing the e-bike boom in Europe and the US, the company last year expanded its product portfolio to include e-bikes in addition to e-scooters and e-motors. The EUB-01, priced at over $3,000, is now available in the United States, while the more economical BQi series, with pricing beginning at $1,499, will be released later this year.

BQi e-bike

On social media channels such as Instagram and YouTube, a significant number of users have commented that the BQi’s appearance and pricing are highly appealing. Comparatively, similar models from Giant and Trek cost upwards of $2,700 and $2,900, respectively. Like any other Chinese e-bike maker, Niu is more affordable, but their selection of bicycles is far less diverse than that of industry leaders.

 

The company is expanding its bicycle selection. In early August, the company launched its latest electric bike, the SQi, in China, in collaboration with renowned gaming gear maker Razer for a limited edition. The SQi appears to be a modern electric motorcycle due to its bulky design, but in fact, it’s an electric bicycle with pedals that offers the same performance as many ordinary e-bicycles.

In contrast to conventional competitors, Niu, which went public on NASDAQ in 2018, has prioritized building its brand and localizing its operations and marketing channels in overseas markets. It is currently opening its retail outlets in key markets, including the UK, the US, and Spain, while maintaining a presence in local consumer electronics stores.

Niu’s flagship stores overseas locations

According to NIU’s financial reports over the past several quarters, revenue from the overseas market has steadily increased, demonstrating its success in establishing brands abroad.

The global e-bike market is worth $24.9 billion in 2020. By 2030, it is expected to reach $66.53 billion, growing at a CAGR of 10.5% from 2021 to 2030. By leveraging the potential of bicycle modernization, Chinese players are expected to become more competitive against global giants.

Photo by Gotrax on Unsplash

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