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E-bikes: A Passing Trend or the Vehicle of Tomorrow?

Written by KrASIA Connection Published on   4 mins read

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Amidst global inflation, how is a luxury good growing in popularity, and is it here to stay?

The e-bike market has seen a significant rise in sales and investment over the last few years. Sales in Europe and North America grew from 2.5 million to 6.4 million units between 2017 and 2021. The global e-bike market was valued at USD 17.56 billion in 2021 and is expected to reach over USD 40.98 billion by 2030, poised to grow at a compound annual growth rate (CAGR) of 9.6% between 2021 and 2030. The market has also attracted significant investment from companies such as Tencent and Tiger Global Management, with more than 20 e-bike manufacturers receiving funding in under two years.

The e-bike industry is predicted to see around 20 companies similar to Chi Forest emerge worldwide. Luxury car brands such as Porsche and General Motors have also entered the e-bike market, as have manufacturers of two-wheeled vehicles such as Giant, Xiaoniu, Yadea, and Aima. Europe is currently the largest market for e-bikes, with annual sales of 5 million units in 2021, exceeding those of electric and hybrid vehicles.

How did the e-bike rise in popularity?

The e-bike industry is snowballing and has already surpassed sales of electric and hybrid vehicles. The COVID-19 pandemic has driven the rapid growth of the e-bike market in Europe and America due to social distancing measures and travel cost savings. E-bikes are faster and more budget-friendly compared to traditional bikes and fuel-powered cars. The narrow streets and poor road conditions in European cities also make e-bikes more suitable for urban traffic than cars.

The trend towards carbon reduction and electrification also drive the shift from fuel-powered to electric cars. Governments are also offering subsidies to stimulate market demand, with some countries offering tax relief or subsidies, providing an extra incentive for people to use e-bikes.

Many entrepreneurs have been attracted to the e-bike industry due to its rapidly growing scale and relatively unsaturated market. In the past year alone, the e-bike industry in the US surpassed $1.3 billion, marking a 33% increase from the previous year.

More than just a passing trend

As the e-bike market grows, brands compete in various areas to establish themselves in this relatively young industry. One critical factor is the ability to control costs. The motor system constitutes 40% to 50% of an e-bike’s total cost. Therefore, brands that develop their motor technology can have an advantage in manufacturing costs. For example, LEMO’s CEO, Tian Gang, has said that their company’s cost of production differs from those who purchase motors directly from suppliers like Bafang or Bosch.

However, maintaining quality is another critical factor for brands to compete successfully in the e-bike market. Brands face the constant challenge of controlling costs and maintaining quality. For example, Joy Kie, a well-known e-bike brand, prioritizes hub motors over central motors to keep costs low, but it also needs to ensure that the quality of its products remains acceptable.

Whether a brand leans towards quality or budget is affected by the market the brand is targeting, such as high-end or low-end markets. Brands must balance cost and quality to grow and thrive.

Expanding offline channels in overseas markets is also essential for brands aiming for long-term development. Although e-commerce channels allow Chinese brands to sell overseas, establishing offline distribution channels, such as opening stores, building warehouses, or developing dealerships, is vital for durable consumer goods like e-bikes. However, setting up overseas warehouses is a complex process that requires localized professional operations teams overseas. This is one of the factors that investors will focus on when investing.

In the United States, e-bikes must pass various quality certification checks, and Amazon Warehouse does not accept dangerous goods that contain batteries. Therefore, companies need to build their overseas warehouses for shipping e-bikes overseas. Although companies can send e-bikes overseas through the developed domestic supply chain and logistics systems, it is still necessary to establish overseas warehouses due to certain restrictions.

To succeed in the e-bike market, brands must consider operations and production. Advertising, channel building, and after-sales services are essential to selling consumer goods. The future competition in the e-bike sector is expected to be tumultuous. Companies must have the edge over their competitors to profit globally, even if the market offers growth and dividends.

It is difficult to predict the future with certainty, but many industry experts believe that the trend of e-bikes is here to stay. Factors such as the growing awareness of environmental issues, advancements in technology and supply chain cost reductions, and the desire for cost-effective and healthy transportation options suggest that e-bikes will continue to gain popularity. In addition, the COVID-19 pandemic has highlighted the advantages of cycling as a safe and socially distanced form of transportation, which may further drive the demand for e-bikes.

This article was adapted based on a feature originally written by Jiao Yimeng and published on New Consumption Internal Reference” (WeChat ID: cychuangye) . KrASIA is authorized to translate, adapt, and publish its contents.

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