The Best is Yet to Come: Understanding the Growing E-bike Market

The Best is Yet to Come: Understanding the Growing E-bike Market

Around the world, the use of electrical bicycles – also known as e-bikes – has grown at an impressive pace during the last decade, with double digit annual growth rates in many markets. An e-bike is a conventional bicycle that also features a motor, battery, and controller, allowing it to either propel itself or be powered by the rider’s peddling. Currently, a wide range of e-bike models are available on the market, with some reaching speeds of 50 mph (80 km/h).

E-bikes are particularly popular in China, which accounts for well over two-thirds of global sales. Other high profile e-bike markets include Germany, Japan, and the Netherlands. Conventional bicycles are popular in all of these nations, and consumers transitioned to e-bikes over time because of the added benefits they offer.

According to the Freedonia Group’s Global Motorcycles study, sales of e-bikes have taken off rapidly in Australia, France, Italy, Taiwan, and the US as suppliers began to look for growth opportunities around the world. Although demand for these products is still concentrated in a handful of countries, e-bike use is increasing rapidly in many parts of the world and will continue to do so in both developed and industrializing nations – ranging from New Zealand to Vietnam.

Why Are Consumers Increasingly Choosing E-bikes?

While e-bikes primarily compete with conventional bicycles, they may also find themselves up against electric scooters and internal combustion engine (ICE) mopeds and scooters in some markets. Consumer interest in e-bikes has grown because of their:

  • low upfront and operating costs
  • convenience
  • environmental credentials

There are plenty of reasons for consumers across all demographics to like e-bikes. E-bikes are not significantly more expensive than conventional bicycles, can accelerate faster and reach higher top speeds, and allow riders to travel greater distances. For older riders, e-bikes make it easier to climb hills and navigate demanding terrain. Because they require less physical exertion, e-bikes allow older riders to be more active in their later years .

For younger riders, e-bikes offer similar performance to mopeds and scooters for a fraction of the cost. As more reliable higher-end e-bikes became available, the performance gap will continue to shrink. Many mid-range and high-end e-bikes feature futuristic designs, giving them greater aesthetic appeal than bicycles. E-bikes are also much more environmentally friendly than ICE scooters and mopeds, an important consideration for eco-conscious millennials. In recent years, e-mountain bikes, e-cargo bikes, and other specialty models (e.g., folding models) have attracted greater consumer interest.

The Future for E-bike Manufacturing Is Bright

The expansion of the global e-bike market will be supported by the growing availability of reliable e-bikes that offer performance superior to previous models. Historically, consumers in many parts of the world had very few models to choose from because of the tiny number of suppliers active in these markets.

However, this situation is expected to change as manufacturers of both conventional bicycles and motorcycles expand their e-bike portfolios and new companies that specialize in e-bikes appear. For example, Spain’s Bultaco – which produced ICE motorcycles until shutting down in 1983 – re-emerged in 2014 as a maker of high-performance e-bikes and other electric models.  Additionally, UK-based Brompton – historically a producer of traditional folding bicycles – began taking preorders for its premier e-bike in July 2017, with the first shipments expected to go out in 2018.

As the global e-bike industry grows and competition intensifies, participants will boost R&D spending and develop more advanced e-bikes that can perform better and last longer. Product innovations – ranging from battery technologies to base materials – have transformed e-bikes and will continue to do so in the future.

Governments Incentivize E-bike Purchases

Many national and local governments, which are seeking to reduce their carbon footprints in the wake of the Paris Agreement, are important proponents of e-bikes. Avenues through which governments encourage e-bike use include:

  • subsidies
  • tax breaks
  • ride sharing programs
  • the construction of public charging stations

In February 2017, for instance, the government of Oslo, Norway began to offer residents a $1,200 subsidy for purchases of electric cargo bikes in order to reduce air pollution.

In recent years, e-bike ride sharing programs have also grown in popularity. In 2017, UK-based bicycle manufacturer Pashley began to supply e-bikes to Serco, which was hired by the City of London (and subsequently the City of Edinburgh) to operate a bike sharing program.

A number of governments around the world have invested heavily in their public charging station infrastructure, adding to the appeal of e-bikes. For example, as part of its National Plan for Electric Recharging Italy plans to build a comprehensive network of 14,000 charging stations by 2022.

The E-bike Regulatory Environment Is Evolving in Many Countries

E-bike regulations vary greatly from country to country and have a profound impact on use. In many instances, cities within a single country have very different regulations. In North America, New York City and Toronto adopted limitations on the use of e-bikes in recent years, and many parks have outlawed the use of these machines on their trails, including those in Oregon and Moab, Utah. Regulations stipulate:

  • age requirements
  • product performance limits, such as top speeds
  • where e-bikes can be used (e.g., bike paths, parks)
  • safety standards

Because most e-bike markets are still at an early stage of development, the regulatory framework is limited and inconsistent. However, many governments have begun work to standardize regulatory schemes intended to ensure rider safety, maintain optimal traffic flows, prevent illegal e-bike modification, and encourage the use of these machines. For example, both China and the EU are currently developing and implementing comprehensive regulatory schemes for e-bikes to address these considerations.

If done properly, regulation can encourage the development of a country’s e-bike market, turning these machines into an important, environmentally friendly mode of transportation. On the other hand, burdensome regulations – such as limits on where they can be used – may detract from their appeal. Because many governments have an interest in the increasing use of e-bikes, future regulations are likely to support the rise of e-bikes rather than restrain growth.

To Learn More

Need more information? To learn about past and projected market trends on both a geographic and product basis and for analysis of major market participants, check out the Freedonia Group’s new study Global Motorcycles

About the Author:

Gleb Mytko  is an Industry Analyst at The Freedonia Group, where his work covers the global automotive, transportation, and machinery markets.