Old Version

Wheelers and Dealers

With mounting orders from the US and Europe, e-bike manufacturers in China are seizing opportunities to stand out from the pack

By Li Mingzi Updated Jul.1

Workers package electric bicycles for export at a factory, Hukou County, Jiangxi Province, March 8, 2023 (Photo by VCG)

Among the 7.5 million e-bikes sold globally last year, around 3.3 million were made in China, according to Ma Yuchi, cofounder and CEO of e-bike manufacturer DYU based in Shenzhen, Guangdong Province.  

While electric mopeds are more popular in China, where they are nicknamed “little e-mules” because of their prevalent use among delivery workers, e-bikes – which have pedal-assist modes and throttles to give riders an extra boost – are taking off in Europe and the US.  

Despite the sluggish global economy during the pandemic, e-bikes were in short supply due to robust demand overseas. Given the strong momentum, experts forecast the industry will rake in hundreds of billions of dollars over the next few years.  

This means huge opportunities for Chinese bicycle manufacturers, which make up more than half of global e-bike production capacity, to move from the lower end of the industry to the top. 

Road to Riches 
Both the US and Europe saw surges in demand for e-bikes. According to Deloitte, US sales of e-bikes between 2019 and 2021 almost doubled from 290,000 to 550,000 units. US market research institute NPD Group Inc (formerly known as National Purchase Diary) revealed that sales revenues of e-bikes in the US tripled from US$240 million to US$778 million over the same period.  

According to the Light Electric Vehicle Association in Florida, imports of e-bikes to the US grew by 70 percent year-on-year in 2021 to over 790,000.  

In Europe, the world’s largest market for e-bikes, countries like Germany and the Netherlands saw an annual market growth rate of over 30 percent in the past two years. Institutes such as the Confederation of the European Bicycle Industry and Geneva-based World Economic Forum forecast that e-bike sales will exceed 12 million on the continent in 2025.  

“There are lots of zigzagging alleys in European towns, where two wheels prove a better choice, especially for seniors and people commuting 30 to 40 kilometers to work,” said Zhu Dankui, co-founder of e-bike brand Fafrees.  

Though some have separate throttles, most e-bikes are pedal-assist, which kick in power as the rider pedals. A sensor reads the torque and revolving speed of the crankset, which signals a control system that regulates how much assistance to give.  

“It’s not a jerky or a sudden sensation; it’s more like when I was five and learning to ride a bicycle, being helped along by a gentle push from behind by my father,” wrote Patricia Marx in her article on e-bikes in the December 26, 2022 issue of The New Yorker.  

The pandemic further fueled demand as people sought outdoor activities, low-carbon lifestyles and alternatives to public transportation.  

In Europe, while a driver’s license is required for e-mopeds that reach speeds higher than 25 km/h, e-bikes are not restricted and can share bicycle lanes.  

Governments have implemented preferential policies to support the e-bike industry.  

In the US, 30 percent of an e-bike’s price is slated for consumption tax exemption, while countries in Europe including France, Germany, the Nether-lands and Italy offer considerable subsidies for e-bike purchases. The energy crisis caused by the Russia-Ukraine war also fueled demand for e-bikes in Europe.  

According to Allied Market Research, the e-bike market is expected to reach US$118.6 billion by 2030, with a compound annual growth rate of 10.5 percent from 2020. 

Charged for Export 
This growing demand has encouraged Chinese e-bike manufacturers to expand their businesses abroad, particularly in the US and Europe.  

On April 24, Joy Kie, a Shenzhen-listed bike and e-bike manufacturer in Hangzhou, Zhejiang Province, noted in its 2022 annual financial statement that both the US and the EU market would continue to need imports to meet the fast increase of e-bike demand.  

Most of Joy Kie’s products are for export. In 2022, e-bikes were its only category that recorded a strong sales revenue increase.  

Steering clear from the fierce competition of the e-moped market in China, DYU focused on short-distance commuters to tap the overseas market.  

According to DYU general manager Tian Jinliang, annual sales increased since the company entered the market in 2017 until 2022, when pandemic lockdowns affected supply chains across China. “Even that year, sales still equaled the year before,” Tian told NewsChina.  

In 2018, DYU became the first Chinese e-bike maker carried by US big-box retailer chain Costco Wholesale. Costco ordered 8,000 e-bikes and an additional 20,000 the following year. In 2022, the annual production value of DYU neared 500 million yuan (US$72.5m), with a US market share above 40 percent, the Guangzhou-based Yangcheng Evening News reported in April.  

Joy Kie announced its addition to Walmart and Costco’s online stores on April 19, 2023.  

Chinese bicycle manufacturer TRINX launched its e-bike brand Tenways in May 2021, targeting urban commuters in Europe and the US. It has a headquarters in the Netherlands and several facilities across Europe. Tenways’s entry model is priced around 12,000 yuan (US$1,747) in Europe, three to four times the cost of a mid-range e-moped in China.  

Also in 2021, Zhu and his partners rolled out their e-bike line Fafrees on online platforms worldwide, including Amazon. Last year, they sold about 10,000 e-bikes and expect sales to double, Zhu said. Instead of opening brick-and-mortar outlets for maintenance services, Fafrees compensates customers between 30 and 100 euros (US$33-110) in cash for needed parts and repairs.  

In 2018, the EU imposed an anti-dumping tax ranging from 21.8 to 83.6 percent on e-bikes imported from China. From 2014 to 2017, the number of Chinese e-bikes exported to the EU tripled, with market share growing to 35 percent, while average prices dropped by 11 percent, Reuters reported.  

The tax, intended to shield Europe’s domestic producers from price dumping, has actually saved a number of Chinese start-ups from engaging in undercutting and price wars, Zhu said. “The high tax yields high prices. And the reasonable revenues enable enterprises to focus more on research and development to get a firm foothold in the European market,” he said. 

Race to the Top 
The industry has attracted numerous investors. Tenways’s first year was bank-rolled by US$850,000 from Indiegogo, a San Francisco-based online crowdfunding platform.  

By the end of 2022, the company registered a 38.8 percent increase in capital, from less than 20 million yuan (US$2.9m) to about 27 million (US$3.93m). Among its investors is Guangxi Tencent Venture Capital, an affiliate of internet giant Tencent, which took a stake in the e-bike company in November 2022, tech media outlet Pan-daily reported.  

More than 10 billion yuan (US$1.45b) in investment has poured into over 20 two-wheel electric vehicle makers worldwide since 2021, according to Beijing-based investment data provider CV Source. The Hillhouse Group, an investment management company established in 2005 in Beijing, financed two funding rounds for Tenways.  

High-tech manufacturers like Xiaomi and Midea also entered the fray by partnering with domestic e-bike manufacturers. In April 2022, home appliance giant Midea announced it acquired a 55-percent stake in TTIUM, a developer of smart driving systems for two-wheel electric vehicles in Wuhan, Hubei Province.  

Besides capital, China’s industrial chain has given a boost to domestic manufacturers expanding overseas.  

With the technology spillover from the new-energy vehicles, e-bikes in China feature improved electric drives, lithium batteries and electric control systems. The country possesses complete bicycle supply chains, which helps reduce cost, Li Jinning, investment director of Shenzhen Hofan Venture Development, which focuses on offshore Chinese start-ups, told NewsChina.  

According to Tian Jinliang at DYU, Chinese manufacturers were dependent on imported torque sensors – which measure how hard the rider is pedaling to determine how much electric power to allocate – until 2017 when they started producing their own, which reduced costs.  

An industrial insider who spoke to NewsChina on condition of anonymity broke down the retail price of a 1,000 euro (US$1,096) e-bike in Europe, which includes a per unit price of 400 euros (US$440), 200-250 euros (US$219-274) in shipping fees, taxes and a 15-20 percent commission for e-commerce platforms.  

“With these fixed costs, e-bike manufacturers have to improve technologies and increase the value-added of their brands to reduce expenses and increase efficiency,” the insider said, adding that smart manufacturing is crucial to reducing costs for customized production, which involves parts of different standards and sizes.  

However, Li said strong production capacity boosted by technology will not be enough to secure an established brand when competition turns from a “blue to red ocean.”  

“While existing industrial chains and applicable technologies make e-bikes easier to produce, it is difficult to stand out. Heterogeneity is crucial to sustained competitiveness,” Li said.

E-bikes are displayed at the 2023 China International Bicycle Fair, Shanghai New International Expo Center, May 5 (Photo by VCG)