E-bike market keen competition – how do companies stand

E-bike market keen competition - how do companies stand
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    E-bike can be called the dark horse of the cross-border track in the past two years, the financing news continues.

    In 2023, the capital is still bullish on the e-bike industry. In the Chinese market, e-bike brands TENWAYS and VELOTRIC received funding in January and February.

    Okawa

    Okawa e-bike upstream core parts brand was completed in mid-March RMB 121 million Series A financing. But a crisis is also emerging.

    VanMoof, the “Tesla of bicycles,” is rumored to be facing financial difficulties.

    According to Dutch paper FD, VanMoof is “losing money on every bike it sells,” and as recently as September 2021, VanMoof closed a $128 million financing round, the largest ever for a European e-bike brand.

    VanMoof’s cash flow situation appears to be even worse, one investor told Brand Factory.

    “U.S. brand Red Power is not selling very well either, and the U.S. market has been in a de-stock state since last year, and demand is nowhere near as high as you might think.”

    VanMoof

    Obviously, competition is still intensifying. 2022 The global e-bike market size of 49.7 billion US dollars, excluding the e-bike brands that have entered with capital, car companies and fashion circles are also coveting the seemingly vast market.

    Porsche, Lamborghini, Mercedes-Benz, BMW, Tesla and other car companies have launched their own e-bike products; Muji and Jacquemus are co-branding to occupy a place in the market.

    Star companies facing challenges

    According to the latest data from market research firm MarketsandMarkets, the global e-bikes market has reached $49.7 billion as of 2022, with 51.25 million units shipped, and is expected to grow rapidly at a compound growth rate of 10.2% and reach $80.6 billion by 2027.

    Despite high growth expectations, problems have emerged with the end of the epidemic and lower and lower mid-range markets.

    Star companies facing challenges

    Electric bike is a heavy capital investment industry, according to professional prediction, assuming that an e-bike brand has monthly sales of 10 million.

    According to 50% gross profit, stocking 3 months, stocking funds 15 million, plus headway shipping, overseas warehouse, operating working capital, the total amount of up to 20 million.

    So when demand for low-end e-bikes plummeted, some e-bike brands had supply chain problems.

    VanMoof, the star company in the e-bike industry, was not spared either.

    On January 23, FD, a Dutch financial newspaper, reported that “VanMoof warned its investors that the company would be in danger within two months if there was no capital injection.”

    One investor revealed more pessimistic news. “A month ago VanMoof had two months of cash flow left.

    Last week , he said there seemed to be only 15 days left. U.S. brand Red Power isn’t selling well either, with the upstream plant reportedly painting over the logos of its slow-selling inventory cars and selling them to others.

    VanMoof e-bike

    Since its inception in 2008, the Dutch brand VanMoof has been targeting a young and trendy audience.

    In order to open up the market faster, VanMoof promises up to three years of free maintenance even for products priced at just £550.

    This has directly led to VanMoof’s products costing more to sell than to buy, and FD reports that VanMoof is losing €11.9 million in 2021, up from €6.7 million a year earlier.

    In short, the more smart electric bikes VanMoof sells, the more money they lose.

    According to FD, by the end of 2021, VanMoof’s repair or renewal costs reached a staggering €8 million.

    In addition, some customers have reported that their $2,000 E-bikes have been delivered with malfunctions or incorrect codes.

    Back in September 2021, VanMoof secured a Series C round of $128 million led by High Tide Group, the largest Series C round ever raised by a European e-bike brand.

    Since July 2017, VanMoof has raised $189.1 million. These funds served as security for VanMoof’s rapid market expansion.

    The founder of an E-bike brand thinks: “VanMoof has its success and is very inspiring, for example, it adopted the DTC model relatively early in a market like Europe where E-bikes are mainly offline channels, and it has done well.

    It has done a lot of innovation at the product level, with a very high degree of integration of intelligence, including the marketing level and a variety of supporting services, all enriching the business model, which is very inspiring to many brands behind.

    But it also has not done a good job, for example, the maintenance costs are relatively high, which may become a short board, but as to how the final, in fact, it is difficult to say.”

    And in addition to VanMoof, Belgian e-bike brand Cowboy also reported huge losses in the latter stages of the epidemic.

    Cowboy

    Parts shortages and logistical problems were major factors, leading to months of delayed deliveries, and Cowboy was not paid until after the bikes were delivered, making sales lower than expected.

    Cowboy’s valuation continues to decline. In early 2023, Cowboy announced undisclosed funding, but the company’s total valuation has fallen 44% compared to the previous round (January 2022, $80 million).

    One investor said that it is not too good a time to invest in the layout of e-bike, the valuation is too high to go in after it is difficult to double, in addition to how to exit there is currently unknown.

    From fame to competition

    The full-scale entry of the e-bike into the eyes of the Chinese public can be counted from 2020 onwards.

    Before that, Chinese people were more familiar with electric motorcycles produced by brands such as Yadi and Aima.

    Yadi&Aima

    In a narrow sense, e-bike generally refers to an electric bicycle, which is more like a bicycle assisted by electricity.

    The main sales markets for e-bikes are Europe and the United States, with the European market penetration rate reaching 20% and e-bike sales of 5.5 million units in 2021.

    Europe has traditionally had a cultural tradition of cycling, and with the promotion of green travel and other environmental protection concepts, European countries have begun to implement e-bike support policies.

    As early as 2018, Scotland launched an interest-free loan of £6,000 for e-bike purchases, which can be repaid within a maximum of four years, and the UK, France, Italy and other countries have also introduced corresponding subsidy policies.

    There are more than hundreds of e-bike brands in Europe, such as VanMoof in the Netherlands, Cowboy in Belgium, Brompton in the UK, Riese&Müller in Germany, Moustache Bikes in France and so on.

    Riese&Müller

    These brands are priced between $1000 and $4000 for the base model and between $10,000 and $12,000 for the high-end model.

    There are fewer e-bike brands in the United States than in Europe, but according to statistics, there are also more than 200.

    In 2020, affected by the epidemic, the demand for green and healthy travel was further stimulated, and e-bike sales in Europe and the United States entered an explosive period.

    It was also in this year that a large number of Chinese sellers discovered the business opportunities of cross-border e-commerce.

    Since 2020, a large number of Chinese sellers have started selling e-bike products to European and American markets on independent stations, Amazon and other online channels.

    The cost-effective price and the oversupply situation caused by the epidemic immediately opened up the market, as supply exceeded demand, creating a very good environment for selling goods.

    Many factories began to cut into the C-end track

    Around 2021, slowly many factories began to cut into the C-end track.

    A large number of Chinese e-commerce sellers seized the e-bike track, and there was a situation where supply exceeded demand, and in the second half of 2021, the e-bike category slowly became involved.

    “Not only the backlog of goods, product homogenization is also very serious, because the e-bike category itself has a high cost of trial and error, so many sellers choose to follow the sale to reduce the risk.”

    Many factories began to cut into the B2C market

    We sell more or less the same style, which leads to a price war. Some sellers have a profit margin of less than 5%.

    As the era of sellers gradually towards an end, brand players began to take the stage, and capital was added to the brand.

    In the period 2021-2023, the Chinese market OKAI, URTOPIA, Aventon, SURPANDA, TENWAYS, VELOTRIC and other 20 e-bike related companies, including Tencent, High tide, Sequoia, including capital favor, it is reported that the total financing amount has exceeded RMB 10 billion.

    Aventon

    Async is at this point on the wings, and most Chinese e-bike brands are not the same.

    Async focuses on the high-end market in Europe and the United States, trying to do the field of electric two-wheel personalized technology consumer brand.

    Async founder Xu Zhuchun introduced the brand factory: “In the past few years hundreds of small brands with public model bike labels have gone international.

    With the emergence of leading brands with capital in hand in the past two years, the entire industry is gradually formalizing.

    The public model bike can be said to be a product of the stage, may exist in the long term, but the probability can only stay in the relatively low-end ranks.

    Most brands will try to find the difference point of their products, and then rely on the difference point to get the choice of users.”

    Async

    Futura’s Liu Yang Yi believes that the current e-bike track is no longer suitable for new players, especially those who do not understand the white market.

    She recommends that before entering the market, one must be cautious, have a deep enough understanding of the market, carefully examine the cooperation of suppliers, and then use all kinds of online and offline marketing to open the circle of resources.

    However, she seems to still be optimistic about the opportunities of this track. According to her, Futura is currently working on a new e-bike brand project.

    How to stand in this competition?

    E-bike is still a hot track, and Porsche, General Motors, Audi, Lamborghini, BMW, Mercedes-Benz, Tesla and other car brands are eager for this piece of “big cake.”

    In addition, the United States, Xiaomi, DJI are also laying out the relevant industries. Muji and the light luxury clothing brand Jacquemus are working with electric bike company to launch a joint model.

    As the “factory of the world”, in 2022 alone, China’s e-bike exports reached 9.96 million units, up 121% year-on-year.

    How to stand in this competition

    With such a volume, how should the e-bike brand break out?

    An investor said that as a capitalist, he will look more at the high quality, after-sales guarantee, innovative products, “Now many brands are priced between $1000-2000, there are not many features, so it is difficult to pull away, or to do a good job first product power.

    Product is the key to brand foothold. Xu believes that e-bike can be divided into three levels in terms of products.

    The first can not, such as can go off-road, can not carry cargo, involving the model of the problem.

    Further up is the question of whether it is good or not, that is, the cost performance, such as how big the car with the battery, with how much motor, mechanical parts specifications and so on.

    The middle and high-end products rely mainly on the third layer, that is, the added value of the product, including the aesthetics of industrial design, intelligent services and so on.

    Xu Zhuchun revealed that Async’s first product is innovative on three levels and will soon enter the market.

    At the level of product innovation, overseas brands have a lot of tricks.

    For example, Cowboy’s e-bike is very simple, no gears, no buttons used to adjust the motor power, but the use of gyroscopes, accelerometers and other sensors automatically help adjust, no human operation.

    Onewheel

    Onewheel attracts users with its cool one-wheeled electric scooters, while KwikFold mainly produces electric folding bikes.

    Liu said that although the e-bike industry is on a white-hot stage, there is still huge space in the high-end segment, such as a Canadian brand specializing in carbon fiber bike material, which sells well.

    “The low-end market is more saturated, some brands can’t even return or repair, and various European regulations also put some low-end brands in an awkward situation.

    The future point of competition is still in the differentiation, first of all, there must be a unique sense of design, followed by the team leader of the brand to have ideas and patterns.”

    An e-bike industry source expressed a similar view, saying, “The brand still needs to highlight what makes it different in order to get a group of loyal users.

    At present, the competition for the low-end e-bike is more brutal, for example, some cheaper brands than Red Power have appeared in the US market, and sales are good.

    For example, some cheaper brands than Red Power have emerged in the U.S. market and are selling well.

    To be truly sustainable, more product-level innovation is needed, including branding.

    Another point is innovation in marketing and service, such as setting up more offline stores and cooperating with more dealers.”

    E-bike is a strong experience product, 70% of transactions still occur offline.

    Liu believes that e-bike is a category that is very suitable for branding because it has a very strong scene.

    Do not ignore the offline scene, especially in the facade and offline channel cooperation, a good first-line experience scene will greatly improve the user’s feeling and give online brands better persuasive power.

    Subdivision field is also the focus of each company. Experts pointed out that “most of the e-bike batteries, batteries, frames on the market are similar, the core is to find the differences in the segmentation track.”

    From the current market e-bike use, mainly divided into mountain, hiking, freight and so on, the style is also very subdivided, such as punk wind and so on.

    Liu cited the example of help old e-bike, soft tail mountain bike and other segments, that these segments are small but can also appear invisible champion.

    However, she does not recommend that newcomers without basic precipitation in the entry directly do segmentation track, “it is easy to do not up”.

    In addition, with the increase in the number of old e-bikes, there are even e-bike “graveyards” in some parts of Europe, and more environmentalist second-hand brand companies are welcome.

    Red Power

    For example, France’s Upway is a startup company focused on refurbishing and reselling branded e-bikes, which sells used bikes for only one-tenth of the price of a brand-new e-bike.

    It sells used bikes for one-tenth the price of a new e-bike.

    New markets are also emerging. In addition to the traditional European market, the U.S. market is widely considered to be an excellent incremental market.

    The Southeast Asian and Indian markets, where annual sales of fuel motorcycles exceed 35 million units, are also seen as long-term prospects for recreating a new market of 20 million units, thanks to the government’s policy dividend to promote electric motorcycles.

    But that’s a story for another day.

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