Ebikes: The Next Big Thing Is Here Now

By Phil Latz | 28th February 2020 |

On 25^th September 2014 I wrote and published an opinion piece in Bicycling Trade entitled ‘I’m Calling it Right Now!’ In that article I predicted that ebikes would become mainstream globally, including Australia, but that it would take, ‘…another three to five years to really make an impact in Australia.’

With the benefit of hindsight I was out by a few years in predicting the timing. Ebike sales have been growing at about 50% per year here for the past three years. But because they’ve started from such a low base, even an optimist could not really claim that ebikes are mainstream here, yet.

Certainly the latest available import data is not that impressive. Only 27,500 ebikes were imported in the 2018/19 financial year by 22 participating brands that included all but a couple of the larger players. Allowing another 5,000 bikes for the companies that did not participate in the data collection still only brings us to 32,500 bikes. I expect the current financial year will see this number increase by a further 50% to around 50,000. If the average retail value is $3,000 (another estimate, based upon a large number of sub $3,000 bikes offsetting a much smaller number of over $3,000 bikes, some of which are multiples higher in price), then that will still mean a $150 million dollar market at retail value for 2019/20.

So the ebike market is already significant here in value, if not in volume.

But if you look back at how far product development and consumer acceptance has come between 2014 and today and at the sheer rate of investment and advances in product development right now, then we’re surely only a season or two away from a truly mainstream new category for the Australian bicycle industry.

It’s already the case in Europe. In the market leading countries such as Germany and the Netherlands ebikes are already the largest category sold by value and in the latter case, by volume as well.

Sure, Australia won’t reach European levels on commuter and recreational style ebikes because of much our inferior level of cycling infrastructure and lower levels of everyday cycling activity in our cities compared to Europe.

But Australia’s mountain bike parks and trails, gravel riding and road riding opportunities are world class, so there’s no reason that we can’t match the Euro’s in these categories at least.

Challenges For Dealers

Just because we’ve found a growing category of high value products to sell, adjusting to ebikes is not all roses for dealers.

Firstly, they face challenges with lower margins often being offered for ebikes of a certain price point compared to a non-ebike of the same price point. Why is that?

On one hand a dealer’s average sale price per bike will increase as they sell a larger percentage of ebikes, but on the other hand they face the challenge of funding more expensive stock.

They also face a retraining and re-equipping cost in their workshop. Some bike shops successfully charge a higher hourly workshop rate for ebike specific work compared to general mechanical work.

The highest number I’ve heard so far is $150 per hour. This might seem high to some bike shop owners, but you can rest assured that many car dealerships charge more, so why not bicycles, as they become ever more sophisticated?

Ebike servicing requires investment in new tools, mechanics training and powered workshop stands or hoists. All of these are additional costs that can and should quite justifiably be passed on to consumers. We also face a chronic shortage of trained, skilled and experienced mechanics and ebikes will exacerbate this problem. While boosting mechanics training opportunities such as Cytech is an important part of the solution, ultimately it comes down to market forces. Bicycle mechanics, particularly ebike specialists, will need to be able to earn sustainable wages if they’re going to see our industry as a legitimate long term career.

Because studies are showing that ebikes are ridden more often and for longer distances, they’re going to be wearing out brake pads, tyres, chains and other components more quickly.

All of these factors add up to say it’s time for retailers bite the bullet and raise their workshop prices now!

Remember, you can’t fix a bike over the internet and in the case of ebikes, it’s much harder to sell them online as well because you can’t legally airfreight an ebike battery.

It’s also now well proven that many ebike customers are new to our industry, or coming back after a long absence. This means that many ebike sales are additional sales, to new markets.

So despite all the challenges, I suggest that dealers can profit by embracing ebikes.

What’s Coming Next?

Looking ahead, technology will be our friend in accelerating new product developments. Batteries will become more energy dense, motors smaller and lighter. Prices will reduce, but probably only slightly, as many customers will opt to pay similar prices in future in return for a higher capacity battery, lighter motor and other improvements.

We also need to keep an eye out and an open mind to the broader e-mobility picture.

Why should our industry only sell traditional two wheeled bicycles?

E-scooters are growing and gradually becoming legalised in some Australian states and territories. (I’m planning to study this situation further for a future article.)

Next there’s what many dealers would consider fringe or even ‘weirdo’ categories such as cargo bikes and recumbent bikes. Until now these have been very small niches in part due to their greater weight and consequential increased effort to push uphill. These categories benefit even more from electrification than do regular bikes.

Then there’s the whole ‘micro mobility’ grey area of products that sit between a car and a bicycle. At our end of the spectrum come the bikes we’ve just mentioned, cargo, recumbent, scooters and so on.

At the car end we’re seeing not just prototypes, but new lightweight car style vehicles going on sale such as the Acrimoto. Who is going to sell these products? Most likely a car or motorcycle dealer, you might think.

But what about something lightweight, slower, that you pedal just like a pedalec ebike, but that has a roof, such as the Schaeffler Bio-Hybrid.

As we move forward the former black and white demarcations between bicycles, motorcycles and cars will become more grey. Electrification will create more crossover products like these that will lower the drawbridge between the traditional product kingdoms of cars, motorcycles and bicycles.

What will this mean? Are we going to invade their territory, or are the motorcycle and automotive industries going to be the ones running across these drawbridges and invading our territory?

When you look at the origins of all the top ebike drive system developers apart from Shimano, you could reasonably claim that the second alternative is already starting to happen.