Thematic Report

E-bikes – Taking charge

by Ken Shin / Mar 11, 2019

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Electric bikes will be a big growth market as they continue to gain traction in Europe as a more ecological means of transport. Sales in the USA will also shift up a gear as related regulations take shape. And for the traditional two-wheeler, healthy European and US markets and a rebound in sales in China will support a more stable environment in years to come.

Global industry overview
The European and North American markets have enjoyed healthy industry demand and supply dynamics of late and we expect the e-bike boom to propel average-selling-price hikes. The Chinese market is also likely to recover this year as the country’s bike-sharing craze pedals to a halt; traffic improves at local bicycle retailers, and with a mid- to high-end model replacement cycle already underway. Further, demand for e-bikes in Europe shows no sign of letting up, evidenced by Taiwan’s increasing exports to the region and positive comments from Dutch bicycle maker Accell Group and Japan’s Shimano.

E-bike sustainability, spec trends and regulations
We foresee sustained growth in value creation in 2019-20, supported by low e-bike penetration in Europe and a larger addressable market in the USA. Smaller and lighter mid-drive motors, advanced batteries and upgraded chains with higher endurance are emerging trends. Bike brands with customised pedal-assist-system (PAS) solutions should take the lead due to differentiated riding experiences. And with no compulsory liability insurance for riders, based on our channel checks, the industry looks to have the wind at its back. Cycles with electric-motor assistance are also picking up speed in the USA, with 11 states passing model legislation in 2018 and companies and associations lobbying for a further 20 this year. Heavyweights Yamaha and Panasonic are also entering the market.

Potential new drivers and profitability
E-commuting bikes are another driver that will have positive implications for urban mobility as European governments increasingly give the green light to cycle-initiative investments. Auto firms, which have failed to penetrate the space, are likely to face steep entry barriers, and e-scooters do not pose a threat. And despite the higher costs of PAS and e-bikes’ cannibalisation of traditional cycles, we expect bike makers to enjoy greater profit. In the long term, Taiwanese manufacturers’ margins should improve due to economies of scale, expertise and adaptability, and vast value-creation experience.

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