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The rise of high speed ebikes

They have been popping up in international news with different names. In Europe they are often called “Fat Tire Ebikes” in reference to the volume of their tires. While in the US they are sometimes searched as “Moped Ebikes” or “Motorcycle Ebikes”. I have taken to calling them bench style ebikes as the prior names can be too easily confused with fat tire folding or comfort models, as well as to assign an immediate contradiction of a model being both a bicycle and a motor vehicle.

The name bench style was chosen in reference to their non-adjustable seats with long seating potentially for multiple riders. These casual focused bikes have become quite popular, particularly among teenagers. Right along with that popularity has come concerns over safety and regulation. With that backdrop I wanted to explore US search data as inspired by a similar Dutch article. Naturally, I love charts, so we’ll let those do most of the communicating here.

Popularity of search term by state

As you can see above, most states prefer the term speed ebike. Fat tire was left out because of the significant overlap with other styles of casual ebikes. Following that search brings up lists of the highest speed ebikes first, followed by more popular law abiding models. We can further group these five terms to see their long term popularity.

  • Speed (speed ebike & fast ebike)
  • Throttle
  • Bench Style (Moped ebike & Motorcycle ebike)

As you can see, references to speed started earlier than other categories, likely in reference to the three class system in the US. Nonetheless, there is clear interest from consumers in the speed of the bikes. 2022 saw a significant growth of interest in speed, and correlated with bench style ebikes. While the latter fell behind, speed only plateaued slightly. This shows a strong correlation between the two, even if it is not a direct relationship.

2024 has again seen acceleration of interest in references to speed on electric bikes. Recent regulations in California may put some pressure on larger and more exposed brands. However, small brands have listed bicycles on their website with explicit advertising of speeds well in excess of 28mph and motors above 750 nominal watts. The regulations were flagrantly violated by some before, so these new rules are unlikely to make a change without a corresponding increase in enforcement.

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Norwegian Bicycle Market

Working in the US bicycle market, I frequently hear comparisons to the European market. But this is often misconstrued, as the countries of Europe vary significantly from one another. Some like the UK have very robust data collection efforts, while others like Norway have virtually no collection mechanism. This got me curious as to what we could learn from indirect measurements. Norway offers a unique opportunity as all registered legal entities must publish their financials.

By pulling in data from many brands across the world, I was able to identify 181 actively operating retailers in the Norwegian bicycle market. In contrast to the US, many of these retailers are multi-sport, as opposed to dedicated bike shops. This naturally makes sense in a country with snowy and dark winters. Only 32% of locations are dedicated bike shops.

Another divergence is how prevalent ecommerce is among these retailers. Both traditional bike shops and multi-sport retailers offer ecommerce as an option for more than 80% of retail locations. Many of the remaining appear to be small, sole proprietor operations.

The big challenge is defining how large the Norwegian market is in revenues. Totaling the bike shops is pretty straight forward and amounts to ~800m NOK in 2023. For multi-sport retailers, we have to make some assumption of what portion of their business comes from bicycle related activities. While most of these businesses are split between cycling and skiing, some do offer camping and other equipment. For the purposes of this analysis, I am using an assumption that 30% of revenue comes from the cycling segment, partially because of the much higher average cost for cycling, but high prevalence of skiing in Norway. This results in an estimate of just under 2 billion NOK in 2023. Some modeling was required for 2023 data as not all retailers had reported their figures by the time of publication.

If we look at the total growth of the Norwegian market since 2015, we can see that there was very steady growth through 2019. In contrast to some European countries, which had much less of a bike boom than the US, Norway saw growth of 40-60% in revenues. This appears to have been disproportionately focused on bike shops, though our model does not account for a change in category mix within Multi-Sport retailers. The high growth was subsequently coupled with a steeper fall than Multi-Sport retailers over the past couple of years. This likely reflects a similar pulling forward of sales that we have observed in the US.

So what does this really tell us? The overall health of the bicycle market in Norway appears to be good, though there are still a lot of built up gains over the past couple of years, and they may experience some further fall. Based on these figures, there is an equivalent of ~$35 USD per person in bicycle revenue in Norway. This compares favorably to the ~$24 USD per person in the US.

Surprisingly, many bicycles are similarly priced between the US and Norway right now due to the current exchange rate. This will inevitably play a role in sales estimation. We have to also adjust for the proportion of bikes that we think will be from adult vs children’s bikes, as the US is surprisingly good at selling children’s bikes. Using a revenue ratio of 60% and an ASP of ~6,500 NOK ($600) brings us to an estimate of 185,000 bicycle units in 2023.

What if we change out assumptions?

Ultimately, our assumptions greatly affect the resulting estimate of unit sales. You can play around with these numbers to come up with estimates yourself. Here is a formula to go by:

(Bike Shop Sales Revenue) X (portion of sales from bikes) / (Average Selling Price)

((Multi-Sport Sales Revenue) X (portion from bike related sales) X (portion of sales from bikes)) / (Average Selling Price)

Given all this data, what is your estimate for total bicycle units sold in Norway?

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Mobile Shops in the US

In 2017, my bicycle shop, Summit Bicycles, acquired the trucks and franchise to operate the Beeline Bicycles mobile shops in the San Francisco bay area. It gave us an early view on the emergence of DTC fulfillment by last mile bike shops. The overall mobile landscape is challenging, and requires dedicated operators to make it work well. Since then, Summit has divested from the mobile side of their business. That doesn’t mean that mobile can’t be a successful model, just not for a shop like Summit. Lets take a look at how many mobile shops are remaining.

In contrast to the 7,000 – 8,000 Traditional bike shops, mobile shops are a relative minority. They make up only ~260 locations throughout the US. There are likely some more who fly under the radar by operating under referral only, with no website to monitor.

Surprisingly, Washington leads the country in the number of locations. I expected California to be high on the list due to population, but it is also surprising that Oregon has not seen more mobile shops in spite of being sandwiched between the two largest states in regards to count. If we adjust for population density, the map changes significantly.

Here we can see that the Washington market is more saturated with 244,153 people per mobile shop, restricting the available population to expand into. Mobile operators in the south appear to have more room to grow, so long as they can deliver value to their populations.

What can we take away from mobile shops?

Looking back on my experience with Summit and Beeline, we had success when we could get more than $100,000 in revenue per truck. Even if we generously assume 2 trucks, it seems that the mobile bicycle market likely has a revenue ceiling around $50m. Even that feels like a big number, and it’s probably closer to $20-$30m. So in the grand scheme of the bicycle market, it is a tiny niche. Nonetheless, high performing operators who can fly under the radar in the mobile market can enjoy relatively limited direct competition, depending on their location.

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USA Ebike Tariffs 2024

Following the recent news that tariffs will increase on electric bikes starting June 14th 2024, I looked back through shipping manifest data to see what proportion of imported ebikes are coming from China. The chart below speaks for itself. It’s a lot.

Granted, the bulk of ebikes are very low cost, which isn’t surprising that they are coming from China. Another interesting area to investigate will be those other sources, which appear to experience more volatility.

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USA – Ebike Imports – April 2024

2023 saw declining ebike sales volume in many countries, including the United States. This was accompanied by a drop in inferred import volume. To no one’s surprise, this was likely caused by the pandemic induced distortions to the market. The excitement to ride bikes outdoors during 2020 and 2021 accelerated consumer demand that would have happened more gradually in future years. This sudden growth led to distorted signals traveling back up the supply chain, which resulted in a large increase in ebike shipments.

When sales did not keep up with import growth, we saw a period of over supply and a buildup of stock in the United States. The natural response to this is to discount prices to move inventory. This basic economic tenant has two affects on buyers:

  1. Buyers shift from non-discounting brands to discounting brands, changing market share.
  2. Buyers who were “on the fence” about buying a bike at that time are convinced to purchase sooner than they otherwise would have. This decreases demand in a future year and increases it to the present year.

Unfortunately, discounting only further distorts demand by reducing future year buyers. Hopefully these consumers will enjoy their Ebikes so much that they will pull in more buyers from outside the market, accelerating overall market growth for an ongoing period.

Back to imports, the supply distortions can be seen in import records as well. Below we see the cumulative imports for each January through April going back 10 years. Early data is limited, but still informative. We can see normal import growth early on, followed by exaggerated growth in 2021-2023 (The over supply period). In 2024 we see April imports 8.6% below April 2023, and YTD imports down 6.6%. This marks the beginning of a period of under supply when viewed at the point of import. The positive side is that this should help relieve some inventory pressure through 2024.

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US eBikes – December 2023

US Shipping manifests indicated a slight decrease in ebike imports from November to December 2023. In the chart above we can see how both 2022 and 2023 imports were heavier in the final two quarters of the year.

Turning to annual figures, 2023 looks to be a retraction in the import rate for ebikes. This falls in line with figures reported by Circana and People for Bikes showing a slight decrease in ebike sell through in the IBD and ROM sales channels. With continued significant inventory strain of the market, we expect 2024 to remain similar to 2023, with a return to growth in 2025 as excess warehouse space is eliminated.

If we look below at the rate of change of YoY import growth, we see a small snapshot of the bull whip effect created by supply shocks from the COVID-19 pandemic. Given that Ebikes have been gaining strong ground for years, even with a temporary slow down in sales, we expect to see demand outpacing supply in 2025 and beyond.