Elby 2020 Market Study Report

Electric Bike Market Trends Market Trends, Target Market, Projected Growth, Bike Boom Prepared and Presented by: Jacob Larsson Email: jacob.larsson@elbymobility.com

MOC.YTILIBOMYBLE.WWW

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Key Takeaways: Forecasted Growth

Things to Discuss

Covid-19 Impact Market Scenarios Market by Region Avg Price point per Region Top Selling Style (Class) Class 1 Class 2 Class 3 E-Bike Market Usage Trekking/Mountain City/Urban Cargo Other Mid Motor Segmentation

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7.9% CAGR (Compound Annual Growth Rate)

75

$ Billion

Forecasted Growth between 2020-2027 $29 Billion

50

25

2020-2027 industry expected to grow 75%

ELBY MOBILITY Source:E-Bike Market. (n.d.). Retrieved January 29, 2021, from https://www.marketsandmarkets.com/MarketReports/electric-bike-market-110827400.html

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2020 2021 2022 2023 2024 2025 2026 2027

The global e-bike market is projected to reach USD 70,025 million by 2027 from USD 41,122 million in 2020, at a CAGR of 7.9% from 2020 to 2027. Apart from the impact of the COVID-19 pandemic, this market’s growth is driven by the increasing traffic congestion, growing interest in cycling as a fitness and recreational activity, and inclination of consumers towards an eco-friendly solution for commuting. Asia Pacific leads the global e-bike market, followed

by Europe and North America. Due to increasing traffic, people in the Asia Pacific region mostly prefer city/urban e-bikes for commuting. However, in Europe, mountain e-bikes are popular, owing to the growing interest of consumers towards mountain//trekking activities. In North America, there is a growing demand for city/urban e-bikes for a daily commute, recreation, and fitness activities.

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Covid-19 Impact Due to the COVID-19 pandemic, commuters are mostly avoiding public transportation. E-bikes are considered a safe, convenient, and affordable alternative to public transportation. Also, compared to other transportation systems, e-bikes are cheaper, easier to charge, and do not require huge investments in supportive infrastructure. This is estimated to boost the sales of e-bikes in 2020 and 2021. However, post2021, the market is expected to return to normalcy. ¡ The sale of e-bikes was dampened in the first quarter of 2020, as e-bike stores were closed due to lockdowns. However, now that the lockdown has been lifted in most countries, including China, India, Japan, the US, Italy, and France, the sale of e-bikes has increased. The number of e-bike buyers has also increased for the first time. According to industry experts and e-bike manufacturers, such as Rad Power Bike, VanMoof, and Lectric e-bike, e-bikes are increasingly considered as an ideal mode of transportation as cities emerge from the quarantine and summer approaches in the US and Europe. ¡ The e-bike market is estimated to observe a huge boost in sales post-COVID-19 in 2021. However, post- 2021, the market would return to normalcy, and the demand for e-bikes would grow at a moderate rate

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Pre/Post Covid Market Scenarios Rapid urbanization and traffic congestion in cities are among the factors expected to drive the demand for e-bikes over the forecast period. Due to the COVID-19 pandemic, shared mobility for transportation is unlikely to be preferred. E-bikes are considered a safe, convenient, and affordable alternative to public transportation.

Most of the countries are working toward boosting the usage of e-bikes through both subsidies and regulatory changes in order to reduce the stress on public transportation systems. Also, compared to other transportation systems, e-bikes are cheaper, easier to charge, and do not require huge investments in supportive infrastructure. Therefore, an increase in demand for e-bikes is being observed.

According to the Bike-EU report, in Germany, e-bike sales have witnessed a dip by 20-30% in the first week of April due to the closure of bike stores. But not that they have reopened, bike shops are reporting a significant increase in sales. Rad Power Bike (Seattle-based e-bike manufacturer) announced its sales in April increased by a whopping 297% year over year. Lectric e-bike (UK bike retailer) mentioned a 140% increase in sales since March 15, 2020. VanMoof (Dutch e-bike manufacturer) mentioned that its e-bike sales from February to April were up dramatically compared to the same period last year.

Most Likely Market Scenario The e-bike industry is amongst the few industries witnessing growth despite the COVID-19 pandemic. The most likely scenario considers the current impact of COVID-19 on the e-bike market, wherein global e-bike sales have increased during the lockdown period. Even after the lifting of lockdowns, people are still cautious and wish to avoid public transportation and mobility sharing for commuting. The e-bike is considered to be an easy, cheap, and safer way to commute during the pandemic. COVID-19 is estimated to have a positive impact on e-bike sales in 2020. Also, if vaccines are not introduced till the first quarter of 2021, then a boost in e-bike sales will be observed in 2021. However, post-2021, the demand for e-bikes is expected to normalize owing to vaccination and government initiatives toward safer transportation.

High Impact Scenario The high COVID-19 impact scenario assumes the long-term effects of the pandemic.

Under this scenario, the e-bike market will witness strong growth till 2022. Considering the second wave of COVID19, which is expected in Europe, people will travel in isolation, and social distancing will continue. The fear of the virus spreading will encourage people to continue avoiding public transportation. Also, if vaccine introduction is delayed till the end of 2021, the demand for e-bikes will continue to grow till 2022.

E-Bike Market

by Region Canada Canada accounted for a 17% share, by volume, of the North American e-bike market in 2019. The popularity of e-bikes is rising in Canada. Also, the government is encouraging people to purchase ebikes as they are a much cheaper alternative to cars. For instance, according to the country’s Ministry of Transportation and Infrastructure, people trading in a vehicle to scrap have access to a rebate of USD 1,050 towards the purchase of any type of new e-bikes. Also, the government is introducing a one-year pilot project that enables a rebate of up to USD 1,700 for business owners towards a purchase of cargo e-bikes.

E-Bike Market

by Region Canada Incentives from the government for cargo e-bikes will help reduce the large van and truck traffic and emissions. Cargo e-bikes are not only efficient for delivering materials and goods around; they also help reduce the operating costs for businesses. Hence, by usage, the cargo e-bike market is expected to witness the highest growth rate during the forecast period.

E-Bike Market

by Region United States The growing popularity of off-road sports, such as mountain biking and crossroad biking, are expected to lead the demand for mountain/trekking e-bikes, resulting in this segment being the second-largest market, by usage, during the forecast period.

E-Bike Market

by Region United States The US accounted for the largest share (83%) of the North American e-bike market in 2019. The ebike market in this country is in the introduction stage compared to European countries.

Increasing concerns about traffic congestion and favorable government regulations are expected to boost e-bike sales in the country. For instance, there are four different types of programs offered by the government—the partial purchase subsidy from government or utilities, vendor funded discounts (discounts from e-bike stores), employer sponsor programs (where the employer gives an e-bike, perhaps as a bonus or part of their pay), and government-sponsored loans.

E-Bike Market

by Region United Kingdom The UK e-bike market observed a year-on-year growth of ~40% between 2018 and 2019. The majority of the UK market is catered to by Class-I ebikes. Class-III e-bikes have to undergo several legal procedures, thus accounting for a very less market share. According to the UK Bicycle Association, the e-bikes with a cost ranging between USD 1,000 and 1,200 have observed more sales during the COVID-19 pandemic. The e-bike industry is urging the government to provide financial incentives for the purchase of e-bikes and create a public awareness campaign to encourage the use of e-bikes for transportation. Considering these incentives and campaigns are put into action, the sale of e-bikes is expected to pick up in the UK during the forecast period.

E-Bike Market

by Region United Kingdom Congestion in the cities is a growing problem, and one of the main reasons for congestion is the growth in van traffic. According to the UK Bicycle Association, vans contribute up to 15% of the traffic and cause over 30% of NOx and particulate emissions. Therefore, cargo e-bikes are being considered as a solution to this problem. These ebikes take less space and have zero emissions. Also, they can take shorter, faster routes fusing cycle and bus lanes or being wheeled through pedestrianized areas); are easier to park (enabling deliveries to be made more quickly); and are cheaper to buy, insure, and repair than vans. Few restaurant owners in the UK make use of cargo e-bikes to deliver takeaway meals; it is much easier to recruit e-bike riders than van drivers or moped riders. Therefore, the cargo ebike market in the UK is expected to witness a high growth rate during the forecast period.

Avg Selling Price Analysis

E-Bike by Class The e-bike market has been segmented based on class into Class-I, Class-II, and ClassIII. The Class-I e- bike comes with pedal-assist only, with no throttle, and has a maximum speed of up to 32 kmph. The Class-II e-bike has a throttle and maximum speed of up to 32 kmph. While the Class-III e-bike is pedalassist only, with a maximum speed of up to 45 kmph.

The e-bike market by class has been further segmented based on key regions, namely, Asia Pacific, Europe, and North America and is analyzed in terms of volume and value for the period 2018–2027.

Top Selling Style - Class 1 Class-I e-bike is also known as a pedal-assist e-bike. The drive system of the pedal-assist/Class-I e-bike is only activated once the rider starts pedaling. Class-I e-bikes have a maximum speed limit of 32 kmph. However, depending on the region, the speed and regulation vary. For instance, in China, from 2019, helmets are compulsory in Class-I e-bikes with a speed limit of 25 kmph, a 400-watt motor, and a maximum weight of 55 kg. In Japan, the speed limit for this class of e-bikes is 24kmph, with a 250-watt motor. In Europe, the speed limit is <25kmph, with <=250 watts motor. North America has a maximum speed limit of up to 32 kmph and <=750-watt motor for Class-I e bikes, with helmets mandatory.

Asia Pacific countries such as China, Japan, South Korea, and Taiwan allow only Class-I e-bikes. This results in the Class-I e-bikes occupying the largest market share in the Asia Pacific region. Due to a ban on e-bikes in a few Chinese cities, such as Xiamen and Guangzhou, their sales declined. However, with new regulations announced by the Chinese government in April 2019, the demand for e-bikes has significantly been impacted. In China, e-bikes must have pedals, be equipped with lithium-ion batteries, and have a maximum speed of 25 kmph. Due to this mandate, the adoption of lithium-ion equipped e-bikes will increase, and so will their cost. Therefore, according to industry experts, consumers might opt for electric two-wheelers or mopeds instead of e-bikes. This will result in a decline in e-bike sales in China during the forecast period.

Top Selling Style - Class 2 Class-II e-bikes have throttles, such as grip-twister, trigger, or button, and are limited to certain speeds only. The drive system of these e-bikes can be throttle activated via a grip-twister, a trigger, or a button and through pedaling action. Class-II e-bikes have a maximum speed limit of 32 kmph. However, depending on the region, the speed limit and regulation varies. For instance, in India, Class-II e-bikes have a maximum speed limit of 25 kmph, with a 250-watt motor. Europe has a speed limit of <25 kmph, a 250-watt motor, and a helmet mandate for this class of e-bikes. They are also prohibited from use on trails and other bicycle-specific infrastructure. Whereas, in the US, Class-II e-bikes have a speed limit of up to 32 kmph, <=750 Watts motor, the mandate of a helmet, and can ride on streets, bike lanes, and multi-use bike paths.

According to industry experts, Class-II e-bikes are presently offered in the Indian market with a speed limit of up to 25 kmph, mostly for mountain biking/trekking. Class-II e-bikes are mostly banned in Europe, except in countries such as the UK and Italy, which allow the bikes to throttle up to 6 kmph. Compared to Europe and Asia Pacific, North America has a higher adoption of Class-II e-bikes, which have access to ride on bike lanes. Considering the favorable norms in North America, the market for Class-II e-bikes is expected to be the largest in this region during the forecast period.

Top Selling Style - Class 3 Class-III e-bikes are only pedal assist with a maximum speed of 45 kmph. Class-III e-bikes are also known as speed Pedelecs.

The drive system of these e-bikes can be activated by the pedaling action. In the EU region, Class-III e-bikes have a speed limit of >45 kmph with 4000 watt-power and require registration, license, helmets, and mirrors & reflectors. Their operation is limited to roads and private properties and not on cycling pedestrian infrastructure. Whereas in North America, they have a speed limit of 45 kmph, <=750 watt-power, and helmet mandate. E-bikes in this region can ride on roads, adjacent bike lanes, or on private properties.

Class-III e-bikes are not authorized in the Asia Pacific region. Whereas, in Europe, Switzerland is the largest market for Class-III e-bikes, followed by Belgium and Italy. The North American region presently has a limited penetration of Class-III e-bikes, with only six states authorizing their operation. Also, Class-III e-bikes in both Europe and North America have a minimum age restriction of 16 years. However, Class-III e-bikes have a potential solution for car replacement to avoid traffic and reduce emissions. Therefore, the market for Class-III e-bikes is expected to grow during the forecast period.

E-Bike Market Size by Usage By usage, the city e-bike segment is estimated to be the largest globally in 2020. On the other hand, mountain e-bikes, due to their robustness, are increasingly preferred not only for mountain/trekking but also for commuting for work and shopping. Therefore, by 2025, the demand for mountain/trekking e-bikes is expected to be greater than city/urban e-bikes. The growing focus of e-bike manufacturers on the latest technologies and innovative designs is expected to boost the market for folding and fat tire e-bikes.

Mountain/Trekking

01 The electric mountain bike is also called e-MTB. The electric-assist motor on a mountain e-bike amplifies the pedaling power, thus helping the rider to go farther and faster. Mountain/trekking e-bikes are designed for off-road cycling and are generally specialized for mountain trails, single tracks, fire roads, and other unpaved surfaces. These bikes usually have higher volume tires with aggressive tread (smaller knobs for gravel roads and packed dirt, larger knobs for soft, loose terrain).

02 The demand for mountain/trekking ebikes is growing rapidly as consumers increasingly show interest in trekking and recreation activities. There is a growing interest in performance-based adventurous sports, which, in turn, increase the demand for mountain/trekking e-bikes. Sports and physical activities are becoming more adaptable through electric motors. Long rides over the hills become easier and steep terrain can be conquered with much lesser efforts.

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03 In many countries, mountain e-bikes are not only used for mountain trekking but also daily commuting to work and shopping. The main reason for the growing popularity of mountain ebikes is their robustness.

Also, owning mountain e-bikes is a status symbol, as they are more expensive and stylish. All these factors are expected to increase the consumersâ&#x20AC;&#x2122; preference for mountain e-bikes.

Mountain/Trekking

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City/Urban

01

02

03

City/urban e-bikes are low-step frame

Rapid urbanization and traffic congestions are

In India, the government announced

bicycles designed for gentle terrain and

among the key factors contributing to the growth

financial support and a scheme called

trips around cities and urban areas.

of the city/urban e-bike market. Due to the

Faster Adoption and Manufacturing of

These e-bikes are designed for frequent,

COVID-19 pandemic, the demand for city/urban e-

Hybrid and Electric Vehicles

short, moderate pace rides through

bikes has increased, as they are considered a safe,

(FAME). Under the scheme, there is a

relatively flat urban

convenient, and affordable alternative to public

subsidy of ~USD 296 for the purchase of

areas.

transportation. Also, most of the countries are

electric scooters/e-bikes.

focusing on boosting the usage of city/urban ebikes through both subsidies and regulations in order to reduce the stress on public transportation systems. For instance, the Italian government is offering a subsidy of up to USD 583 (in municipalities with a population of over 50,000 inhabitants) for the purchase of bicycles and eELBY MOBILITY

bikes. In California (US), the state government has proposed a partial purchase subsidy between USD 500 and 1,000 on e-bikes.

City/Urban

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Cargo

01

02

03

Cargo e-bikes are usually longer and lower to the

In Asia Pacific, the share of family and

Congestion in the cities is a growing problem, and one of the

ground, providing easier loading of cargo. They

commercial cargo e-bike was 72% and

main reasons for congestion is the growth in van traffic.

have more cargo space compared to city/urban

28% respectively in 2019. Whereas, by

e-bikes. These e-bikes tend to have powerful

2025, the share of family and commercial

motors and optional rack accessories for

cargo e-bikes is projected to be 55% and

transporting goods or additional passengers

45% respectively. In Europe, the share of

(including children). Cargo e-bikes usually come

family and commercial cargo e-bikes was

in one frame size but offer adjustable seats,

49% and 51% for 2019, which are

stems, and handlebars to fit a wide range of

expected to change to 38% and 62% by

delivery trucks are often banned from entering certain

riders. The cargo e-bikes have been further

2025. In North America, the split between

apartment complexes where spaces are reserved for

divided into family and commercial purpose cargo

family and commercial cargo e-bikes was

aesthetic landscaping and childrenâ&#x20AC;&#x2122;s play areas. Therefore,

e-bikes.

66% and 44% for 2019 and this share is expected to be 48% and 52% by 2025.

Therefore, there has been a rise in government initiatives to spread awareness regarding the benefits of cargo e-bikes. For instance, the French government provides the highest incentive of USD 1,400 on the purchase of cargo e-bikes. In Canada, the Victoria province is introducing a one-year pilot project that enables a rebate of up to USD 1,700 for business owners towards a purchase of cargo e-bikes. In South Korea,

cargo e-bikes are increasingly considered a suitable alternative for delivery in South Korea. Such incentives from governments for cargo e-bikes will help reduce the large van and truck traffic and emissions. Cargo e-bikes are not only

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efficient in delivering materials and goods around, but they also help reduce the operating costs for businesses. Therefore, all these factors are expected to boost the sale of cargo e bikes, especially in the European region.

Cargo

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Others (Folding+Fat Tire)

01

02

The others segment includes folding e-bikes and fat

Folding e-bikes are attracting

tire e-bikes. A folding e-bike features a frame and

consumers owing to the advantages

components that can fold, rotate, or be removed to

offered by them. For instance, they are

improve portability. A fat tire e-bike has tires that are

flexible, compact, and lightweight. These

wider than 2.8 inches, often 4 or 4.9 inches wide. The

e-bikes can also be folded when

fat tire e-bike is suitable for riding in loamy, sandy,

traveling in metros and subways.

or packed snow conditions.

They can be kept inside the home as they take very small space when folded.

03 Folding e-bikes are popular in Europe, especially among urban commuters who want to save space in their boats or RVs. Therefore, the market for folding e-bikes is expected to grow at the highest rate in Europe during the forecast period. Also, major conventional bicycle manufacturers are launching their e-bikes with the latest technology and innovative designs in the Indian market.

For instance, in the 2020 Auto Expo, Hero Cycle introduced its e-bikes lineup, which included a folding bike (Easy Step, a straphanger) and an electric fat bike (Essentia). Presently, the market for folding and fat tire ebikes is limited in the Asia Pacific and North American regions. However, over the forecast period, the market for folding and fat tire e-bikes is expected to grow at a

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moderate rate.

Others (Folding+Fat Tire)

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Motor Segmentation

Motor Segmentation During the Forecast period the Mid Motor is expected to make a significant jump as compared to the Hub Motor.

Hub Motor The hub motor is an entirely independent drive system that retains all of its components inside the motor casing. Due to this, an e-bike equipped with a hub motor requires less maintenance. As the hub motor is not connected to the main pedal drive system, it does not add any extra stress to the chains or shifters, thereby ensuring the protection of these parts from wear. With a hub motor, the overall maintenance of the e-bike is also lesser compared to the mid motor. Hub motors are mostly equipped with city/urban e-bikes.

The Hub motors are cheaper as they are mass-produced in much larger quantities and do not require the manufacturer of e-bikes to alter a frame to fit the motors. Asia Pacific is a major market for hub motors due to the region being a cost-sensitive market.

Mid Motor As the mid motor is positioned between pedals at the bikeâ&#x20AC;&#x2122;s bottom bracket, it ensures a low and central center of gravity, providing load balancing. Also, the rider does not feel the additional weight because of where it is positioned. The biggest advantage of the mid motor over the hub motor is its gear ratio. The mid motor allows the rider to power the rear wheel via the same chain and gear set as the pedals; due to this, a low gear can be selected for powering up steep hills. Therefore, the mid motor in low gear can climb steeper hills than the hub motor of similar power, which can sometimes overheat, leading to a temporary shut-off or permanent damage to the magnets inside (worst-case).

Also, the mid motor is lighter and smaller in weight compared to the hub motor.

Europe and North America have shifted toward the mid motors due to the benefits offered by them, as mentioned above. These regions have a higher adoption rate of e-mountain bikes, which require more power to climb hills, which may not be supported by the hub motors. Also, in these regions, e-mountain bikes are increasingly preferred for daily commuting. These factors are expected to increase the demand for mid motors during the forecast period globally.