The electric bicycle market - UK

1.2 The international market

The e-bike market generated $**.* bilion in revenue in **** and is expected to reach $**,* bilion by **** growing at a CARG rate of **.*% [***]. This rapid growth is driven by the growing need for sustainable means of transport that are projected to slowly take over the use of cars and other less sustainable vehicles. To promote this, many governaments are taking actions to stimulate the use of bycicles and the elettrification of them, which is crucial to expand the market to a bigger audience and to get the people that are already into biking to use this type of transport for longer, and in more situations.

In Europe, the number of elettric bikes has risen in the past years:

Numero di biciclette elettriche assistite vendute Unione Europea, ****-****, migliaia di unità Fonte: Confederation of the European Bicycle Industry

The production of these goods is mainly located in China, where the cost of producing an elettic bike, thanks to the much higher avaiability of cheap workforce and prime materials mainly linked to the manufactoring of the batteries, is way lower. Most elettric bikes on the market today use lithium iron phosphate batteries, lithium and the other minerals needed for making this tipe of battery are ...

1.3 The market in the UK

The e-bike market was valued at USD *.** bilion in **** in the UK, and is expected to reach USD *.** by ****, with a growing rate of CARG **.** during the forcasted period [***]. 

The growth will be driven by new customers coming in the bycicle market as well as existing customers switching from traditional to elettric bikes, with the latter ones being the more impactful. Research by Mintel highlights that **% pecent cyclist and *% of all adults in the UK say they are "likely" to buy an e-bike for sale in the next ** months, calculated with UK's population, this means around *.** million people.

In ****, production was aroud **.*** units, still small compared to the total production of bikes of * million units, but there were many signs that that number was going to drastically increase in the next ** years. This increase has in fact happened, with the share of ebikes produced being aroud *% of the total, however, the increase was not as big as many other countries in Europe, where the proportion is around **%.

If we take Germany as an example, we can see that the market is pretty similar in size, however, in the UK only ***.*** E-bikes are sold each year, compared with * million in Germany. The ...

1.4 Export-import

The UK is a net importer of bikes, we expect the trend to be the same for elettic bicycles as the producers in the country are small compared to foreign players.

It's estimated that the country imports around *** million US$ worth of bikes and exports only around *** million US$ in ****. 

Export-Import of E-bikes UK, ****-****, millions of US$ UNComtrade

The export is mainly directed towards Irland, the USA, Singapore, the Netherlands and South Korea. Together, they account for over **% of the total.

  Top * destinations for export of bikes UK, ****, millions of US$ UNcomtrade   Imports are mainly from China, Cambodia, Bangladesh, Indonesia and the Netherlands. Together they make up **% of the total.   Top * origins of bikes import UK, ****, millions of US$ UNcomtrade  

1.5 The effects of the pandemic

The COVID-** pandemic has had a significant impact on the e-bike market in the UK. As lockdowns and social distancing measures were implemented, there was an increased demand for e-bikes as people sought alternative modes of transportation. This surge in demand led to a shortage of e-bikes and related components, causing prices to increase and delivery times to lengthen. Additionally, many people turned to cycling for exercise and leisure, further boosting sales of e-bikes.

It's reported that since the start of the pandemic, cycling levels have seen a significant increase of around **% [***], howevers sales of new bikes are not keeping pace.

It is reported [***] that the boom of e-bike demand that followed the pandemic has produced some inefficiencies in the system. Companies and dealers were pressured to produce and order many elettric bikes, due to high demand and shortage of supplies, but now the hype seems to be over and these companies are left with a lot of unsold products.

2.1 The demand: Travels in the UK

The demand for alternative ways of transport has risen in the past years, however, in the UK, the use of bicycles, both ordinary and electric, did not go up as much as in other western countries. To understand that, let's take a closer look at what are the motivetions and the caracteristics of transports in the UK and at what drives people to use e-bikes in whestern countries.

Travels in the UK:

The UK governament created a survey to find out about the aproach that citezens have towards various means of transport. The results show that the use of bicycles is not very developed. In ****, it accounted for only *% of the trips and *% of the total distance travelled. 

Yearly trips by type of transport UK, ****, (***) Department for Transport

The most common trip purpose in **** was shopping, with **% of journeys being made for this purpose, as shopping can require cargo space to store the items that are bought, this could be one of the reasons why bikes are so unpopular.

  Most common trip purposes UK, ****, (***) Department for Transport   Looking at the age distribution we can clearly see that kids are the main users of bicycles, with the numbers going down as ...

2.2 The demand: who uses e-bikes in the UK?

Evidence on the impact of e-bikes on overall travel behavioris mixed, in general there's not enaugh evidence to say that the purchase of an elettric bike is negatively correlated with the purchase of a car. This tells us that people who are buying them don't use them as alternatives to cars. So then who buys them? A Dutch Mobility Survey found the avarage e-bike user to be older, retired and female with small household sizes and lower levels of education but higher than average household income. However other survey found different results, let's look at all the factors in details [***]:

Age: in general, several studies confirm the expected distinction between more recreational use by older riders and more utilitarian use by younger riders. Older riders claim how e-bikes enable them to continue riding, when physical constraints would otherwise prevent it.  Income: several studies have noted that e-bike ownership and use are  both  positively  associated  with  household  income. Gender: there is a marked difference in the gender distribution of e-bike users between those countries where rates ofcycling are high for both genders, and countries with lower rates of cycling, particularly amongst women. studies of the first group have often found a majority ...

2.3 Geographic distribution of demand

The UK's territory is very etherogeneous, to get an idea of how the demand for e-bikes changes in the different territories, we looked at a survey from **** by We are cicyng UK. We found out that England is the only territory with a considerable usage of bicycles as means of transport.

In the other territories usage is low mainly because the car is still preferred. In these territories demand for E-bikes will probably follow the one for normal bikes, as the purchase of it does not replace the need for a car.

2.4 New trends in demand

The demand for e-bikes was first driven by a search for alternative and sustainable means of transport, however it's now following some new trends in the market:

Search of new ways to exercise: some people may think because the bike is electric and takes less effort to ride that it's not really exercise. A study conducted out of Brigham Young University and published in the Journal of Medical internet Research found that people who ride electric bikes experience nearly as much exercise as those who ride mountain bikes without feeling as if they've had a difficult workout. Attention to mental health: E-bikes make cycling more accessible and people are more likely to do it because it's easier, getting about the same workout with less the effort. For those who may be living an otherwise sedentary life, riding an e-bike gets them moving and in nature. This exercise, change in scenery, and fresh air helps improve mood, reduces stress, provides for a more restful sleep, and increases productivity. Safety and quickness: Most cyclists travel ** to **mph, but an e-bike can average **mph. E-bikes allow you to get to your destination faster than a regular bike. E-bikes are not more dangerous than regular ...

3.1 the structure of the market

The number of companies that produce bicycles in the UK did not change considerably in the last few years, last year, there was a *,*% increase that brought the number back to where it was in ****.

Number of companies for UK SIC****: ****, Manufacture of bicycles and invalid carriages UK, ****-****, in number Office for National Statistics

Looking at the size of the companies we can see that the vast majority of them are very small, with less than * employees. The number of companies decreases as the dimention goes up, and there are no companies with more than *** employees.

  Number of enterprises for Standard Industrial Classification (***): ****, Manufacture of bicycles and invalid carriages, by employment size bands UK, ****, in number Office for National Statistics

3.2 The electric bike value chain

The e-bike value chain is composed of: the extraction of raw materials, production of intermediate products, munufacturing of the bikes, distribution and end customer delivery.

To better understand how the components of a bike are usually surced and what are the countries that provide them, let's look at an example. Pedago is a company based in California that produces elettric bicycles, to manufacture an "Element", their most affordable model, varius components are shipped from varius parts of the world. As explained earlier in the report, Asia is the where the majority of components come from, let's look at them in detail [***]:

Battery: China, South Korea LCD display: Nanjing & Suzhou, China Fork and frame: Taicang, China Brakes: Kunshan, China Kickstand: Taicang, China Motor: Suzhou, China Sprocket: Kunshan, China Tyres and rims: Kunshan, China Spokes: Jiande, China

As we can see, China is a supplier for all the components of an ebike, the problem with this supply chain is that, once the bike arrives to the end customer, it has already travelled it has already travelled thousands of miles through a global supply chain snarled by the pandemic.

3.3 Distribution channels

The distribution channels for e-bikes are both phisical and online. The physical channels still dominate the market, with a share in Europe of about **% [***]. 

Physical stores:

Elettric bikes are expensive, this is the reason why the vasto majority of buyers prefer to see the product in a shop before they buy it. The conventional distribution is made primarely of small retail stores spreaded across the country, It's estimated that the UK has around *.*** bike shops. The mosti important one is Halfords plc, with an estimated market share of **%, however, it's worth mentioning that, even for this historic retailer, online sales are becoming more and more important and last year they reached **% of the total revenues of the company.

Online sales as a share of total Halfords group revenue UK, ****-****, (***) Halfords

Online stores:

With online shoppong becoming more and more important it's worth taking a look at the main online shops for e-bikes in the UK, here are the most important ones:

Chain reaction cycles Leisure lakes bikes Tredz Wiggle Cycles UK Halfords

4.1 Typology of the offer

E-bikes can be classified in two ways: by type of throttle control and by use [***]. 

The first distintion in made between:

*) TYPE * E-Bike: Pedal Assist, is an electric bicycle on which you must pedal in order to use the motor. It's just like a conventional bicycle except that there's a motor that senses that you're pedaling and kicks in to aid the pedaling effort. It feels like you have the best tailwind of your life on a permanent basis. This class/type of E-bike may or may not have a throttle. (***)

Secondly, we can categorize e-bikes based on the primary use that they are made for:

*) Comfort / Cruiser: This category is designed for the casual recreational rider that wants comfort and control. Perfect for getting some exercise or running a quick errand to the store. This category comes with two frame styles, the traditional diamond shaped frame and the “Step Through” frame. The “Step Through” frame makes is very easy to get on and off the bike. No need to lift your leg high to get on and off the bike.

*) Hybrid / Commuter: This category is designed to go far and get there fast. Perfect for commuting to ...

4.2 Pricing

Electric bikes are farirly expensive, with prices of a new one that range between £*** and £**.***. The price depends mainly on the type of bike, battery characteristics and weight.

To get a broad view of the prices in ****, let's look at the most popular categories from one of the leading online tores in England, with some examples as well [***]:

4.3 New trends in the offer

The development of e-bikes doesn't focus a lot on the improvement of the engine, that has a power limit that is fixed by law and therefore cannot be improved, but is mainly concerned with improving the battery efficiency and weight. Recent developement in battery compositions and management systems promise huge improvements over the current industry standard, lithium-ion.

Zen Ebikes, in collaboration with Dahn Lab and Tesla, recently debuted findings on a new battery composition that has a better energy density and charge time than lithium-ion, all while approaching a theorical longevity of *** years. The technology should debut on Zen Ebikes next year. [***]

In addition to these new tecnologies, development of lithium-ion batteries has not yet been abbandoned, Panasonic will begin mass-producion of new lithium-ion batteries in ****. These new batteries could increase EV range by up to **% [***]

5.1 Regulatory framework UK

In the UK, you can ride an electric bike if you're ** or over, as long as it meets certain requirements. These electric bikes are known as "electrically assisted pedal cycles" (***). You do not need a licence to ride one and it does not need to be registred taxed or insured [***]. 

What counts as an EAPC:

The bike must have pedals that can be used to propel it The electric motor must have a maximum power of *** Watts The top speed of the bike should be under **.* mph An EAPC can have more than two wheels

Any other bike that does not meet the EAPC rules is classed as a motorcycle or moped and needs to be registred and taxed. You'll need a driving licence to ride one and you must wear a crash helmet.

Ebikes are the only electric vehicle without a purchase subsidy in the UK.

5.2 National Cycling strategies in Europe

A national cycling strategy is a multi-year plan that establishes a global vision aimed at coordinating policies, objectives and actions for cycling. It sets clear interventions, instruments and precise goals for the development of cycling at the national level. In short, a national cycling strategy ideally consolidates all policies taken at national level in support of cycling, thereby sending a political signal that cycling matters and that it should therefore be supported systematically by public authorities, businesses, academia and civil society organisations.

Here is the state of National cycling strategies in Europe:

6.1 Segmentation

The UK market can be devided between national manufacturer, which are just a few micro companies and big multinational producers.

UK manufacturers:

Multinationals:

• Volt Bikes Ltd
• Emu Electric Bikes
• BMW Mottorrad
• Mahindra & Mahindra
• Yamaha Motor
• Hero Electric
• HubUR