Pedelec and E-Bike Test
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Disruption of EU pedelec market by corona 4 to 40 million annual sales

What can we learn from past corona virus pandemic? 40 million pedelecs annualy by 2026 season in Europe?


Hannes Neupert, President Director informs on Corona as accelerator of the European pedelec industry: Express chance opens up for newcomers!

Since early summer, most bike dealers all over Europe are sold out of their stocks of all products, which are good for commuting and daily cycling, like pedelecs, city bikes, bags and helmets.
Strong growth in repairs and wearing parts occurred due to the wish of many consumers to make their bike street ready again.
This triggered long waiting times in many stores due to unavailable service capacities.
Even getting a flat tire fixed could take weeks…
The pandemic caused the pedelec market to expand and fueled an extraordinary rapid growth in the market demand.
The existing sales alone will result in a more than tenfold increase in market sales over the next few years.
Nothing new – we can learn from earlier SARS corona pandemic experiences from 2002/03 in China.

What we can learn from past corona virus pandemic
The industry has seen a virus-induced Light Electric Vehicle boom before.
In 2002/03, the Asian SARS corona pandemic caused an electric two-wheeler sell-out in China.
Within just 3 years the sales numbers doubled from 1,6 million annual sales, which have been supplied dominantly by the 4 market leaders of that time (all historically grown bicycle makers) to about 6,7 million by 2004.
The majority of the 6,7 million units has been delivered by newcomers, which have not been visible in the market before and never cared about making and selling mechanical bicycles.
These newcomers have been players completely focused on the mission of making and selling electric two-wheelers that fulfill customer wishes and expectations.
Each company that had the capacity to deliver bikes with even only mediocre quality has been able to sell all available quantities.
This has been a “production hell” for most of the manufacturers and a lot of trouble had to be overcome.

Most of the newcomers from 2002-2004 are, today still the dominant market players making and selling 4 - 10 million units each annually.
The extreme growth in the market has surpassed everything the bicycle industry has seen before.
Between 2004 and 2005 the market numbers doubled again from 6,7 million units to 12 million units of annually sold vehicles in the Chinese market.
This extreme growth just happened a bit delayed due to the fact that the start ups making them have taken some time to establish the production capacities capable of producing these numbers.
The next doubling of the market has taken 4 years – just by 2009 the annual sales have reached 23,7 million units a year.
And the number of 40 million annual sales has been reached by 2019.
But the end of growth is, most likely, still not reached since technology and performance improvements are still triggering the market growth by providing more value for money and opening up more use cases.
The widespread use of sharing electric bicycles and electric scooters accelerated the market growth in the last few years.

What can we learn from China market development?
Corona SARS 2002/2003 pandemic transformed an existing electric two-wheeler market from the early adaptor consumers to the early majority consumers.
Thus, pedelec riding transformed to a normal means of transport.

Existing “heritage bicycle makers” lost their leading market position due to their missing vision of the potential of an extreme market growth to newcomers who believed in the light electric mobility market potential and took the chance to swiftly adopt to the market demand. 

Market growth was limited by the supplier’s capacity to deliver not by customers readiness to buy such vehicles.

Customer acceptance was triggered by the pandemic, which caused by the massive transition from public transport to individual electric two-wheeler mode of transport.
The motivation to invest in an electric two-wheeler for most buyers was, at that time, to avoid the risk of exposure to infection in public transport.
Equal motives cause todays rise of sales of pedelecs in Europe. 

After the end of the pandemic 2003/04 the market continued to grow and double several times until today.
And there is no indication that growth will not double again in the years to come – the pandemic 2002/03 was just an accelerating catalyzer for the general society, to understand and accept this mode of transport.

40 Million pedelecs annualy by 2026 season in Europe? estimates similar growth pattern as experienced in China 18 years ago.
But the growth potential in Europe might be even bigger and faster, as experienced in China in the past!
Currently it seems that the only limiting factor for further sales increase is the staggering supply.
Although, manufacturers started to assemble bikes in multi-shift operations and suppliers ramped up productions demand clearly outstrips supply and there are few indications that this situation may improve soon.
Despite the fact that the main industry events, like Eurobike Trade Show Friedrichshafen have been canceled or delayed in 2020, manufacturers report full order books for 2021 much earlier than in the past years.
Shortage of all components from lamps to tires will limit production, but exceptionally high capacity utilization concerns the suppliers of key component such as internal gear hubs and electric bike components.

The fact that the whole industry has similar supply-chain processes and a joint vendor pool does not improve the situation.
Current winners are the companies with extensive cash flow, long-term purchasing and optimistic pre-orders.
Their deliveries are secured in massive volume, and they will be able to produce and sell next year and probably achieve a two digit growth rates.

The 2 weeks house show of ZEG at Cologne that ended on 23rd of August 2020 has delivered a glimpse of the radically changed market.
Some makers like KTM bicycles have already sold out their 2021 production capacity upfront to the show, and some dealers reported that they just got their last 2019 models with an extreme delay in August 2020.
Some makers announced that they are trying to ship first 2021 models by October 2020.
It is a matter of fact that the idea of the bicycle season model is completely mixed up – and it might be the right time to change this pattern to non-seasonal supply strategy, like the automotive industry that has continuous supply of models for a few years until the next product face-lift is announced. 

This recent supply-chain crisis presents an exceptional opportunity for new market entrants.
We already have had some new players which have grabbed market shares from the established “heritage bicycle brands”. Like in the Netherlands where companies like Cortina, Stella and Amslod have grabbed massive market numbers in just a few years – and even further, secured a dominant position in some segments.
From the perspective of the established brands those companies came out of nowhere.
Further, those newcomers do not work according to the established patterns, like the common industry-practice to sell products through the bicycle dealer network or having annual completely new model ranges.

In the last decades European bicycle leaders commonly have stated that the electric bicycle is a niche product, and every year their sales estimate has been proven wrong.
Even this year the head of the largest pedelec sales network in Europe ZEG Mr. Honkomp was cited in Bike Europe “2021 will not be as good as 2020, it can’t be,” concludes Honkomp. „In fact, I think we will have a good situation for the next 5 years”

Mr. Honkomp seems not to share the vision that pedelec sales are still in the infant stage and most oft he market acceptance is still down the road to be developed.
He is one of the brightest minds in the industry and has a proven success record over the last decades.
But for the market estimation of pedelecs, I do believe that he is still too much referencing to the experience gained by selling muscle-powered bicycles, not accepting that the potential of the pedelec is multiple compared to the muscle-powered only cycle.
Or he is smart and does not share his real growth expectation with other market players and the press.
Sales numbers could easily be tenfold and higher than the muscle-powered ones, as the benefits of a pedelec is already well understood by riders that have experience with pedelecs.
To attract users with no prior pedelec experience it just needs low entry barriers to trigger a first test ride that leads in almost evey case to regular pedelec usage.
The two grand ladies of the bicycle industry KTM bicycle owner Mrs. Carol Urkauf-Chen and Mrs. Susi Puello (former Winora/Accell Germany leader today leading Pexco) have both pioneered electric mountain bikes - but both have not imagined at the beginning, that it would be so much changing the industry in such a short period of time.

Such point of view resembles the situation of the „heritage bicycle makers“ in China in 2002/03 when the market was accelerated by the pandemic.
The same situation we are facing now in Europe: The moment for new players to take over market shares and turn the market upside down has come.

The market chance in Europa and many other locations in the world for newcomers is now
A chance to bypass the present component scarcity would be to pull a high degree of vertical integration of the value chain in-house.
Starting from an own drive system development to a user-experience optimized distribution channel, there are multiple opportunities to disrupt the market with new processes and product offerings.
Dutch „Stella Fietsen“ Company for instance, developed within 10 years from a newcomer to the market innovator and leader in the category of electric bicycles in the Netherlands. They tailored their distribution channel and value proposition to the needs of their target customer: Online orders, testing of the product at home and long-term guarantee are only some of the services Stella has managed to distinguish itself from their competitors – with success.

Other aspects of the current pedelec industry practice invite for a distinctive approach.
A slimmed and optimized product portfolio offers the opportunity to streamline production processes, and therefore, limit the sources of potential errors in production.
Industrialization and automatization of the pedelec production improves efficiency and allows economic savings of the retail price.
27 years ago German bike brand CUBE took a similar approach.
They started their production flow according to the industry production experience gained in the area of chair manufacturing.
Today CUBE is market leader in several European countries in the middle and premium mountain bike and road bike segments, according to their own information and by far the largest producer of pedelecs and mechanical bicycles in Germany.

When observing the pedelec industry in Europe, it is obvious that new players are the ones that benefit from the current situation: Large budgets on product development and marketing create great advantages for newcomers.
Those striving new players, which work hard on fulfilling customer wishes are able to actually ship products, despite the fact that their competitors, the “heritage bike makers” may already be sold out for months to come.
One example is the Amsterdam based company which has lately attracted 20 million Euro capital for expansion of their business and is completely focusing on two models which are exceptional from customer experience, sales method, price tag and USP’s.

A glimpse of what is going to happen can be found as well when browsing adverts of recruiters.
For instance the Amsterdam based shared mobility startup, which has 50 million Euro of capital on hand, currently searches for a pedelec development manager.

The potential industry disruptor who is now in the starting blocks, aims at sales numbers in the millions for the next 2-3 years.
The newcomer is a market leader in motor controller for two-wheeler, thus, having core competency in production, electronic components and software.
Their business strategy aims to integrate all core activities of the value chain to gain a clear competitive advantage and supplier independency.
As a result, the company wants to offer a pedelec with great product features for an extremely competitive price, delivering exceptional user-experience.

Currently the company is setting up production in Germany State of North Rhine Westphalia looking for talents to form their core team.
The plant manger job posting describes the company background and market entry strategy:

These are just some of the chances to be part of the ongoing disruption of the market to unfold in the next few years and help to reshape the market in a way, which will enable all 750 million Europeans to end up cycling on their pedelec to a happier, healthier and more sustainable mobility future.
Considering the tough times in most companies in the automotive industry supply chain and the sluggish behavior of most suppliers in the automotive industry to take the chance in the non-automotive world, talents with a vision on future mobility might migrate to the rising stars and disruptors of the LEV industry.
The growth and innovation wave to come is expected to be much bigger than what was triggered 18 years ago in China since the technology available today is much more advanced in so many areas and further, distinct sales models are available as well today, thanks to the mobile internet and pay by use options.
Considering that pedelec use might be paid per ride and even get reimbursed for the health and society benefits created by riding it - who of the 750 million Europeans would not change his mode of transport?
Copy: Hannes Neupert
Translation: Anke Torkuhl
Online publication: Angela Budde
12th September 2020



7 - 12 September 2021, IAA, Munich, Testtrack

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