Jack Denton and Lina Saigol
Venture-capital firms are pouring money into e-bike and e-scooter startups, as the pandemic and social distancing measures escalate the popularity of urban mobility to help consumers and workers get around town.
Consulting firm Deloitte estimated in a report last year that the number of e-bikes in circulation world-wide should reach 300 million by 2023—a 50% increase over 2019’s 200 million.
Numbers like these have attracted an array of venture capitalists to the sector, which is highly fragmented compared with the consolidated pushbike business, making it ripe for investment.
European VCs poured $165 million into e-bikes in 2019 and 2020, more than the previous four years combined, according to data from PitchBook.
The influx of cash comes as consumers and key workers are increasingly turning to bicycles, e-bikes and scooters as travel restrictions on public transport remain in place.
Many countries across Europe have fully embraced electric bikes. In Germany, sales rose by 36% to nearly one million units in 2018. Almost a million more were sold in Germany in the first half of 2019, while more than half of all adult bikes sold in the Netherlands in 2018 were electric.
Analysts at CMC Markets say the e-bike ecosystem is also benefiting from the boom. Thule /zigman2/quotes/202980109/delayed SE:THULE +0.93% , a Swedish company, is seeing stronger demand for the heavier bike racks that e-bikes require, while London-listed security group G4S /zigman2/quotes/202248409/delayed UK:GFS -0.04% has experienced growth in its tracking systems for e-bikes.
Increased use of both e-bikes and traditional bicycles has been boosted by major infrastructure improvements across cities in Europe, including London and Berlin, which have all invested significantly to support alternative mobility solutions for consumers.
In April, at the height of the pandemic, Paris said it would create 650 kilometers of cycleways in the French capital and its surrounding areas, and said it would keep several open after the crisis has passed.
The pandemic has also accelerated the trend for traditional pushbikes. Bike shops around the world reportedly sold out of their goods at the peak of the pandemic.
Halfords /zigman2/quotes/202992596/delayed UK:HFD +0.34% , a major British bicycle retailer, took a hit from the pandemic but saw its bicycle business surge 59% on a like-for-like basis in the 20 weeks to August 21, with cycling services up 18% in the same period. The company noted that its electric bikes and scooters were up 230% year-over-year.
In August, Giant /zigman2/quotes/207062034/delayed TW:9921 +1.74% , the world’s largest bicycle manufacturer and based in Taiwan, opened a new plant in Hungary that it expects to produce 300,000 units next year. It plans to add a second production line in September, with e-bike production starting in the spring of 2021.
Although sales at Shimano /zigman2/quotes/200116166/delayed SHMDF -3.28% , which makes about 70% of the world’s bicycle gears and brakes, decreased by 12% in the first half of 2020 compared with 2019, its stock price is up 23% year-to-date on expectations of rising demand for its products.