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Li-ion Segment Driving Global E-Bike Growth

Ryan CitronElectric bicycles (e-bikes) continue to be the highest selling electric vehicle (EV) on the planet, with nearly 35 million unit sales forecast for 2016. Improving lithium ion (Li-ion) battery technology is resulting in e-bikes that are lighter, lower in cost, and remarkably similar to traditional bicycles. Additionally, increasing urbanization and a desire to move away from cars for motorized transportation are opening up more opportunities for alternative mobility devices. E-bikes are uniquely positioned to be a primary benefactor of this trend since they are low in cost relative to cars, do not require licensing, and can take advantage of existing bicycling infrastructure.

Barriers to market entry have been reduced over the past several years. Thus, crowdfunded startups such as Sondors, which offers a $499 Li-ion e-bike, have contributed to increased competition in the marketplace. These crowdfunded companies are taking advantage of maturing e-bike components in order to lower sales prices and improve performance.

Movement to Li-Ion Increasing Sales

The global e-bike market is well-positioned for growth, primarily in the Li-ion battery segment. Sealed lead-acid (SLA) batteries continue to represent the largest segment of e-bike sales due to their low cost and popularity in China. However, Navigant Research expects annual e-bike sales with SLA batteries to decrease significantly in most regions over the next 10 years—particularly in China, as the country moves to quickly transition over to the higher-performing and more environmentally conducive Li-ion chemistry. Countries such as Germany and the Netherlands are also poised to significantly increase adoption of Li-ion.

Percentage of E-Bike Sales with Li-Ion Batteries, World Markets: 2016-2025

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Opportunities in the global e-bike market are characterized by the split between e-bikes with SLA versus Li-ion batteries. The SLA e-bike market is expected to experience a -4.7% compound annual growth rate (CAGR), whereas the Li-ion segment of the e-bike market is expected to grow at an 11.4% CAGR and represent where the bulk of growth and opportunities for the present and future are. The environmental and performance advantages of Li-ion over SLA position the technology to become the global mainstream battery for e-bikes in the future.

Sales in China to Decline, Growth Expected in Other Markets

Overall annual sales of e-bikes in China, the world’s largest market, are expected to decline due to market saturation and new bans on e-bike use in large areas of major cities such as Beijing, Shenzhen, Shanghai, and Guangzhou. Yet, the Li-ion e-bike market in China is expected to grow considerably over the next decade due to strong government support for the technology and decreasing Li-ion battery costs. According to Bike Europe, the Chinese government has outlined plans to transition toward Li-ion-powered
e-bikes representing one-third of the industry (or roughly 10 million unit sales) by 2019. While Navigant Research assesses this goal to be overly optimistic (having forecast that China is expected to reach the one-third Li-ion mark by 2022), it is nevertheless indicative of the overall market direction in the country.

Annual E-Bike Sales, China and the Rest of the World: 2016-2025

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Western Europe continues to achieve steady and significant growth in e-bike sales, with Germany alone accounting for 535,000 unit sales in 2015 (compared to 480,000 in 2014 and 410,000 in 2013). During the next 10 years, e-bikes in the region are expected to evolve from a specialty commuting or recreation device to a standard bicycle form that is accessible to nearly all bicycle consumers.

The North American e-bike market was relatively flat in 2015, largely due to low gasoline prices and consumer awareness, combined with relatively poor bicycling infrastructure. In addition, several lower-priced models were discontinued as brands in the market transition toward higher-quality products. The evolution of the North American market is highlighted by the trend from lower-priced e-bikes to high-quality and high-performance electric mobility devices.

Nevertheless, the United States still has strong potential due to its enormous bicycle market (roughly 16 million per year)—just a 5% penetration rate would result in impressive e-bike sales figures. Navigant Research forecasts e-bike market share of the total bicycle market in the U.S. to rise from 0.8% in 2016 to 2.4% by 2025

Overall, the global e-bike market is projected to grow at a 0.4% compound annual growth rate (CAGR) over Navigant Research’s forecast period (2016-2025). This slow-growing CAGR is expected to be largely due to China’s anticipated decline in annual unit sales (-0.8% CAGR).

However, excluding China, the global e-bike market is forecast to achieve strong growth—rising from 3.3 million annual unit sales in 2016 to nearly 6.8 million units by 2025 at an 8.2% CAGR. The bulk of this growth is expected to occur in Western Europe and other markets in Asia Pacific such as Japan and Vietnam.

E-Bike Market Share of Total Bicycle Market by Country, Select Markets: 2016-2025

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Continued Investment Expected

The global e-bike market is expected to be a strong area for investment. E-bike sales are anticipated to generate over $15.7 billion in revenue globally in 2016 and grow to a $24.4 billion market by 2025. Several established key markets are projected to expand and numerous emerging markets are expected to develop more robust sales and revenue streams.

In markets around the world, increasing urbanization and a desire to move away from cars for motorized transportation are creating more opportunities for alternative mobility devices. E-bikes are unique mobility devices since they are low in cost, have no licensing requirements, and can utilize existing infrastructure. Improvements in Li-ion energy density and decreases in battery pack costs are expected to position e-bikes even more firmly as a primary technology that will be increasingly utilized as an alternative mode of transportation to cars.

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