eBikes Shortage Everywhere- What’s going on?
The world during and post-pandemic have changed how we travel locally for our daily needs. The buzz word “social-distancing” consciously or subconsciously reminds us to stay socially distanced from other people in public transport.
The quest for a safer, sustainable, and healthier solution has led to more and more people using traditional modes of transportation like an electric bicycle (and bicycle). This has translated into an unprecedented increase in demand for electric and non-electric bicycles.
The scarcity of bike inventory/stock is caused by 3 main factors:
Massive surge in electric and non-electric bike demand
According to the market research firm NPD Group, sales of e-bikes grew 145 per cent in 2020 compared to 2019, outpacing sales of all bikes which were up 65 per cent.
Europe is leading the way in terms of the usage of electric bikes and essentially, setting the trend for the rest of the world. Growth forecasts indicate the number of e-bikes sold each year in Europe could go from 3.7 million in 2019 to 17 million by 2030 which means twice as many bikes as cars will be bought each year by 2030.
Australia is not far behind and catching up on the usage of e-bikes fast. The total import of electric bicycles grew more than 56% in the year 2019/20 as compared to 2018/19 and it is expected to double the number for the year 2020-21.
Such a massive spike in demand around the world was not expected and the factories are not prepared to handle it. Moreover, e-bike sales are not eroding the sales of traditional bicycles, showing that the e-bike market is not a zero-sum game.
Components inter-dependency bottleneck
Due to the sudden increase in demand, the bike industry is experiencing acute shortages in inventory supply. Historically, there was on average lead times of 45-60 for the key components; however, with demand continuing to outstrip supply, lead times have ballooned on the key components from 45-60 days up to more than 300-400 days. The stock levels at local stores are dangerously low and customers are having to wait for a long time to buy.
A typical electric bike may have 200-250 different components sourced from different vendors so if one of them has a lead time of 400 days, that means a huge delay in production.
The fear of running out of stock is real and causing the e-Bike industry to place orders 12 to 24 months in advance to secure the future supply. This hoarding of future orders by major brands unnecessarily is making the situation worse for smaller brands to secure their inventory.
Reduced factory capacity coupled with no new major capacity addition
The factories around the world are operating at reduced capacity with less staff than usual to keep their employees safe. Moreover, since bike sales were stable for many years; manufacturers of major components like Shimano, Tektro etc. did not invest in new capacity addition to their current production capacity so as to enable balance in the market. Although some of the component manufacturers have increased their efficiency by 10 to 15%, they are still waiting for a significant investment.
Based on past market dips, the major components manufacturers are reluctant to invest in additional capacity. The investment in new capacity takes years before it’s operational and the factories are waiting to see if they should add new capacity and how much to avoid redundant capacity. There is a bit of a catch-22 situation here.
To meet the growing demand in the coming years we need component suppliers to invest in extra capacity to produce more critical components and products as soon as possible.
Now the question is when this situation is going to be back to normal?
At the moment, demand is almost growing as much as twice the current factories production capacity. Although manufacturers are increasing the efficiency and planning for new capacity addition, It could take at least 12-24 months for the cycling industry to fully recover, catch up with demand and build back up inventory supply.
Till then we need to live with this hard reality and be ready to wait to buy a bike of our choice.
This article is brought to you by Moov8:
Moov8 is Australian owned and operated electric personal mobility vehicle company. We develop premium next-generation reliable Electric Bikes, Scooters and Trotter MAGWheel made to Australian Standards.
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Learn more about moov8 by visiting https://moov8.com.au/