The electric revolution’s coming, and it’s on two wheels

The electric revolution’s coming, and it’s on two wheels

The Asia-Pacific region’s e-bike industry is ideally placed to be a driving force in the electric revolution globally
Tesla’s stock surged to record levels, Geely-owned Volvo announced an all-electric fleet by 2030 and Volkswagen AG publicised plans for six new battery plants by 2025. All these recent business headlines reflect the growing momentum of everything “e(lectric)-mobility”.1
Although intriguing, these developments represent only a fraction of a much bigger and more complex global equation, encompassing technical innovation, climate change, urban development, sustainability, government policies, change of consumer behaviour and much more. Electric cars may dominate the headlines, but they are not leading the transition to electric vehicles.
Why? Cost and infrastructure issues are still plaguing electric cars’ broad adoption. Instead, two-wheel vehicles like electric bicycles (e-bikes), electric scooters (e-scooters), electric motorcycles (e-motorcycles), and micro-mobility devices are leading the way.
When it comes to the number of vehicles on the road, electric twowheel vehicles are way ahead of their four-wheeled counterparts. It is not in the metropolises of North America or the major cities in Europe where electric vehicles are making the biggest headway – it is in Asia and more specifically, China. In the UK, there are some 140,000 electric vehicles today – quite a surge from just 3,500 in 2013, but in China, 22.7 million of them were sold in 2018 alone – more than in the rest of the world combined.2
The surge of e-bikes is going beyond China. India, Indonesia, Vietnam, Thailand and other Asian markets are embracing electric two wheelers at scale. While the rest of the world is taking their first steps to an electric vehicle future, Asia is already walking at pace. Extending from its already impressive base, the Asia-Pacific market for e-bikes is expected to grow at a CAGR of 10.1% between 2020 to 2027 and to reach US$10.26 billion by 2027.3
Figure 1: E-bike market – growth rate by region (2021-2026)
E-bike market growth rate by region
Source: Mordor 2020.
The other main growth area is Europe, with the Netherlands and Germany currently leading the charge. More than 40% of the bicycles sold in the Netherlands last year were electric. In Germany, a third of the 4.3 million new bicycles sold had a battery, according to the country’s industry association.4
An important consumer market, the Asia-Pacific region also is a production hub for e-bikes and related components, like battery cells and charging infrastructure.
Opportunities for investors
With major suppliers like Bosch, Liv Cycling (EnergyPak), Panasonic, Samsung SDI, and Shimano Inc. commanding more than 70% of the global market for e-bike battery packs, the segment is moderately consolidated. But there are still exciting opportunities for investors.
The e-bike battery pack market offers a dynamic growth outlook with a predicted compound annual growth rate of 13% for the five-year period ending in 2026. Commitments like Samsung SDI’s plan to invest US$1.15 billion into battery production capacities in Xian and Tianjin, China are testament to that potential.5
Closely connected to power cells is the market for charging equipment. The market is young, and its potential is largely untapped as yet. Critical areas like speed of charging to reduce vehicle downtime, improved convenience from wireless and on-demand mobile charging, more efficient charging through grid and renewables integration are some of the opportunities. Innovations in these areas are just beginning to emerge and their broad scope creates a highly diverse market with hundreds of competitors.
It should come as no surprise that, in addition to native players like Merida, Shimano or Samsung, international players are also strengthening their presence in the region. Bosch eBike Systems for example opened its new Asia-Pacific headquarters in Taichung, Taiwan in 2020. It is the latest milestone in a continually growing footprint in Asia-Pacific, after successful market entries in Australia, Japan and New Zealand within the last six years.6 Continental also has corporate offices in China, South Korea and Vietnam.
Companies which are successfully competing in the e-bike market already are enjoying the benefits. Giant Manufacturing, the US$4 billion Taiwanese group, saw revenue jump 55% year-on-year in June 2020. Accell, the US$730 million parent to brands such as Raleigh and Sparta, earned more than half its revenue from e-bikes last year.7
Other companies outside the core bike industry are taking note and trying to hop on the bandwagon. Traditional car and motorcycle manufacturers are among them.
General Motors (GM), Ford Motor Company in partnership with Pedego, Peugeot, Volkswagen, Ducati Motor Figure 1: E-bike market – growth rate by region (2021-2026) Source: Mordor 2020. Holding in partnership with Thok, all introduced e-bike offerings of some sort in the last two years. Jeep unveiled its efforts as part of a 2020 Super Bowl advertisement, the most expensive TV advertising time available in the US.8
The appeal goes beyond the immediate, established players within the mobility sector though. The technological advances brought about by e-bikes have given other industries, as well as private and institutional investors, food for thought.
The future of e-bikes
Where the bicycle’s design has arguably remained constrained to a dual triangle frame and a pair of wheels for most of its existence, the e-bike provides the opportunity to create a gadget which can build in software appeal and tech-ready hardware.
This explains the attraction for Foxconn Technology, the main assembler of Apple products, who has joined forces with a fellow Taiwanese hardware firm, Yageo Group, to delve further into electric vehicle production.9
It is part of the rationale as to why Groupe Bruxelles Lambert (GBL), which owns the lion’s share of Adidas, took a controlling stake in Canyon Bicycles in late 2020. Joining GBL as an investor is Tony Fadell, a former Apple executive, renowned for his work inventing the iPod and NEST (the temperaturecontrol device). One of Canyon’s most recent projects was a prototype for an “electric pedal car”, which was rumoured to now receive significant funding following the acquisition.10
Investors are betting on the continuation of this growth trend. Shares in Giant Manufacturing have risen 43% so far this year and are now valued at 26 times Daiwa Capital Markets’ forecast earnings for 2021. Shimano, the US$19 billion Japanese group which controls roughly half the global market for bicycle components, trades on a forward multiple of 35 times, according to Refinitiv data.11
In summary, the Asia-Pacific region is in a prime position to not only benefit from continued sales growth in the e-bike sector, but also harness significant investment and innovation. We’re looking forward to seeing where e-bikes will take investors in the coming years.
2 June 2021
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The electric revolution’s coming, and it’s on two wheels

1 Bloomberg, 2020.
2 Wired – KATIA MOSKVITCH, Mar 2019.
3 Data Bridge Market Research – Asia-Pacific E-Bike Market – Industry Trends and Forecast 2021 to 2027 – August 2020.
4 Reuters – E-bikes give the two-wheeled market a jolt – Peter Thal Larsen – July 2020.
5 Mordor Intelligence – E-BIKE BATTERY PACK MARKET – GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2021 – 2026) – 2020.
6, June 2020.
7 Reuters – E-bikes give the two-wheeled market a jolt – Peter Thal Larsen – July 2020.
8 Navigant Research – E-Bikes Offer New Revenue Opportunities for the Automotive Industry – Ryan Citron – 2020.
9 Forbes – Apple Contractor Foxconn Pushes Further Into Electric Vehicle Production – Ralph Jennings – October 2020.
10, January 2021.
11 Reuters – E-bikes give the two-wheeled market a jolt – Peter Thal Larsen – July 2020.

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The research and analysis included on this website has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed.

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