This is a scary time for all of us in the bicycle and ebike industry.
While politicians blather about returning production to the USA, and create tariffs that jack up prices of what we sell … most of us know that it would take decades to return such production to the USA, and even if we did so, the prices of USA product would not compete with bikes built in Asia or Mexico.
I once calculated that we need about 70 different industries to rise up and be commercially successful before we can truly build bikes here. Everything from packaging to making spokes. Cutting, prepping and welding tubes, and then painting them. Cast and forged parts for mechanical part such as derailleurs and brakes. None of this would happen fast.
For ebikes, we have even bigger challenges. It takes years for a plant that makes cells for large format lithium batteries to go from green field to good product at a price we can support in our industry.
Motors are another product that would take a long time to get into the right level of production and price. And the current situation with rare earth materials, a key material for today’s fractional horsepower traction motors is still controlled mostly by China. (That is another story.)
For nearly 80 years, the world bicycle industry (heavily influenced by and led by American brands) has pursued a basic strategy: Make basically the same product, but keep finding ways to keep the prices low, usually by shifting to low wage rate areas for production, and accepting narrow margins. We continue to do this by seeking low tariff sources.
Yes, there are exceptions. But the bulk of consumer product, bicycle or ebike, is offered with low price as the sales driver. IBD product is, to
A degree, an exception. But we are not the bulk of the sales.
And the prices have been amazing. I could write another thousand words about the amazing value that is offered by bicycle makers and brands world wide. But the current business model is not conducive to shifting production to start up suppliers and high wage rate workers in USA.
When I look in my crystal ball, cloudy as it is from 50 plus years of use, I see these scenarios:
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- The world and USA economy and political situation returns to something resembling 2023-4, and we carry on as usual. Frankly, I do not think that will happen. The system is broken, and that means we have an opportunity to create something better. We will do so.
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- Radical new technologies reshape the supply chain. Printed parts, printed bikes, local production to individual orders maybe. Attractive idea, but I do not think it is going to be priced right any time soon.
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- Radical new technologies part 2: For ebikes, new and successful energy storage devices (today we use batteries…). New and successful motors that do not need the same manufacturing and materials infrastructure as current product. Again, I do not think this will happen quickly. In the best of times, a new motor factory took years to get running. Battery plants even longer.
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- And the last one on this list takes some explanation and context:
When I was a young bike mechanic, the shops I worked for made most of their profits from the service department. The bikes of the ’60s and ’70s needed 30-, 60-, 90-day checkups. Tires, paint, chains, cables needed attention. If a bike was used much, it was in the shop constantly. (Most bikes were used by children.) An adult on a bicycle was regarded as odd. And most bikes could not really endure constant use as commuters or competitive machines. (A flashback memory: Campagnolo used an advertising slogan at that time: “To Win The Race, You must Finish The Race.”) Then, in the mid-’70s, Asian product started arriving that was much more durable and worked straight out of the box. (A bike that was assembled in 15 minutes! Instead 45 or more.) Service work suffered. By the ’80s, most shops depended on complete bike sales (Thank you Triathlons and MTB riders! Adults became our best customers. Children’s bikes were relegated to mass merchant. Service work existed, but not like it used to. At this point, reader, you are thinking that I am going to pitch a return to a service-focused shop. Yes, sort of. But I have some insight that may be new. Keep reading.
Sustainability as a marketable virtue. Access to Service affecting Competitive Pressures for brands.
We are all aware that a bike that we repair carries no tariffs. And the action of keeping it in service is an action that fosters sustainability. This is a price advantage for our customer, and easy to make a profit on. As well as being good for the planet.
We are all aware that satisfactory quality, complete bikes, are now shipped direct to consumers and that hurts our complete bike sales.
Maybe we are not all aware of how grim the after sales service access looks to the brands that are shipping direct to consumers.
Ebikes need more service. They need more explanation on how they work, they wear out parts (they are ridden more miles) and eventually they need major big ticket replacement of the battery. This is especially true for D2C bikes.
At eCycleElectric, we are often asked how a brand, sometimes new to USA market, sometimes not, can handle the myriad of customer issues ranging from minor repairs to consumers wanting a refund on bikes that really have nothing wrong with them.
Too many IBDs refuse to service or look at bikes they did not sell. And handling a problem over the phone is very frustrating for all involved. Truck-based mechanics are a high-priced solution, and not found everywhere. A speedy refund is a profit disaster.
This reminds me of the common attitude among shops in my youth towards Huffy, Murray, etc. Those bikes were inexpensive, but not very reliable or durable. Shops would refuse that customer, sometimes rudely.
So I have a simple recommendation to the IBDs: Stop That!
Embrace service work. Charge what you think you need. But do not refuse service. Do not denigrate brands that you do not sell; just price the work appropriately. You can make more money this way than by selling the bikes.
If you think the bike is not something that you can, or want to service, then it is a sales opportunity. Explain the issues to the customer and lead them to a bike that you can sell them that will suit them batter.
If your service team resists this idea… know it is a common problem and engage your leadership skills. Usually, they are hesitant because they do not know how to work on the bikes, or the parts are not quickly available.
(The USA badly needs a central source for ebike parts. We will have one sooner or later. )
Training is available now. Specifically for bicycle mechanics to learn to understand and work on ebikes. https://levassociation.com/
The way we did things has ended. But Our Future is Bright. We are champions of sustainability, human mobility, and we are needed for the future of personal transportation. ,