Electric Bikes

Key Business Issues

Following are the key business issues driving electric bikes

Factors Driving Market Up

Supply Side Issues

Government Encouragement for Sale:- US federal government and state governments are offering tax incentives for promoting sale of electric bikes. Also separate laws for electric bicycles separating them from conventional fuel motorbikes also acts as an encouragement as rules and regulations are comparatively easier form electric bikes segment

Availability of better battery and motors: Continuous research in power storage has led to tremendous improvement in power storage capacities. Although electric bikes concept is bit old, it was considered to be infeasible a decade back but now with advanced batteries available electric bikes are offering better value.

Demand Side Issues

Increasing Gasoline Costs: Gasoline costs have substantially increased in last few years forcing US consumers to look for other options.

Factors Slowing Market

Supply Side Factors

Quality Issues: Most of the electric bikes in US are imported from China have quality problems which although is keeping cost low but critical failures is damping spirit amongst potential consumers

Demand Side Factors

High cost compared to value: Electric bikes are perceived to have high costs compared to value offered by them. Costs are high because 750 watts (Average power) requires an expensive motor and a large battery raising cost.

Car-centric US population: US consumers would always prefer a car to travel to even nearby destination, making it difficult for electric bike companies to market their product

Difficult Maintenance: Maintenance is difficult due to service on electric bikes is hard to obtain.

Reluctant Insurance companies: Insurance companies are reluctant to insure electric bike companies due to large number of lawsuits faced by them.

Source: i) Circuit breakers

ii) Electric Bikes: Legal Issues

iii) Electric Bike faces long road

Investing Activities

Sr. No	Company	Capital Raised	Date	Investors	Type of Investors	Details
2	Brammo	$28 m	26th Oct 2011	Polaris	Strategic Investor	Move estbalished Polaris, a powersports manufacturer as business partner of Brammo. Deals allows Polaris numerous exciting opportunities to pair Brammo’s proven electric drive train technology with Polaris’s proven powersports products
3	Zero Motorcycles	$17 m	17th March 2011	Invus LP	Venture Capitalist	Capital is expected to go towards expanding the Zero’s U.S. operations, primarily, and towards expanding the company’s global sales efforts, research and development
1	Zap Power Systems	$2.5 m	-	General Public	General Public	Inestors are loyal customers who invested in this socially responsible company. A company newsletter and web site was used to pitch the deal, which took a year to complete.

Partnership Activities

Sr. No	Entity 1	Entity 2	Date	Details
1	Cosworth	Storck	17th January 2011	Cosworth Group will be focusing on a number of aspects of the electric bike, including making the bike’s electric engine lighter, more powerful and more efficient. This process will draw on technologies that have been developed by Cosworth Group for a range of industries including Formula One motorsport.
2	Brammo	Polaris	26th October 2011	Brammo has signed a strategic partnership with Polaris, allowing brands to strengthen their presence in the market of electric recreational vehicles (powersports) and combine their technological expertise on batteries and drivetrain.

Value Chain of Electric Bike