About 6 years ago, a prominent bicycle industry peer used to hold the number two rank behind Dahon for number of folding bikes shipped annually in the USA. His line consisted of factory direct, mid-tier, stylish folding bikes. Like many other niche bicycles, his main sales markets were in the “Keystone 6.”
The Keystone 6 consists of NYC, Southern Florida, So Cal, The Bay Area, Portland and Seattle. Of course, Wisconsin, Chicago, Colorado and parts of Texas are also good markets in the bicycle industry but are not really strong for urban folding bikes. NYC seemed liked the perfect sales market for affordable folding bikes. New York’s flat grid city layout is perfect for small wheels, a high bicycle theft rate and small apartment size all allowed his folding bike business to flourish.
That was until the Big Apple’s bike sharing program rolled out in full force. In NYC where docking stations are everywhere, share bikes just start to make a lot of sense for commuters, tourists and day trippers. Gone are the maintenance, theft and storage issues associated with traditional bicycle ownership.
Fast forward to present day and Share Bikes are in all of the “Keystone 6” markets. Whether they are the docked or the dock-less drop type. These share bikes have historically been co-op city funded docking station types but a new breed of electric drop bikes are popping up everywhere. Basically, they are electric share bikes with no docking station that you can order on demand via mobile apps.
These electric drop bikes will most likely cut into mid-tier ebike sales much like regular docked bike sharing did to retail folding bike sales. The math also seems to make consumer sense too:
- Electric share bikes cost $3~4/ hour to rent on average
- A modern, well maintained e-bike battery lasts 500-600 good charge cycles (let’s just roughly estimate that an average charge cycle is about an hour of use)
- That’s $1500-2400 equivalent in retail cost for a good, mid-tier premium e-bike (without all the maintenance costs, charging, storage and theft issues.)
While it makes consumer sense to use urban electric bike sharing, are investors going to make an enough to turn a profit? Time will only tell…