Year: 2022

What’s the deal with Rad Power Bikes?

Posted on By Pierre No Comments on What’s the deal with Rad Power Bikes?
Brands, Business

With sales figures that compare with the whole US market, the company quickly claimed the title of leader in its market.
What makes the brand so successful in a market where customers have trouble making the difference between all the offers available?

Rad Power who?

Often, when I mention Rad Power, I get big, interrogative, looks. Truth is the brand name often rings no bell, even amongst the E-Bike aficionados, and especially in Europe.
Thing is, they own the title of the most funded E-Bike company in the world, with a total $329 million in investments since it was created, and a last round of $154 million. The second most funded company is a Dutch one, VanMoof, with $189 million received as investment overall.
But those two companies could not be more different. When VanMoof worked at making its bikes as different as possible from the competition, Rad Power did little in terms of feature, distribution, or, let’s be honest, design.

How big are they?

Pretty big. credit: radpowerbikes.com

In October 2021, when they raised their last round, Rad Power claimed more than 350 000 customers. Note: customers, not Bikes, or, for that matter “Unique E-Bike customers”.
They also said they made more than $100M in revenue in 2019 (so even before the pandemic hit).
To give you a bit of perspective, the whole US market of E-Bikes in 2021 was around 790 000 bikes sold (yes, as many as Germany last year).
Of course, the Data person in me will start with a series of questions:

  • Where does the data come from ?
  • Is it reliable ?
  • What’s the time period?
  • Why do they say customers and not bikes?
  • What’s the part of US sales vs Europe (or the rest of the world)?

If we only assume that their growth matched the market over the last 4 years, 2021 must have represented around 40% of their all time sales, that means around 150 000 bikes sold, or 37% of the US market in 2021.
That seems a bit much, even taking into account the possible sales they made through their B2B channel.
Nevertheless, and even taking those numbers carefully, they are one of the major E-bikes manufacturers in the US, and certainly the biggest “e-pure-player” (by opposition to big groups like Giant or Pon who also offer non E-bikes).
They also have a staff of more than 700 people, comprable with VanMoof’s 600 people staff.

How are they different?

They’re not, really.
Indeed, the bikes, made mostly in China and Taïwan (but very likely only for the top of the range) and mostly distributed online, seem to offer very little differentiation compared to, again, their European counterpart, VanMoof.
But the bikes have one major advantage: they just work.
The brand seems to have put all its energy providing a reliable, inexpensive, non disruptive experience.
They offer 11 bikes, from a bit less than 1000€ to just under 2000€ for their “All-Road” model.
They even offer a cargo bike (more exactly a long-tail bike) for 1899€.

1899€ “cargo” bike

So it’s all about the value for money?

Well, yes and no.
If we take their cheapest bike, the RadMission, There are a lot of bikes out there very comparable:

  • Aluminium frame made in China
  • Single gear
  • Mechanical brakes
  • Kenda tires
  • Non-differentiating design and geometry

To us, those bikes are different only for 3 reasons

  • A high-quality 504Wh battery (when most competitors, at that price point, offer a 418Wh battery, best case scenario)
  • A cadence sensor
  • Dozens of accessories to customize your bike without the struggle of finding the rack that will work “with that version of the stem on that generation of bike…”

And also the brake lights, also known as the Boomers’ special feature.
Bottom line is: they’re good enough, and the “big” battery is a real plus to make the experience good for customers, and create a positive word of mouth.

But what seems to make the brand very different, is somewhere else: it’s the way they tackle problems to make things happen for their customers, no matter what. 2 examples:

Can they make more premium bikes?

That seems to be a good plan.
Here is why:

  • The new funding round will have an impact on how they manage their performance ratios, and it’s always better to sell one 3000€ bike than three 1000€ bikes.
  • The hard part is to make people start riding bikes. When that’s done, the price barrier tends to go further up (see the average price of bikes sold in Germany or the Netherland).
  • They’ve already increased their prices in December, right after the funding happened. It may have been part of the deal.
  • They plan to enter the European market, already much more mature than the US.

And here is how:

  • They’re going to open 5 stores in 2022 (Vs 5 as of April 2022). And they will discontinue the mobile service at the same time.
  • Focus the production with high quality partner (maybe produce more in Taïwan than in China)
  • Their top range (~2000€ bikes) is not MUCH cheaper than the competition, but at that price you can get a Long Tail bike or a pretty versatile off-road bike. They can use the experience on that segment to build, for example, a real cargo bike, with a lot of customization.
  • It’s in their DNA: offer even more options that add-up in terms of $: more services, features, options, accessories…

Europeans might not realize it at first, but we’re definitely going to see more Rad Power Bikes in the streets very soon.

Why is Germany so good at bike commuting?

Posted on By Pierre 1 Comment on Why is Germany so good at bike commuting?
Analysis, Market Data

Hint : It’s not only about the post-war policies.
So why is it with German cities that makes them so good when it comes to bike commuting ?

Classic German commuter on his way to work

It’s all about dense-city (…)

Germany’s structure as a federal state has some inconveniences. Much more paperwork can be needed when you have lived across states and you decide to move to France, for example (completely hypothetical scenario).

But it has a lot of advantages. Among them, the fact that secondary cities are not, actually, that secondary, allows for certain redistribution of power.
On the opposite side of the spectrum, France, for example, has taken away a lot of interest in its secondary city to make the Paris area more attractive. Universities, jobs, transportation : for most people in their 20s, living in Paris is an obvious choice.

In Germany, a lot of students will move from a secondary city to another, not only because the university/school has a very good reputation there, but also because they can see themselves stay in the city and get a job.

As a consequence, the proportion of people living in secondary cities is much higher than in France, as shown in the table below :

source:https://datacommons.org

That better repartition of the global population reflects when comparing density between countries, and at the regional level.
Germany is, on average, more than 2.5x dense than France:

source:https://datacommons.org

But when comparing region by region, it’s clear that Germany has done a better job at creating attractive clusters outside the first city area.
In France, Paris Greater Area is 14 times more dense than the average. For comparison, in Germany, the most dense region is only 2 times more dense than the country overall.

And what better than well-sized cities to make you want to use your bike ?
Traffic is bad enough to make you want to ride, but you still have enough space to feel like you’re actually outside exercising.
Distances are long enough that walking is not an option, but not so much that you would only consider “passive” solutions (like the bus or the tram).
And adapting the space to accommodate cyclists is still pretty easy.
It’s the ideal scenario.

As a consequence, the numbers talk for themselves: When in France, biking represents between 3 and 4% of all transportations, that number rises up to 13-15% in Germany.
I hear you: that makes sense if the density is so much higher. In France, we have to take the train or other public transportation to go anywhere.

If you bike to work, you’ll bike everywhere

In that case, let’s focus on biking to work. Surprisingly enough, German people live further from their job than the average French worker: 17km for the former and 10-13km for the latter (depending on the source). Intuitively, that makes a strong case for a higher use of bikes in all those french commutes.
Here again though, the results are more or less the same: 3% of all transportation to work is made on a bike in France, compared to 13% in Germany.
As Germans are now getting more and more on E-bikes for their commute, it makes absolutely no doubt that those figures will increase.

Why does Paris still have a long way to go?

The question we could ask ourselves then is quite obvious: why, then, isn’t the Paris Area a champion in bike commuting, with that level of density?
The answer will deserve a more in-depth post another time, but here is the short answer :

  • Lack of infrastructure (Paris was designed in the 70s to drive, not to ride)
  • By comparison, a pretty efficient and dense public transportation system (metro, train, bus, tramway…)
  • There’s a “sweet spot” in terms of density that makes it hard to bike without major infrastructures (if you don’t have a bike lane, you’ll also get stuck in traffic on your bike)

Hopefully, the post-covid trend should accelerate a most needed decentralization in many countries, in Europe and all around the world.

Sources:

Our 6 expectations for the e-bike industry in 2022

Posted on By Pierre 5 Comments on Our 6 expectations for the e-bike industry in 2022
The Big Trends
ebike industry trends for 2022

The e-bike market is still pretty young, and the last years has been anything but normal for the merket. In that very hectic context, what should we expect for the industry in 2022?

Tesla was created in 2003 and the first roadster was launched in production in 2010.
Surprisingly enough, it took almost 5 more years for the first e-bikes to be hit the market on a similar scale (let’s say – at least – a few hundreds models built and sold a year).

The last 5 years have seen the market become bigger in terms of demand, and much more fragmented in terms of offer. The historical bike brands have not been able to make the turn fast enough to guarantee the same share of sales they used to make on mechanical brands.
Which is good, because instead of boring mechanical bikes on steroids, we ended up with a huge amount of very different e-bikes, and a fair amount of which really try to change the take on biking or commuting as a whole.
Think a hundred of small Tesla trying to do their thing.

2022, year of maturity ?

As you’re aware, 2020 and 2021 have been a pivotal time for biking. Socially, of course, but also in terms of infrastructures and technologies.
Even Paris, a city that has been under the spell of a self-called “car lover” president for 50 years, has made huge changes in short time, adding biking lanes to most of its main axis, and offering up to 500€ for your first e-bike acquisition.

So, what can we expect from 2022 ? Is it finally the time of maturity for e-bike company?
Of course not. But we’re getting there, and it’s now time for :

  • More investments (but also smaller, more fragmented, fundings)
  • Keeping it “local”, still : The Atlantic is still too big to cross (big brands will remain US or Europe specific)
  • Spending more effort in differentiation (to get out of the clusters, or gain ground on their direct competitors)
  • Challenging the regulations in Europe (is 25km/h the right number? Is the legal framework enough for riders to feel safe?)
  • Selling more High-end bikes (as people are now used to spend a few thousand euros in a bike)
  • Re-localize production (“assembled in Europe” should not be satisfying enough for a lot of customers)

As usual, feel free to comment or contact us if you want to discuss any of the point above.

Sources