Electric bikes

	Model EZ-TDG03AZ-26 from Zhejiang Enze is a 6-speed bike that runs on Li-ion batteries.

With raw materials and parts seen to stay generally constant, suppliers expect quotes to hold or even drop by 5 percent.

Makers of electric bikes in China are taking several steps to prop up sales and sustain financial viability amid weakening overseas demand. Due to the global economic crisis, some companies have reported up to 70 percent fewer orders in the past several months.

In addition, several are finding it difficult to manage operating cash flow. Suppliers of manufacturing inputs are requiring cash on delivery, while buyers take longer to make purchases, preferring to wait until they have customers for a product before confirming orders.

Customs statistics attest to the slowdown in demand, showing overseas shipments of electric bikes, scooters and other cycles in 2008 down 14 percent year on year to 1.3 million units. Sales, however, remained positive, growing 49 percent to exceed $250 million, driven by the higher value of products sent overseas. The increase was partly a result of suppliers raising prices to cover currency risk and additional manufacturing expenses, and a consequence of efforts to shift to midrange and upscale designs.

With consumers expected to remain frugal due to economic uncertainty, several companies plan to attract more orders in coming months by maintaining quotes at current levels or reducing them by up to 5 percent. These suppliers are confident they will be able to implement this strategy successfully, since the cost of raw materials and components is expected to be stable.

Suppliers are generally reluctant to compete solely on price as most cannot afford major cuts without risking profitability. Labor-related expenses and additional testing fees keep margins slim despite lower raw material costs. Makers do not want to engage in a price war that may prompt some markets to initiate anti-dumping measures.

To gain a differentiation advantage and thereby avoid competing solely on price, several are making their models more environment-friendly by using energy-efficient batteries that contain less-toxic substances. NiMH and lithium-based power sources are increasingly being employed instead of lead-acid types. Some companies are adopting units that can be recharged via solar panels.

A few suppliers are developing models for specific markets. Tianjin Shuntian Electric Bicycle Co. Ltd, for instance, has released an electric bike for areas with prolonged rainy seasons. The product features a detachable water-resistant cover on the controller.

Electric bikes from China consist of pedal- and throttleactivated models. With prices starting at $200 per unit, the products are frequently offered as high-end options among mountain and city bikes. Quotes increase depending mainly on the frame material, motor and battery.

Models typically come with wheel diameters ranging from 12 to 28in. Most employ 150 to 350W motors that run on 24 or 36V batteries, although some midrange and highend products use 48V types. The power sources have leadacid, nickel-based or lithium-based formulations. When recharged, these batteries enable electric bikes to cover a distance of 20 to 50km at 20 to 25kph.

Entry-level designs generally do not exceed $300. In this segment, most models have steel frames, cantilever brakes and lead-acid batteries. Their various components are from domestic suppliers.

Units priced between $300 and $450 come with steel or aluminum alloy frames. For brakes, these often employ cantilever or disc types, while the batteries are nickel- or lithium-based. Taiwan-made tires, and Japan-sourced derailleurs and suspension systems are common in this segment. More-expensive models can have magnesium alloy frames. Overcurrent and low-voltage protection, locks and other add-ons are present in several designs as well.

Of China’s 1,000 bicycle suppliers, about 600 have electric models in their selections. Most manufacture the products together with traditional mountain, BMX and city bikes.

Jiangsu and Zhejiang provinces are the primary sources of electric bikes, scooters and other cycles in China. Jiangsu is the top exporter based on sales. Its shipments of more than 400,000 units last year exceeded $106 million in value. Zhejiang is the leading exporter in terms of volume.

In 2008, it sent 730,000 units worth $98 million overseas.