The bicycle kingdom goes electric, and China’s biggest e-bike maker Yadea wants to make most of them
- Some new models will sell at five times more than current average price
- Company expects global e-bike demand to hit 100 million units annually in five years, with China accounting for half of it
Dong Jinggui, chairman of China’s largest electric scooter maker Yadea Group Holdings, envisions rebranding e-bike as glitzy and hi-tech by launching new models that would be priced five times more than existing products.
The Hong Kong-listed company plans to unveil dozens of new electric bicycles in 2019, with some products priced at 10,000 yuan (US$1,455) that Dong believes affluent consumers around the world, with an affinity for two-wheeled vehicles, will be drawn to. An average e-bike sells at about 2,000 yuan.
“As the automotive industry undergoes a technological shift towards electrification, electric bicycles will also have a great opportunity to grow, spurred by people’s increasing awareness for environmental protection,” Dong said. “But we have to churn out some fancy products that hit a consumer nerve.”
Which is also why Yadea, based in Wuxi, Jiangsu province, is adamant in redefining e-bike as a fashionable tool that is more than a vehicle for transport.
The new models to be launched this year will incorporate the latest digital technologies to attract customers, but Dong would not disclose details.
China, once the world’s “bicycle kingdom” as the vast majority of the population used bicycles as a main transport tool, reported sales of about 32 million units in 2017, accounting for 60 per cent of the global total.
Demand for battery-powered bicycles worldwide could nearly double to 100 million units annually in five years, with half of them sold in mainland China, Dong said.
Yadea raised HK$1.1 billion (US$140 million) through an initial public offering in Hong Kong in May 2017, and raked in sales of 7.85 billion yuan for that year, selling 4 million units.
In the first half of 2018, the company sold 2.47 million electric bicycles, up 40 per cent from a year earlier.
But Dong’s ambition is to increase sales target by five times to 25 million units in three to five years, from 5 million last year. The ultimate goal is to achieve sales of 100 billion yuan a year, he added.
Yadea’s domestic rival Niu Technologies, which sells high-performance smart e-scooters, raised US$63 million in a US IPO in October 2018.
The company makes and sells e-scooters that cost about 6,000 yuan each and has recorded sales of 125,000 units in the first six months of 2018, representing about 5 per cent of Yadea’s total deliveries in the same period.
Citi said in a report that Niu was expected to post a 52 per cent annual revenue growth between 2019 and 2022. In the first three quarters of 2018, Niu’s sales were valued at 10.5 billion yuan, up 91 per cent from the previous year.
“Making e-scooters with more value-added – higher-end products – holds the key to the industry’s future success,” said Xie Weishan, chairman of Kmind Consulting, an adviser to Yadea.
“Price wars are no longer the name of the game in the e-scooter industry. We aim to help Yadea make better, high value-added products to win more customers, and eventually help the industry to grow on a healthy track.”
Chinese electric bicycle manufacturers suffered from falling sales for three straight years from 2014 to 2016 as a result of overcapacity in the domestic market.
But Yadea managed to buck the downward trend by offering high-end products that helped it push sales up by 20 per cent in 2015.
Its Hong Kong-traded shares gained 14.4 per cent in 2018, closing 3.4 per cent higher to HK$3.02 on Monday.