As we’ve reported previously, the Trump administration’s trade war has recently entangled electric bicycles, among other products, in billions of dollars worth of trade tariffs with China.
Now American electric bicycle companies are responding about how this could impact their businesses, generally for the worst.
The goal of the Trump administration’s trade war has been to penalize China for what it considers unfair trade practices that reduce the cost of their products – electric bicycles in this case.
In theory, increasing the prices of imported electric bicycles would allow US companies to better compete, giving them a chance to invest in local manufacturing of the necessary components.
However, there is actually very little US-based e-bike manufacturing as it is, as almost all e-bike dealers in the US import their e-bikes from abroad, mostly China.
So instead of giving US companies breathing room to manufacture their own e-bikes, the tariffs are largely just hurting the US electric bicycle industry by preventing it from importing and selling affordable e-bikes, without solving the underlying reasons causing US e-bike companies to choose not to manufacture their e-bikes in the US in the first place.
To help determine how the new tariffs would impact the US e-bike market, I spoke with a number of e-bike companies about what changes might be in store for the future of their businesses.
A bleak future for the US e-bike industry
As it turns out, the results don’t look good.
Both small and large e-bike businesses in the US are already reeling from the effects of the tariffs.
A representative for Ancheer, a California-based e-bike company that sells some of the most affordable e-bikes in the US, expressed dismay over the tariffs in an interview with Electrek. Ancheer will regrettably be raising prices on their electric bicycles, but intends to try to absorb some of the cost to avoid passing on the entire 25% tariff to their customers.
Rad Power Bikes, another US-based e-bike company, also plans to increase the prices of their electric bicycles. The company already announced that prices would increase by $200 on each of their e-bike models. According to the founders of Rad Power Bikes:
“Manufacturing in China allows us to achieve our quality and affordability standards while meeting a very high demand. We analyzed all of our manufacturing options when we started building e-bikes and continue to do so. It wasn’t, and still isn’t, feasible to manufacture in the U.S. for the price, quantity, and quality to which we are dedicated.”
Before news of the tariffs, Rad Power Bikes had been on track to achieve $50 million in sales this year – quite a feat for a company that started as an Indiegogo project only three years ago.
But with a sudden price increase in an industry that was only beginning to take hold in the US, the future of such explosive growth may be called into question.
Small e-bike businesses could be impacted even worse
But it isn’t just big companies that are hurting. Smaller electric bicycle companies are perhaps hit harder than anyone.
I spoke with Barent Hoffman, the owner of West Coast Electric Cycles, a high performance electric bicycle builder and components dealer, in a conversation about how the tariffs impact his small business:
“As an independent custom e-bike builder, I rely on components that are manufactured in enormous scale in Asia, at prices that cannot be matched by any American supplier.”
Hoffman described to Electrek how despite performing much of the assembly of his custom e-bikes himself in his Bellevue Washington WCEC shop, he is still reliant on parts that come from Asia.
And with the uncertainty of how long the tariffs will last, he is afraid to order more stock at 25% higher prices and potentially face the prospect of the tariffs being removed shortly afterwards on a whim of the current administration, leaving him stuck with artificially expensive inventory that is much harder to sell.
“The tariffs are detrimental for a small business like mine. I do not have the resources to develop domestic manufacturing, nor do I have the financial capacity to absorb the cost of the tariffs. It’s just an unfortunate situation to be in.”
Another independent e-bike dealership, Adam Solar Rides in Pittsburgh, Pennsylvania, is also feeling the crunch. With essentially zero low-cost electric bicycle manufacturers in the US, Adam Solar Rides imports their entire lineup of electric bicycles from abroad, mostly from China. Like many small businesses owners, they are left with questions about how exactly the unclear tariffs might affect them and other e-bike dealers.
According to the owner, Adam Rossi:
“I’m curious about the definition of ‘manufactured’ too. Can we ship parts to another country, assemble it there, and call it manufactured? Or what is the definition on the tariff, is it just where it’s shipped from?”
The confusion makes it difficult for small businesses to plan and budget for even the immediate future, and nearly impossible to develop their longer term business strategies in the face of a trade war that is constantly developing and shifting.
Kenny Fischer, the founder of Denver-based FattE-Bikes, sent Electrek his views via email:
“The new tariffs that have hit our industry (and so many others) will be difficult to navigate. Not because they will hurt our business but because they hurt the American consumer. If the US were more manufacturing friendly I think most bike companies would be happy to manufacture here. However it is very expensive to manufacture in the US and overseas manufacturing is the only real way to offer the American consumer potentially life changing products.”
FattE-Bikes does hope to mitigate the effects of the new tariffs by moving towards a new model of assembling their e-bikes in the US, even if the parts are originally manufactured in China and thus will still be impacted by the new 25% tariffs.
According to Fischer:
“We may not be “made” in America but we can be built here. In doing so we’re creating jobs, improving quality control, and unlike most e-bike companies that will hike up their prices, we still aim to offer an exceptional product at an exceptional price.”
Larger companies are finding new countries to manufacture in – just not the US
Unlike small companies who can’t afford to open new manufacturing centers in countries outside of China, much less in the US, some large e-bike companies are using this exact strategy to avoid the tariffs by moving production out of China to another country.
According to Ken Fagut, Global Sales Consultant for Oyama and the CEO of Foldaway Solutions:
“Oyama has committed resources to make their Taiwan factory a world class e-bike manufacturing center and is actively recruiting some of the finest minds in the industry to support them.”
Tern, another large manufacturer of electric bicycles, is taking a similar strategy. According to Steve Boyd, General Manager at Tern North America:
“We have multiple manufacturing partners and are working to move these particular models out of China, although that will take 9-12 months due to lead times and production planning.”
In the meantime, Tern will be forced to raise prices on their current electric bicycles, with prices expected to increase by around $500, according to Boyd.
A representative for another large international bicycle company informed me that his company is now shifting its production of their 2019 electric bicycle models to two other Southeast Asian countries to avoid the import tariffs on Chinese e-bikes. The source spoke on condition of anonymity as he was not authorized to speak publicly on the matter.
What about the few companies in the US that build electric bicycles?
For the few US companies that already had some level of US manufacturing, the effects of the new Tariffs will be largely mixed.
Andrew Davidge, the founder of Vintage Electric, feels this distinction is important, even if imported electric bicycle parts are still affected by the increased tariffs:
“Anyone importing ‘parts only’ from China is subject to the same tariffs so it’s a level playing field. We source our parts globally and do not build bikes in China.”
Both Vintage Electric and Optibike build more expensive electric bicycles in smaller numbers that are geared towards wealthier clientele. By focusing on what some would consider “luxury electric bicycles”, these companies might be better positioned to either absorb the cost of increased tariffs on imported parts such as electric bicycle motors, or find customers with enough expendable income that the higher prices of the final e-bikes wouldn’t be as large of a deterrent.
And by manufacturing a portion of their parts domestically, such as Optibike who sources locally built frames for some of their models, the tariffs will have less of an impact on the company.
However, the uncertainty of the new tariffs may still be problematic. According to CEO of Optibike Jim Turner:
“I think if the tariffs were to continue long term it would make building bikes in the USA more likely for other companies, but components would probably still be sourced from overseas. The problem with these tariffs is no one knows how long they will last so probably no changes in production in the e-bike industry will occur in the near term.”
Will the US ever begin manufacturing electric bicycle components?
“Just build them in AMERICA!”
That’s the common refrain, right? And it’s the whole point of these 25% tariffs on imported Chinese e-bikes.
But is it even possible. Will it ever happen?
To get more insight on the possibility of the US becoming an e-bike manufacturing center, I spoke to Nick Drombosky, a consultant for US-based electric mobility startups and owner of multiple e-bike companies including Banker Supply.
With all of Drombosky’s experience, he has tried for years to find a way to build e-bikes in the US. But according to him, it just doesn’t work.
“First, Taiwan and China have been building almost all the bikes for the entire world for the past 30-40 years. They have ecosystems and two generations of tradesmen that result in the best bikes in the world. Look at all the top brands—Giant, Specialized, Cannondale— they all make their top end bikes in China and Taiwan. Even look at the Italian brands and you’ll see they build their frames in China and Taiwan and paint them in Italy.”
While many people ridicule the term “made in China” as being synonymous with poor quality, the fact of the matter is that they’ve spent years honing their skills to build high quality bicycles.
You get what you pay for. Companies who want to pay for high quality e-bike designs get some of the best and experienced bicycle designers in the world. Even the cheapest of the electric bicycles coming out of China are often surprisingly high quality for the price, as we have personally seen in some of our recent low-budget e-bike reviews.
According to Drombosky:
“The United States has a huge gap in education. You can go to China and find all the specialized engineers you need all day. They have been focusing on technical education for men and women for decades that the US has spent getting mad at Chinese people who just want to work.”
That isn’t to say the US doesn’t have their own great engineers. Of course they do, even if they don’t have the same relevant industry experience as Chinese engineers and designers. But it takes more than just quality designs to sell US-made electric bicycles.
“Second, even if you do make bikes in the US, they will be multiple times more expensive than their overseas counterparts and 99.9% of consumers won’t pay that price. When my shop tried selling a US-made bike next to a Chinese bike, with signage that explained why the US-made bike was more expensive, we couldn’t even sell one. Customers would stand there and talk about how they want American-made goods, then they would buy the Chinese bike.”
And even if companies could convince customers that paying 2-4x the price for an e-bike was worth it, that wouldn’t be their last obstacle. As Drombosky explained:
“Third, if you did make bikes here, at least if they are of high quality, you would still have to import the tubing because no steel or aluminum manufacturer in the states makes the specialized butted or hydro formed tubing that modern bikes need.”
Ironically, not only would a US e-bike manufacturer need to import the raw materials for their frames, but they could still be subject to import tariffs that the Trump administration has placed on imported steel and aluminum from China. Thus, the e-bikes could end up even more expensive than just US-built e-bikes, as customers would also have to pay for the higher cost of the imported raw materials.
But it doesn’t even end there.
“Even if you deal with the tubing supply chain and consumer retail price tolerance, there is no supply chain here for the cables, shifters, crank sets, chains, saddles, and every other part. It would take decades to set all of this up, but you would first have to get consumers to the point where they will pay $1,800 for the bike that they could get for $400.”
And then add in all of the other e-bike parts including motors, batteries, throttles, speed controllers, etc. All of these parts are mass-produced in China. They simply aren’t available in the US and no one is designing them or manufacturing them. The US would likely have to start by reverse engineering the Chinese products and learning how they produce them. How’s that for irony?
So what does the future hold?
If talking with so many e-bike companies has shown me anything, it’s that no one really knows what will happen. In fact, I’m not even sure the White House knows what the future of these tariffs will be.
But it is not complicated to see the detrimental effects that these policies very likely could cause. Simple high school AP Economics taught me that this won’t be good for either China or the US in the long-term. Even if a country can produce multiple items better or cheaper than another country can produce them, it is always in both countries’ best interest to focus their resources on their most skilled areas, and trade with other countries for the products they can’t produce as well domestically.
That’s not my opinion, that’s the basic principle of Macroeconomics, and was explained well by the New York Times recently in relation to the current Trump trade war.
Those who mess with free trade are usually the ones who don’t understand it. And in the end, it won’t be the governments that pay the price. It will be citizens.