The future of e-bikes? The retail car showroom

This article appears on the THE GLOBE AND MAIL

KATE HELMORE

PUBLISHED OCTOBER 15, 2023

The eBliss Anytime electric bike starts with the push of a button. It has a sealed automatic transmission that selects the right gear, no greasy chain that stains the pant leg, and even two red taillights. It’s the closest a two-wheeled, saddled bicycle comes to the experience of driving an automatic car.

At least that’s what the founders of eBliss, an e-bike company based in Dallas, are hoping for. Bill Klehm, chief executive of eBliss, is a car man. He spent decades at Ford and CarFax and now is in the e-bike sector. He’s hoping to leverage his knowledge and skill set, with the first step being to build a user-friendly bike and then sell it at car dealerships. Because the future of bikes is cars, says Mr. Klehm.

“We think about these as pieces of transportation equipment, not a throwaway bicycle that somebody buys for $100 at Walmart.”

It’s an interesting proposition. And it might give eBliss an edge in a market that is expanding rapidly.

E-bike sales are booming. The global e-bike market was valued at US$17.56-billion in 2022. It is expected to reach more than US$44.08-billion within 10 years. China is leading the charge with 50 million electric bicycles sold in 2022. But the North American market, at first slower to the uptake, is surging ahead. The U.S. market was worth US$1.98-billion in 2022, and is expected to increase at a compound annual growth rate of 15.6 per cent by 2030, according to Grand View Research.

Cities across North America are leveraging this demand to reduce emissions and cut congestion. In June, B.C. launched a $6-million rebate program for people buying electric bikes, which ranges from $300 to $1,400, depending on income.

So far, e-bikes have largely been sold through two avenues: direct to consumer or specialty bike shops. The direct-to-consumer (DTC) route is plagued with challenges arising from poor quality control. For example, over the past year, Rad Power Bikes, which sells direct to consumers, has faced a series of high-profile lawsuits, a recall of 30,000 bikes and layoffs, and it has pulled out of the European market.

Mr. Klehm and his partners at eBliss are betting that the car dealership route will allow them to expand with fewer quality control issues while also tapping into an underserved market.

“There’s 2.3 million people that visit car dealerships every day to buy something transportation-related. There’s natural foot traffic there that I think we can leverage on to help us sell e-bikes into the community.”

These new consumers are not bike enthusiasts, he said. They live outside dense cities and are unlikely to trade a 30-minute car commute for an hourlong bike ride. Instead, he’s targeting people who want another mode of transportation for the last mile. The quick jaunt down the road to a coffee shop, restaurant or the gym. This last mile accounts for a lot of time spent in a car. Fifty per cent of car trips in the U.S. are less than three miles, said Mr. Klehm.

This is expensive. The cost of driving a car one mile, including fuel costs and wear and tear, is 50 cents. The cost of riding an e-bike one mile is a third of a cent.

“The worst thing you can possibly do for a car, the worst thing for the environment, and the worst thing for everybody, is to drive a vehicle with 63,000 parts one mile,” he said.

In this way, the bike does not act as a competitor to the car, but a complement. They can be sold alongside the car as a package deal. This makes sense from a business perspective too, he said. The car dealership is the largest and most well-oiled distributor of transportation devices. There are 17,000 franchised auto dealers in the U.S., with US$1.7-trillion in annual sales.

And these dealerships make all their money on financing, not on the car itself. The average selling price of eBliss bikes is US$4,300. Dealers make US$860 to US$1,000 on each sale, a 20- to 25-per-cent margin. The sales margin on a car is 3.9 per cent, according to the National Automobile Dealers Association. For a US$30,000 car, the gross profit would be approximately US$1,170.

However, eBliss is not the first company to try to sell through dealerships, said Ed Benjamin, chairman of the Light Electric Vehicle Association. Volkswagen attempted it in the past in Europe. It didn’t work. This is because dealerships make money on servicing vehicles. The e-bike does not need constant servicing and maintenance. In fact, that is one of the selling features of eBliss e-bikes: no maintenance.

But this was a different context at a different time.

Differences could include the fact that cars have increased in price, fuel was less expensive, e-bikes were not as broadly accepted, car sales among young people were still high, and dealerships were not searching for extra sources of revenue. It also wasn’t North America.

Mr. Klehm is hoping that these factors will make all the difference.

So far, eBliss has 50 dealership chains signed up. They will start delivering in the first quarter of 2024 with a sales target of 30 bikes per dealership per month, expanding to 60 per month within six months of launch. They plan to target more than 200 auto dealers by the end of the year, accumulating US$1-million in annual sales.

The company also plans to use car dealerships to sell cargo e-bikes, notably for urban and suburban delivery where the “last mile” of delivery is the most expensive and problematic. Many cities already limit cars within their downtown cores. An e-bike also navigates traffic congestion. Since dealerships already serve small fleets that should be an easy intersection, said Mr. Klehm.

Mr. Benjamin noted that e-bikes are a novel product. An entirely new mode of transportation. It could be a shame to replicate the business patterns of the past.

“This is a new thing,” said Mr. Benjamin. “We don’t need to do things the way we used to.”

Mr. Klehm agrees, to a certain extent. But he thinks that weaponizing the tools of the past to chart a new future is the way forward. “Car dealerships are businesses that have spent 100 years honing and defining processes around serving people’s transportation needs,” he said. “Of course, you wanna launch a brand-new set of products into the best organized and best capitalized distribution system in the world.”