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IBD e-bike brands see little impact from Trump tariffs

Published February 15, 2019

Editor's note: The following article appeared in the Feb. 1 issue of Bicycle Retailer & Industry News.

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BROOKLYN, N.Y. (BRAIN) — Industry associations continue to lobby against the 25 percent tariffs imposed on Chinese-made electric bikes and motors. But many suppliers and retailers say most premium brands typically sold at IBDs are not affected, since these bikes don’t come from China.

Instead, the bigger impact appears to be on direct-to-consumer brands and on electric share bikes and scooters, where price is a much bigger concern.

“We’ve focused a little more on premium brands. Most of them are not making their bikes in China, so it hasn’t really had as much of an impact on us,” said Chris Nolte, owner of Propel Electric Bikes in Brooklyn, New York, and, soon, a second location in Long Beach, California.

Nolte said the tariffs may end up benefiting his brands because they help “normalize” e-bike pricing by forcing up the price of low-cost Chinese-made bikes. “We’re more impacted by the fluctuation of the euro to dollar than anything else,” he added.

Other retailers who shrug off the tariffs noted that the fast evolution of e-bike technology in recent years has driven down prices across the board.

“It’s not that big of a deal. The pricing is what it is,” said Joe Witherspoon, founder of Motostrano. “E-bikes are not the cheapest thing in the world, and actually the price has been coming down from what it was four years ago. If it goes back up a little bit it’s not going to make or break the e-bike space.” Motostrano owns two e-bike stores in the San Francisco Bay Area.

“It’s not that big of a deal. The pricing is what it is. E-bikes are not the cheapest thing in the world, and actually the price has been coming down from what it was four years ago. If it goes back up a little bit it’s not going to make or break the e-bike space.”— Joe Witherspoon, founder of e-bike retailer Motostrano

Paul Kozy, owner of the four-store Kozy’s Cyclery chain in Chicago, also pointed to the broader decline in e-bike prices, which overshadow any smaller increases caused by tariffs.

“E-bikes are in a natural state of evolution. I’m now able to buy Bosch-powered bikes for $2,000, and just a year or two ago the lowest Bosch you could buy was $3,500,” Kozy said. Bosch, the market leader in mid-drive systems, does not build its motors in China.

E-bikes are just one of the many categories targeted by President Donald Trump in his administration’s ongoing trade dispute with China. The 25 percent e-bike tariff was effective Aug. 23, while a 10 percent tariff on conventional bikes and most bike products went into effect in September.

The administration had threatened to increase the tariff on conventional bikes and bike products to 25 percent on Jan. 1 — a prospect that worries the industry much more because of the significantly bigger market for conventional Chinese-made bikes. However, the second increase has been postponed until March 1. Recent media reports suggest the administration will delay that by another 60 days.

The Bicycle Product Suppliers Association and PeopleForBikes, which have led the industry’s opposition to the tariffs, estimate that a 10 percent tariff on bicycles increases costs to suppliers and retailers by more than $100 million, while a 25 percent tariff would inflict a $250 million hit.

For brands that don’t source from China, the tariffs offer another selling point.

Gazelle, for example, manufactures all its bikes at its factory in the Netherlands.

“For the bikes that we offer, the price won’t change because of the tariffs,” said Ewoud van Leeuwen, general manager of Gazelle North America. “We are a very reliable and dependable company that doesn’t change the prices — and that’s exactly what the retailer wants at this point.”

Global brands like Trek and Specialized have largely avoided China or moved away from that country because of the important European market. The European Union in January imposed anti-dumping duties on Chinese-made e-bikes that range from 18.8 to 79.3 percent.

Trek brand director Eric Bjorling said the company has supported PeopleForBikes and the BPSA in their opposition to the tariffs.

We’re currently evaluating our supply chain, along with the rest of the industry. We do have the benefit of manufacturing a number of our electric bikes — specifically those for the European market — in our facility and Hartmannsdorf, Germany,” he said.

Accell North America, whose e-bike brands cut across several layers of the e-bike market, has mostly sidestepped the tariffs. But Larry Pizzi, ANA’s president and head of sales, said that is partly due to good luck. Pizzi also chairs the BPSA’s e-bike committee.

Its Haibike bikes are built in Taiwan, as are most Raleigh Electric bikes. But Raleigh also offers some models that are made in China because they use a Chinese-made mid-drive system from TranzX.

ANA paid the tariff on a shipment of TranzX-equipped bikes that landed in December and raised retail prices on those bikes by $100 or $200 to about $2,000.

“We’re absorbing a big part of the increase, hoping that they’re able to relocate their production. Otherwise we’ll have to move away from them,” Pizzi said.

But the company got lucky with its budget-priced iZip brand. Some 18 months ago, it moved production of some entry-level iZip models to Vietnam from China.

The first models landed in November. “We’re very happy with what we’re seeing,” Pizzi said. The move allowed iZip to offer the lowest opening price points it has had in four or five years — $1,599.

Topics associated with this article: Electric bike, From the Magazine

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