Rad Power Bikes may close soon

[Rás Cnoic]

Its

SoCal is crawling with Rads, too. I see more school kids than adults on them, but parents hauling young kids on Rad cargo bikes are a pretty common sight. A very popular choice for surfboard transport as well. The vast majority here have 20" wheels with 3" or wider tires.

Guessing a good half of the many, many ebikes I see out and about here are Rads. With that kind of market penetration, hard to understand what went wrong. Did product liability suits play a significant role?

It's the same story for most of the bike industry woes- spending a fortune on bikes to supply the huge demand during covid, then fighting lack of supply issues as China shut down, then getting hit by a sudden drop in supply in '22 yet by then having a huge over-inventory they can't sell, (costing a fortune), which they still can't sell- this is still an issue in the start of 2026 for a lot of bike brands as demand has not recovered to pre covid levels. Boom & Bust economics.

The start ups seem to have been hit hardest, partly because all their materials come ready made from China and lack of experience of older more cynical 'seen it all' bike biz companies (The bike industry is basically a long line of boom and bust cycles) meant they all thought the huge demand for e bikes was this new industry coming of age and high demand would continue forever.

Rad were caught in this trap, but also, the 'non traditional cycling customer' they fostered and made them big sales, post covid these customers could access the reemergence of Chinese bikes and parts- RAD are now competing with many similar Chinese bikes, most probably made in the same factories where the RAD stock comes from and being undercut. Like a lot of start ups, the rest of industry caught up.

So all their cash reserves is locked up in warehouses full of bikes nobody wants, sales are way down, and they are being superseded by newer bikes. Finally with so much product coming from China being prime target for tariffs, that's probably been the final straw.

 

[Rás Cnoic]

PON has very deep pockets, so they wont end up as some other pure bike brand owners. PON is indeed struggling like the other bike OEM's, so they are slimlining the brands and product ranges (like most, I see it daily around me). When CSG was still owned by Dorel there was a significant overlap in the portfolio and although they did sell out some patented stuff to their suppliers (.....) they had to reduce the product lines when they where bought by PON.bike. And if you look closely you would see that some of te PON.bike brands use the same frame molds, wheels are no longer special, hiw many Lefties are actually still used and other things get more in line with the rest of the portfolio.

You can see the same wiht other big OEM's, Trek is abandoning the Trek brand for the urban line for the (E-)bikes build at Diamant, Accell is streamlining their ranges and adopt a more car like platform idea and reducing the overall manufacturing locations, Belgian brands are also growing closer in their line up. Flyer for example is also fully suckt into the main factory of their new owners.

So for this moment less innovation, more platform based products and still stress on the ebitda of the OEM's. And indeed I hear a lot of old co-workers from past employers and current who are seeking their adventures outside of the bike-biz

Very interesting. And depressing.

As I said above, well regarded Scottish clothing brand Endura have suffered like your PON brand examples. Just this week massive lay offs in Scotland and entire company pulled from Scotland to the London HQ of their owners, in effect they'll be lumped in and managed together with all the other outdoor brands, the clothes made in same Asian factories as the other brands, any Scottish Endura uniqueness gone, corners cut, all the same, just to survive. Painful.

 

[Rás Cnoic]

This is from The Rise and Fall of Rad Power bikes on Geekwire, link below:

Step on the gas

Rad raised more than $300 million from investors in 2021, doubled headcount to more than 600 employees, and bet big on sustained demand.
But like many other businesses during the pandemic, Rad dealt with supply chain delays and disruption. The company went to great lengths to meet demand — in mid-2021, it bought 64 containers and chartered its cargo from Asia into a non-traditional port near Seattle.
Bike companies over-ordered on long lead times assuming COVID demand would keep going, according to Pluth. But he said the surge slowed dramatically by the summer of 2022.
“Prices were driven down, margins were driven down,” Pluth said. “Rad was affected — everybody was.”
As the pandemic demand settled, Rad was saddled with hundreds of millions of dollars of inventory.
“We just had too much inventory liability that we couldn’t be flexible,” said Leah Hunkins, a former supply chain leader at Rad. “It’s like walking around with a bowling ball around our ankles and going for a run — you can’t move.”
Pluth stressed that selling bikes below cost to clear inventory can be problematic.
“The more you sell, the more money you’re losing,” he said. “You’re in between this double-whammy of lower demand and a lot of product in stock. The other companies were able to work through that, given they have a lot longer track record and more diversified product. I’m just not sure Rad was able to do that.”

The rise and fall of Rad Power Bikes: From breakout success to the brink of shutdown

Rad started as a scrappy hardware startup and grew into the largest e-bike seller in North America. But a series of missteps and macroeconomic challenges led to more than seven rounds of layoffs and a remarkable downfall.

www.geekwire.com

 

[Biplaneguy]

I also get the impression that most of the Rad line, with the exception of their new Radster models, seems kind of primitive compared with many of the newer offerings from other manufacturers. But that's just an impression from when I was shopping for a bike for myself; the Radster I bought is the only Rad bike I've seen in person (and it's a very nice bike). Of course the lawsuits and the battery recall didn't help, either.

If they can reorganize out of the bankruptcy and drop most of the older models, they might have a chance at bouncing back.

 

[Chazmo]

I’m not sure how bankruptcy works, but that’s a hell of a hole to dig out of.

 

[Chazmo]

Y’know, I might be a little out-of-date with respect to the corporate jargon, but we all know that just in time (JIT) manufacturing was an epic fail during Corona (COVID). What I think I’m seeing here is a total swing (by RAD) the other way, which might’ve looked correct in 2021-2022, but was obviously wrong. Especially for e-bikes that were leapfrogging each other technologically. $75M debt is just wrong. I don’t see that correcting itself anytime soon.

 

[Jeremy McCreary]

If Rad's circling the drain for the reasons stated above, have to wonder how Aventon's doing these days?

I have ~40 mi on a 2023 Aventon Level.2 and a test ride on a Pace.3. (No experience with any Rad.) Both Aventons strike me as well-designed hub-drives and solid values with a large national dealer/service network behind them.

But I gather that it takes more than that to survive in this tricky post-COVID ebike market — starting with smarter inventory management than Rad came up with.

 

[stompandgo]

Names like Aventon and Velotric will continue to have their lunch eaten slowly by no-name brands, which have become the Murrays and GMC's of e-bikes.

 

[Roamers]

Then they overreached and tried to compete against Microsoft in the desktop OS and application market. They bought WordPerfect, Quattro Pro, and Unix Systems Laboratories.

Excellent example of the advice to "stick to the knitting."

 

[stompandgo]

Early computing was rampant with companies that did just the opposite. I worked for three of them: Data General, Digital Equipment, and Sun Microsystems. All failed by not evolving. Oracle came close, but survived (for now).

 

[gromike]

Those cheap DTC will get the klicks, but after that bike craps out some of those buyers will see the value in a quality machine. The others will give up, their ebikes rusting away to garbage.

 

[Base]

Early computing was rampant with companies that did just the opposite. I worked for three of them: Data General, Digital Equipment, and Sun Microsystems. All failed by not evolving. Oracle came close, but survived (for now).

well Oracle is very happy with SAP using their DB...

and JD Edwards isn't that bad.

 

[Stefan Mikes]

Those cheap DTC will get the klicks, but after that bike craps out some of those buyers will see the value in a quality machine. The others will give up, their ebikes rusting away to garbage.

Said the one who bought as many as three $400 e-bikes (Sorry, Mike, your action was exemplary!)

well regarded Scottish clothing brand Endura have suffered

I and my brother seem to be among the last customers to get the Scottish Endura winter cycling shoes.

 

[Rás Cnoic]

Said the one who bought as many as three $400 e-bikes (Sorry, Mike, your action was exemplary!)


I and my brother seem to be among the last customers to get the Scottish Endura winter cycling shoes.

I mean to be very clear Endura haven't gone bust just, I guess, been slimmed down and their independence whittled away. Until the headlines this week I didn't even realise they'd been sold back in 2018 to UK powerhouse The Pentland Group- owners of Speedo, Berghaus, Canterbury (rugby top clothing brand) Lacoste, and many more as well as main shareholder of JD Sports with 2,400 retail outlets world wide and Pentland have annual sales of $6.4 Billion! Feckin hell! (Thanks Wikipedia.) So they are a small cog in an enormous business empire. Its the way of the world in every business I guess, but it always seems odd that the mad creativity that makes small companies desirable in the first place, by losing their independence when swallowed up, that mad creativity that made them a success, gets beaten out of them in blander corporate culture. But the reverse is they probably go bankrupt if solo & small.

 

[stompandgo]

Those cheap DTC will get the klicks, but after that bike craps out some of those buyers will see the value in a quality machine. The others will give up, their ebikes rusting away to garbage.

Or they say "screw it" and jump back into their cars.

 

[stompandgo]

View attachment 204570

well Oracle is very happy with SAP using their DB...

and JD Edwards isn't that bad.

SAP is like the mainframe. They will be around for quite a while because of the enormous initial and continuing investment needed, but it's a dinosaur and will eventually be displaced.

Oracle is hanging in there. Database is their bread and butter, but they would have died a while ago if they hadn't gone deeply into debt to build out their cloud hyperscaler platform, which is leveraged for their AI platform. If they can manage that debt, they are poised to be a major AI player.

 

[MrHyak]

This is from The Rise and Fall of Rad Power bikes on Geekwire, link below:

Step on the gas

Rad raised more than $300 million from investors in 2021, doubled headcount to more than 600 employees, and bet big on sustained demand.
But like many other businesses during the pandemic, Rad dealt with supply chain delays and disruption. The company went to great lengths to meet demand — in mid-2021, it bought 64 containers and chartered its cargo from Asia into a non-traditional port near Seattle.
Bike companies over-ordered on long lead times assuming COVID demand would keep going, according to Pluth. But he said the surge slowed dramatically by the summer of 2022.
“Prices were driven down, margins were driven down,” Pluth said. “Rad was affected — everybody was.”
As the pandemic demand settled, Rad was saddled with hundreds of millions of dollars of inventory.
“We just had too much inventory liability that we couldn’t be flexible,” said Leah Hunkins, a former supply chain leader at Rad. “It’s like walking around with a bowling ball around our ankles and going for a run — you can’t move.”
Pluth stressed that selling bikes below cost to clear inventory can be problematic.
“The more you sell, the more money you’re losing,” he said. “You’re in between this double-whammy of lower demand and a lot of product in stock. The other companies were able to work through that, given they have a lot longer track record and more diversified product. I’m just not sure Rad was able to do that.”

The rise and fall of Rad Power Bikes: From breakout success to the brink of shutdown

Rad started as a scrappy hardware startup and grew into the largest e-bike seller in North America. But a series of missteps and macroeconomic challenges led to more than seven rounds of layoffs and a remarkable downfall.

www.geekwire.com

Rad is also located in Ballard which is a very expensive place to operate from, and any employees in that area will be demanding significant wages. The mgmt probably sucked much of the investment dollars figuring it would just keep pouring in......just a guess.

 

[Chazmo]

Names like Aventon and Velotric will continue to have their lunch eaten slowly by no-name brands, which have become the Murrays and GMC's of e-bikes.

I think there are two things that fly in the face of this pessimistic conclusion:

#1: First of all, there is the question of how they are managing their manufacturing. These dying/dead players racked up unsustainable debt by over-producing and stocking bikes that were simultaneously selling (much) slower while getting obsoleted by newer models.

#2: Secondly, but related, is the question of innovation. My take on Aventon is that they are innovators. I know nothing about their financial situation, but I hope they haven’t racked up too much debt as they have to get back to a more just-in-time manufacturing model to avoid over-stocking.

As for Velotric, same points to make, but I have no knowledge/opinion on #2.

And, by the way, for all of you, if you haven’t read “The Innovator’s Dilemma” by Clayton Christensen, I can’t recommend it highly enough. There’s never been another B-school text that I ever found to be a page-turner.

 

[gromike]

Said the one who bought as many as three $400 e-bikes (Sorry, Mike, your action was exemplary!)

Makes me an expert in cheap DTC bikes. I knew what I was getting into, and how to fix them.
One advantage with an inexpensive ebike is no worries about locking up and going in the pub for a beer or two.

 

[jabberwocky]

Rad def seems like a victim of the venture capital death cult. Successful niche company took in big wads of cash from VCs looking for the next big thing, tried to expand rapidly to meet growth expectations from those VC investors and (predictably) weren't able to because growth just wasn't possible in their industry. Their timing was particularly sucky (trying to expand post covid right as the market was returning to normal, as well as when several other competing companies were growing their share of the market) but it may not have really mattered in the end.