Depreciation of Electric Bikes

[Bicyclista]

Electric bikes, unfortunately, depreciate much faster than conventional bikes. This thought hit me today with great clarity due to what, at first blush, seemed like a bargain. I saw a craigslist ad for a used Juiced 2013 ODK U500 for $650. Wow! I thought. That's a good deal!

No matter that the spokes were rusty and that, as the owner admitted, the battery was only good for half its capacity. Wait! That's no good. Who wants to have only half the range (or less)? I will have to buy a new battery, $699! So, $650+$699=$1349 plus tax on the battery.

Still, that's a substantial savings compared to the $1999 that a new Juiced ODK U500 costs, right?

Actually, a refurbished U500 for $1119 is a better comparison! Plus, it comes with a new battery and a full warranty!

The lesson is that a $2000 ebike is worth only about $300 after four years. (I'm valuing the warranty at around $100.) The reason ebikes depreciate so fast is the battery. Expensive when new, it's nearly worthless once it looses about 50% of its capacity.

 

[Lost]

I hate reality!

 

[Bicyclista]

I still love my ebike!

 

[emco5]

Last June there were 2500 bicycles for sale on my region's Craig’s List, and there are still 2500. You almost have to give away a bicycle to get rid of it.

It isn’t any better with power-assisted bikes. After 11 months on CL, my last factory-built eBike finally sold for 35% of it’s new value, and it was in mint condition with a strong battery. Beyond the cost of batteries, few consumer items depreciate as fast as last season’s electronics. At this period in time we are all guinea pigs at the forefront of change. If the populace buys into the program there will eventually be some demand for used eBikes. Until then, an eBike investment is a toss. Consider it a cost of entertainment, and possibly doing some good for humanity.

 

[Alex M]

Emco hit the nail on this one. It's not just the battery.

The industry is in its adolescent stage - motors, electronics and other components are changing all the time, (mostly) improving. And then there is "Chinese probrem" as the 4th-grader Cartman put it - too many and too unregulated manufacturers out there, coming and going like flood waters in spring. Even reputable brands replace their ebikes with COMPLETELY different models after 2-3 years, no matter if the old one was a success. Not "an improved version" but a different model, with different frame and everything else, except for maybe wheels. A completely different bike, and often those parts are proprietary.

 

[Deleted member 4210]

The reason many e-bikes 'depreciate' so fast, has nothing to do with the batteries, but more to do with the fact that the vast majority of them are way over-priced at between $2600 and $12,000 for what you actually get. In fact, most that are priced over $3000, when you compare what's really on them, are not any better in quality of components, than a solid one priced at $1800. The bigger players like Pedego, Easy Motion, Stromer, Haibike, and so on, are demanding a hefty premium for their 'brand' and marketing. Not to target Pedego, but you can find virtually their exact same e-bikes at Asian factories that sell direct. The costs in USD are about $550 to $700 for e-bikes that Pedego sells for $2600 to $3400. Those factories build and sell in qty, but they do allow samples in smaller quantities. They are not set up to sell to the consumer, but just using it as a reference point to what it actually costs to build these. Sure you add some for shipping, which by sea is dirt cheap especially in any meaningful quantity, and then cost of customs and unloading. Maybe that adds about $60 to $100 per ebike at most. The market is an excellent 'weighing' mechanism, in that it is telling you that you paid way too much, if you can't sell it for anything close to its original sell price when new, if it's been used for a few months or even a year. Cars are the same way, and often worse in the first years, but people derive far more utilitarian value from a car, and usually can keep it for at least 10 years. Obsoleted by new technology advances, and they also extremely high prices. They get or take what the market can bear, but keep in mind that only goes so far, and thats why you have more than 30% of car purchases today coming from subprime buyers, with an absurd 7 year loan term. They are upside down almost the day they drive it off the lot. But then thats why too, the industry has such horrid boom and bust cycles. If you think of the utilitarian value of the ebike, and how often you will use it in your part of the US, in a 2 season area, where winter stinks, and late fall or early spring stink too in terms of temps, then you are probably not psychologically going to be willing to spend as much, as someone who can use it year round in places like FLA or AZ, or CA. Most seasoned IBD's who have been in the bike business for years, smell this stuff from a mile away and that's why they won't touch e-bikes with a 10 foot pole. Besides being a huge capital outlay, for fewer bikes, the margins aren't any better with e-bikes than with regular bikes. They can see the rapid technological obsolescence too, so the risk from season to season is quite high of clearing inventory. I have to laugh at these jokers who have 10,000 and 12,000 SF e-bike sales facilities who think they will remain a going concern. They will HAVE to discount the heck out of their ebikes, to make enough inventory turns to cover their nut for the size facility, limited buyers, and the infantile nature of this market. Asia and Europe view ebikes far differently, and require bikes for many of their needs, where here its just a recreational pursuit, when you have cars to get you around.

 

[RoadWrinkle]

To accurately quantify the depreciation rate of an ebike you have to assign a value on the enjoyment factor. How much is it worth to feel like Superman on the trails when you are climbing during the usable life of your bike? IOW, we are not just talking about the purchase price minus the resale price.

 

[Alex M]

Technological obsolescence, rapidly changing design making 3-years old model obsolete and incompatible with newer parts - this is it.

Ebikes that sell around $1,800 depreciate fast as well, can easily drop 2 times in as many years.

$500 production cost at the factory - maybe. Many Chinese items retail in the US for 3-5 times their COGS, some as much as 10 times, nothing new here. Those who invested in R&D and better ebike components would have higher COGS, those who copied-stole somebodies else design and still use decent components will have it lower, clones with inferior components will be cheap even in retail. Yes, thousands of unknown/untested models from unknown factories affect the market, people want it "cheap" and often don't realize what it would cost them in the long run.

We can't usually buy retail from Chinese factory. People who bought ebike components China-direct from places like Alibaba will tell you that this is risky too, hardly one out of 10 sellers can be reliably dealt with.

I would say, anything over 2.5K retail is overpriced, considering the origin. In retail prices, decent frame + quality e-parts + necessary add-ons like torque arm, better tires and brakes (due to faster speeds) = about $1,000-1,200. It will still look like DIY though ...

 

[Joe Remi]

Yes, ebikes depreciate faster than non-assist bikes because of dead batteries and rapidly changing technology. So you buy a bike or kit at a price you can live with and ride the crap out of it. Anyone looking at an ebike with concerns about resale is in the wrong market.

 

[Hugh]

One of the reasons I decided to install a mid drive kit on my fat bike is the kit kit can easily be removed and the bike put back to stock if I so desire. But an E bike as an investment is just silly. In my local market all bikes once they have been taken out of the store and used for a few years lose on depreciation. North America is largely a throw away society.

 

[Alex M]

Hugh, you're right, they aren't any "investment". In the US it's a toy, sport equipment, luxury item. Marginal in commuting so far. This country is (mostly) not bike-friendly, streets, highways and the entire car-oriented urban and suburban structure aren't going to change soon.

Not sure how big a transportation/commuting role they play in Asia, they are still expensive there, streets are dominated by non-powered bikes and cheap stinky gasoline contraptions of all kinds, especially in South-East Asia and India. I would think that with Chinese wages they are still expensive for Chinese local buyers as well.

 

[Ann M.]

Perhaps some of the 'Throw Away' mentality comes from too few places to get electric bikes or kits serviced or built, @Hugh Combine that with inadequate owner knowledge about how to care for and charge most electric bikes, folks get frustrated or their product dies prematurely from neglect. We see that all the time at the shop. Mostly though, is the 'Wow, If I'd only known this before or known about your repair shop...' kind of statements from ebike or escooter owners, so I see education and better support of local shops as a means to reduce the waste.

 

[Alex M]

I wish proper maintenance could change the nature of battery and motor. With daily use the battery will need to be replaced in 3 years, if not sooner. There were reports that even a spare battery with maintenance charging wouldn't last more than 5 years, though I have some doubts, don't understand this.

Motor lifespan is less predictable - too many variables, depends on what drive and what terrain, could be more than 3 years or less. So you're out of $1,000 in repair/replacement after 2-3 years. If you don't know what you're doing (or don't care), you'll kill it much sooner. If trips are short, terrain easy and motor is still chugging along, you can squeeze few more years out of it.

 

[MLB]

Anyone that thinks the $500 cost made in China bike is comparable to a Haibike has never spent time on both.
The devil (and value) is in the details and the big brands just do those really really well.
Plenty of people will argue that a Pinto is as good as a BMW too, because they both have 4 tires and a steering wheel.
Those same people think a Walmart bike with a bafang PAS setup is every bit a Haibike too.

It costs huge to maintain a dealer network with parts and warranty service, something the owners of those cheap knockoffs can only wish for often times.
The ebike dealers that are in NOW will be the major players as the infantile US market grows and grows.

I've bought 6 ebikes and sold 3 of them in the past 4 years. All were name brands and quality bikes and I sold them for no more than $600 less than I paid for them. I take care of my toys and it shows, but anyones 1-3 y/0 bike should look like new if garaged and kept clean.
IF you factor in the tremendous joy AND health and fitness they've brought me every time I ride them, I think they are one of the biggest bargains I've ever spent money on.
And yes they ARE an investment. An investment in your health. And that is almost guaranteed to have a net positive return.

 

[fxr3]

there has to be value added back in somewhere for the enjoyment of watching these threads sometimes deteriorate! From "Depreciation of ebikes" to whatever MLB just wrote.......is priceless!
Never would have seen it if I hadn't bought a ebike!

 

[tomjasz]

Yes, ebikes depreciate faster than non-assist bikes because of dead batteries and rapidly changing technology. So you buy a bike or kit at a price you can live with and ride the crap out of it. Anyone looking at an ebike with concerns about resale is in the wrong market.

What rapidly changing technology? Other than basic improvements in efficiency not a lot has changed in 5 years as motors go. Batteries have gotten more powerful but otherwise I don't quite see what has changed? I just tok delivery of a new gear drive and while there are small improvements the basic design is the same and all the parts are available for 5 years ago. I think batteries are the single biggest issue and they are only an issue because we haven't educated the market well enough. The used market is a great market for the educated buyer. It's a shame really.

 

[tomjasz]

Perhaps some of the 'Throw Away' mentality comes from too few places to get electric bikes or kits serviced or built, @Hugh Combine that with inadequate owner knowledge about how to care for and charge most electric bikes, folks get frustrated or their product dies prematurely from neglect. We see that all the time at the shop. Mostly though, is the 'Wow, If I'd only known this before or known about your repair shop...' kind of statements from ebike or escooter owners, so I see education and better support of local shops as a means to reduce the waste.

!!!!SPOT ON!!!

 

[Solom01]

Just as an aside it would be really helpful in the reviews if the ability to repair, replace parts was discussed. I owned an iZip Enlightened which was not cheap in it's day, but has a proprietary in-tube battery - it really is sad, and environmentally a disaster - to throw away a bike that's in perfect condition because batteries are not available. Because of this I made sure that my second bike was as generic as possible, so that I would have a better chance of getting parts when needed. When I see a review where the fact that a bike is really stealth with highly integrated parts and and there's gushing about how pretty it looks I mark it down as a negative - it makes it less likely that you'll be able to get spares.

 

[Bob G]

For price discovery of any brand out there just do a targeted search on ebay -- sporting goods + cycling + brand name -- and then follow the results over time. I've done that for around a year and have noticed a drop in the prices bikes ultimately sell for. Sure many are listed much higher but they remain for sale month after month, but some of the ones that do get bids are very low, almost salvage value where the seller just yanks it from the auction before the close. I can only imagine the shock they must feel. I've have followed Stromer and Haibike especially with a few other brands to a lesser degree. Buy it for a low price and then enjoy the heck out of them, that's how to get your money's worth.

 

[Christian Pinkerton]

I've had my Spitzing & Bultaco Brinco for some years now, 5 at least I think and the batteries are still going strong. I ride every day, everywhere. I don't have a car so they get a lot of use.

I think that if you buy a used electric bicycle you should expect to purchase a new battery given that you have no idea what the current condition is of the one that comes with the bike. Everything else can be inspected visually and replacement motors are not that expensive to buy if needed.

From my experience there is a whole lot less faffing around with ebikes from ebike manufacturers than home made jobs. With home made I found it was endless tinkering and the cost was not that much different but with much higher risk of things going wrong. LIPO batteries turned out to be a nightmare.

If you buy a cheap ebike and use it lots you have to expect to lose a good percentage of what it costs if you manage to even sell it that is. i feel I am in a good position to sell due to the battery being not worth nearly as much as the bike. Someone gets a nice bike that works fine and if they replace the battery then they practically gave a new bike for much less than what I paid.

Electric motors are pretty good. Think about washing machines and they mileage they rack up.