Profit Margins

[jkvt]

Just out of curiosity - does anyone have any idea what a general profit margin is for ebike companies? I know that's a loaded question and there are 700 dollar ebikes and there are 10,000 dollar ebikes, but I'm just trying to get a general sense of how much an ebike company makes off of a bike. I have a $1400 ebike that I feel is a very good value and I really don't see how they make a whole lot of money off each one, especially since I don't believe conventional bikes have a whole lot of margin, although I imagine direct selling of ebikes helps on the margin side some.

This kind of strayed in my head because I had a minor issue that would likely be a warranty claim but I'm just taking care of myself. Partly because it's just easier for the low cost but also I would like to see the company succeed so I don't mind putting a little bit into the bike if I need to. Obviously if it were a bigger issue, ie a bad battery, I'd definitely go through warranty.

 

[Ravi Kempaiah]

There is a saying within the bike industry and it applies to some other industries as well.

" If you want to make a million dollars in the bike industry, you need to start with two million dollars"

The reason for that it, bicycles are one of the oldest industries and perhaps more established than automobile industry. As a result, most of the manufacturing has been relegated to Asia.
Just like how it is impossible to manufacture a phone in the US.
If everything that goes into Apple iPhone was made in the US, they would have to sell the device for $30,000.

Having said that, if you are very shrewd, partner up with the right social media influencers and catch some flies with honey, you could sell some bikes with decent profit.

This bike with Gates belt, Bafang Ultra motor and Sturmey Archer 5-speed hub can be purchased for $2300 and with volume, for $2100.
https://www.alibaba.com/product-det...spm=a2700.galleryofferlist.0.0.452d43ebH4V4gp

The same bike can is being sold for $4500 by some american resellers:
https://boltonebikes.com/collections/ebikes/products/warthog-mid-drive


Only the gullible customers fall for it. Because, to truly engineer a bike frame, motors and batteries, it takes A LOT of capital.

So, in a few years, those companies without long term vision will drop out of the market. It is simply not going to work.

------------------------------------------------------------------------------
It brings up the question, why is Rad Power bikes doing well and how are they doing it?

That is a different topic in itself

 

[socal2fast]

Seems like a good deal. What other super deals are out there? I like the look of the Soul Stomper

 

[byunbee]

Watt Wagons is a reputable U.S. based company known for making high quality bikes. The owner @pushkar is active on this forum and usually responds within hours if not minutes.

He just released a new lower priced model which is a Bafang M600 + Gates Carbon Drive combo.

City Commuter - Pre-order for late July Delivery

An incredible class 3 full featured ebike, with throttle, at ~50lbs! Bafang M600, 11.6ah 48V pack 30-35 miles range with Pedal assist Shimano G-C7000-5D 5 speed IGH, Belt drive, Throttle Carbon rigid fork. 27.5x2.1 tires. We can swap out for 700C tires Carbon handlebar Carbon Seatpost Tektro HD...

wattwagons.com

 

[byunbee]

I believe @Ravi Kempaiah who is the owner of a new ebike company called Zen E-Bikes is in the process of developing a full suspension ebike with Bosch Motor + Rohloff + Gates Carbon Drive but understandably at a higher price, but lower than brands like Riese & Mueller. Ravi is well known and respected on this forum.

Zen Samurai Diamond

Early summer is the time when most companies start announcing new products and I thought this would be an appropriate time to announce updates on this model - Samurai. Some key highlights of the bike are presented below and full specifications will announced sometime in July once the...

electricbikereview.com

Watt Wagons also has something similar in development with similar timing (September/October).

The New Ultimate Commuter Pro - Delivery Oct 2020

This is the pre-launch version of the upcoming Watt Wagons Ultimate Commuter Pro - aka the Superbike. For pre-orders we are ONLY ASKING FOR THE FOLLOWING - Frame size / Color / Style / Fork. Prototype expected July 2020, Bike Delivery late Oct 2020. Here are the founder specs Motor - Bafang...

wattwagons.com

 

[GypsyTreker]

I always thought the profit question to be moot. If the market pays the asking price of a product, in droves , the company marketing it did a hell of a job, their profit is their business. If the product being marketed has no takers margins don't matter. This does not apply to health care or big-pharma .

 

[byunbee]

I always thought the profit question to be moot. If the market pays the asking price of a product, in droves , the company marketing it did a hell of a job, their profit is their business. If the product being marketed has no takers margins don't matter. This does not apply to health care or big-pharma .

Very good point.

 

[FlatSix911]

The local bike retailers are now experiencing a Bike Boom (reminiscent of the '70s 10- Speed Boom)
Almost everyone was getting cabin fever due to COVID -19 and wanted to get outside and active.
Most LBS in the Bay Area are out of inventory and their service departments are backlogged for months.

 

[FlatSix911]

I believe @Ravi Kempaiah who is the owner of a new ebike company called Zen E-Bikes is in the process of developing a full suspension ebike with Bosch Motor + Rohloff + Gates Carbon Drive but understandably at a higher price, but lower than brands like Riese & Mueller. Ravi is well known and respected on this forum.

Zen Samurai Diamond

Early summer is the time when most companies start announcing new products and I thought this would be an appropriate time to announce updates on this model - Samurai. Some key highlights of the bike are presented below and full specifications will announced sometime in July once the...

electricbikereview.com

Watt Wagons also has something similar in development with similar timing (September/October).

The New Ultimate Commuter Pro - Delivery Oct 2020

This is the pre-launch version of the upcoming Watt Wagons Ultimate Commuter Pro - aka the Superbike. For pre-orders we are ONLY ASKING FOR THE FOLLOWING - Frame size / Color / Style / Fork. Prototype expected July 2020, Bike Delivery late Oct 2020. Here are the founder specs Motor - Bafang...

wattwagons.com

I would like to hear more about Ravi's new venture. @Ravi Kempaiah can you share any details?

 

[Alex M]

" If you want to make a million dollars in the bike industry, you need to start with two million dollars"

Here is how I think it works.
A US or European company invests 2 million in R&D, makes a quick 1 million on top of this after manufacturing it in China and they are proud and very happy.
Then Chinese factory across the street without any R&D work suddenly starts making an identical bike, and US/EU guys go back to drawing board ...
And so on.

 

[ruffruff]

There is a saying within the bike industry and it applies to some other industries as well.

" If you want to make a million dollars in the bike industry, you need to start with two million dollars"

The reason for that it, bicycles are one of the oldest industries and perhaps more established than automobile industry. As a result, most of the manufacturing has been relegated to Asia.
Just like how it is impossible to manufacture a phone in the US.
If everything that goes into Apple iPhone was made in the US, they would have to sell the device for $30,000.

Having said that, if you are very shrewd, partner up with the right social media influencers and catch some flies with honey, you could sell some bikes with decent profit.

This bike with Gates belt, Bafang Ultra motor and Sturmey Archer 5-speed hub can be purchased for $2300 and with volume, for $2100.
https://www.alibaba.com/product-det...spm=a2700.galleryofferlist.0.0.452d43ebH4V4gp

The same bike can is being sold for $4500 by some american resellers:
https://boltonebikes.com/collections/ebikes/products/warthog-mid-drive


Only the gullible customers fall for it. Because, to truly engineer a bike frame, motors and batteries, it takes A LOT of capital.

So, in a few years, those companies without long term vision will drop out of the market. It is simply not going to work.

------------------------------------------------------------------------------
It brings up the question, why is Rad Power bikes doing well and how are they doing it?

That is a different topic in itself

That bike also has $600 shipping from Alibaba

 

[Ravi Kempaiah]

That bike also has $600 shipping from Alibaba

That would be the least efficient way of doing things.
That reseller guy is smart. He has taken a lot of pre-orders!
Once you have enough pre-orders to fill half the container, then cost of shipping goes down dramatically to < $50 per bike.

 

[Ravi Kempaiah]

I would like to hear more about Ravi's new venture. @Ravi Kempaiah can you share any details?

Thanks.
The goal has been to build high-quality E-bikes and bring the latest battery tech to this space. There is some room for innovation with respect to design, quality, price etc.
Over a month ago, we got a brilliant engineer to join our team as a founding member and things are coming along well.
I am excited share with you guys all the development in a few months (by September). We will have Prof. Jeff Dahn (the mastermind behind Tesla's batteries) to launch the products.

 

[byunbee]

Thanks.
The goal has been to build high-quality E-bikes and bring the latest battery tech to this space. There is some room for innovation with respect to design, quality, price etc.
Over a month ago, we got a brilliant engineer to join our team as a founding member and things are coming along well.
I am excited share with you guys all the development in a few months (by September). We will have Prof. Jeff Dahn (the mastermind behind Tesla's batteries) to launch the products.

Does that mean you are using proprietary batteries? What's Prof. Jeff Dahn's role in your company?

 

[FlatSix911]

Interesting news... Tesla just delayed Battery Day again for the third time this year.
I am looking forward to attending the event at the main factory in Fremont, CA.

Elon Musk delays shareholder meeting, Tesla ‘Battery Day’ again

Elon Musk announced that Tesla’s “Battery Day” is being delayed again to after July 4, and it might be combined...

electrek.co

Elon Musk announced on Twitter today that Tesla’s annual investor meeting will be delayed due to restrictions for holding events:

“We will have to postpone the annual shareholder meeting, as there’s still no large gatherings allowed by July 7th. Not sure of the new date, but I am guessing maybe a month or so later.”

The CEO then commented on the Battery Day – saying that they might combine it with the shareholder’s meeting.

“Probably good to combine them, since they are converging in time.”

He also confirmed that it won’t happen this month as previously planned and that the date will “hopefully” be announced after the July 4th week:

“I’m hopeful we can announce a date after the July 4th week.”

It would likely put the new date of both Battery Day and the investor meeting in August. Musk also mentioned that he is leaning toward holding the event in Fremont

 

[Sierratim]

This post from ~2 years ago offers an insight into gross and net profit margins on bike sales, https://www.quora.com/What-are-the-profit-margins-on-bicycles . Basically it's like new car sales, the real money is in the accessories and service.

 

[Art Deco]

I always thought the profit question to be moot. If the market pays the asking price of a product, in droves , the company marketing it did a hell of a job, their profit is their business. If the product being marketed has no takers margins don't matter. This does not apply to health care or big-pharma .

What we were warned about the "Military Industrial Complex" ~"Medical Industrial Complex" today.

 

[Johnny]

An individual who just started making bikes can undercut the price of a similarly or less equipped bike from a big company by 30-40 percent, that is how huge profit margins are.

 

[Sierratim]

What we were warned about the "Military Industrial Complex" ~"Medical Industrial Complex" today.

Both of these 'complexes' have a common factor...back to our regularly scheduled programming?

 

[Art Deco]

This post from ~2 years ago offers an insight into gross and net profit margins on bike sales, https://www.quora.com/What-are-the-profit-margins-on-bicycles . Basically it's like new car sales, the real money is in the accessories and service.

Bike shops are about as old as horse "tack" and buggy shops . They have a full century of market optimization.