- More and more cities are redesigning streets near city centers in favor of cyclists. Demand for e-bikes is growing rapidly.
- Dutch e-bike startup Vanmoof, which expects sales of 100 million euros by 2020, is benefiting from this.
- When it comes to design and sales strategy, the founder takes inspiration from Tesla CEO Elon Musk.
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Taco Carlier has never experienced such a flood of orders in the eleven-year history of his company. The head of Vanmoof, a Dutch e-bike manufacturer, unveiled the new generation of his high-tech bikes at the end of April and says he sold more than 10,000 units worldwide within the first three weeks. In Germany, sales rose 226 percent year-over-year between February and April.
Fearing infections on buses and trains, people are currently taking to bicycles en masse. Carlier expects the trend to continue even after the Corona crisis: "I firmly believe that we are at the beginning of a revolution. Thanks to e-bikes, the number of cyclists will increase. We're already seeing that in cities like San Francisco and London."
Just a few days ago, for example, the mayor of London announced that he wanted to redesign streets near city centers so that they could withstand a tenfold increase in bicycle traffic after the end of the closure measures. German cities such as Berlin are also testing wider bike lanes at the expense of motorists. Covid-19 is accelerating that change, Carlier said. "Everything we predicted for the next 10 years is just happening in three months."
In fact, the market for e-bikes was booming even before the Corona crisis. In 2019, some 1.36 million electric-powered bikes were sold in Germany - nearly 39 percent more than the previous year. The market is professionalizing and prices are rising, to an average of 982 euros per bike including e-bikes - an increase of 30 percent compared to 2018. A billion-dollar business that is also increasingly displacing classic wire bikes. The market share of e-bikes in the overall bicycle market is currently 31.5 percent.
From ten to 40 million euros in one year
Vanmoof wants to profit from this - and is doing a lot of things differently than the competition. The company, which sees itself as the Tesla of e-bikes, recently raised an investment of 12.5 million euros from London-based venture capitalist Balderton Capital and electronics supplier Sinbon Electronics. Vanmoof had previously raised more than six million euros via crowdfunding and from a small funding round from Slingshot Ventures in 2017.
For a bike company, venture capital funding is an unusual route. But: Taco Carlier doesn't see Vanmoof as a bike manufacturer, but as a tech company. A glance at the staff already shows that: Vanmoof's software team is almost as big as the hardware team. A total of around 180 employees work at the headquarters in Amsterdam, and 290 worldwide.
Carlier has big ambitions: He wants to sell his e-bikes to a billion people. That can only be achieved through "high quality at an affordable price," he says. So far, the plan is working. Vanmoof has quadrupled sales from ten million euros in 2018 to nearly 40 million euros in 2019. This year, it is expected to rise to 100 million. Sales have been consistently 20 percent above plan since the beginning of the year, according to the company. Anyone ordering from Vanmoof today will have to wait three months.
Parallels to Tesla
The hype surrounding the monochrome high-tech wheels has a lot to do with the new pricing strategy. With a new price of 1998 euros, the two models S3 and X3 are around 40 percent cheaper than the previous generation - and no longer much more expensive than e-bikes from discounter brochures.
The strategy of entering the market in the luxury segment and then tapping into the mass market through volume and economies of scale was formulated by Tesla CEO Elon Musk back in 2006 in his "master plan" for the spread of electric mobility. In other respects, too, the parallels to the U.S. automaker are hard to overlook. This starts with the naming. Vanmoof has given its two model series the abbreviations S and X, in analogy to Tesla's Model S and Model X.
In terms of design, the e-bikes are unmistakably based on the Silicon Valley aesthetic of manufacturing products from a single mold. Bulky elements such as cables, gears, bells and lights disappear into the housing. What remains is a sleek form that is staged in the advertising videos to the beat of electronic basses and in close-up - very much in the style of Tesla.
The Dutch company's technology focus is also reminiscent of Elon Musk's product philosophy. The e-bikes are intended to be more than a means of transportation. They are computers on wheels that adapt to the preferences of their riders. On the latest generation, for example, the gear shift and the warning sound of the bell can be adjusted via smartphone app. Owners can also unlock and locate the bike via the app. In addition, the vehicle has an integrated display on the frame that shows the battery status.
In addition to the naming and high-tech focus, a third parallel to the U.S. automaker stands out: Vanmoof's business model is based on control over the entire customer experience, from in-store purchases to repair subscriptions and a tracking service in the event of theft.
E-bike expert: concept can be a lasting success
E-bike expert Hannes Neupert sees a good chance that the concept can become a lasting success. Like Tesla, the Dutch company has focused on the software functions in its products, while the components used, such as the motor or the battery, are not openly communicated.
That's what sets Vanmoof apart from the competition, he says: "Traditional e-bike manufacturers market their bikes as parts stores, for example by writing in large letters on the frame that the electric motor is from Bosch or the gears are from Shimano," says the chairman of Extra Energy, an association that focuses on lightweight e-vehicles. "Vanmoof offers customers a sleek and distinct branded product that strikes a chord with urbanites with features like built-in anti-theft protection." Neupert finds the fact that the batteries of the high-tech bikes are not removable less of a problem: "Permanently installed batteries increase safety, save weight and offer manufacturers more freedom in design." As with smartphones, he says, this trend will also take hold with e-bikes.
Vanmoof founder Taco Carlier himself makes no secret of his admiration for Elon Musk. His love for Musk's car company even goes so far that Vanmoof has a Tesla as its company car. In addition to the tech pioneer, former Apple chief designer Jony Ive has also been a major inspiration, he says.
Parking tickets awakened the entrepreneurial spirit
Yet Vanmoof was less tech-oriented in its early years. Carlier started the bike company in 2009 with his brother Ties. The founding was allegedly preceded by several parking tickets Carlier received from the police because of the constantly defective lighting on his Dutch bike.
The studied engineers then developed a prototype that integrated components such as the LED system or lock directly into the frame. The Carlier brothers also hid the chain behind a specially adapted housing. "We wanted a robust bike that was still elegant," Taco Carlier told the business magazine Brandeins.
To be sure, the first Vanmoof bikes sold decently. However, they did not become a mass product, according to Carlier, partly because the minimum price of 600 euros at the time was not in proportion to the high risk of theft for many city dwellers.
According to Carlier, demand did not increase until 2014, when Vanmoof launched a first model with an electric drive and integrated GPS sensor. Now the bike could be easily located and returned to the owner after theft. In the meantime, the service has become an important part of the Dutch company's business model: according to the company, around 50 percent of buyers book the paid theft guarantee with their bike.
Success could find imitators
In total, Vanmoof states today, more than 120,000 bikes have been sold since the company was founded. 80 percent of them via the company's own online store. Industry expert Hannes Neupert doesn't think Carlier's goal of reaching one billion e-bike riders is exaggerated - even if he doesn't see Vanmoof as the measure of all things, despite all the hype. "Those who have sufficient financial resources, can build up high inventories and rely on online sales with good service will also sell a lot of e-bikes."
The market is still in its infancy, he said, especially since many people have yet to enjoy the "special riding experience." "In Europe alone, up to 750 million people can theoretically be equipped with an e-bike," Neupert estimates. He sees the Belgian e-bike provider Cowboy, which is pursuing similar goals, as a promising challenger to Vanmoof.
So with the latest round of financing, Taco Carlier may also have kicked off a duel for market leadership in the e-bike segment. Vanmoof plans to use the €12.5 million to ramp up its production capacity and open new stores.
This article first appeared on Business Insider on May 29, 2020.