Electric bikes are part of a new mobility movement wherein recreational riders and commuters can use their bikes not just for fun, but also to drive less and get around better.
Percy Chien is the executive director of Fairly Bike Manufacturing Company, a high-quality contract manufacturer that has built bicycles and electric bikes for leading brands all over the world.
In this episode of The Electric Bike Podcast from EVELO, Percy talks about how the mobility movement contributes to growth in the electric bike market and about bicycle and electric bike manufacturing generally.
You’ll learn why Asia is the hub for bicycle and e-bike manufacturing, and how the Trump Administration’s tariffs on bicycles and electric bikes may be impacting manufacturing.
You can listen to the podcast and follow along with the transcript below. Our host, Armando, had recently visited San Antonio, where he rode electric scooters all over town.
Armando: Unless you’re from there, when you think of San Antonio, Texas, you probably remember the Alamo or see visions of cowboys in the Wild West. But San Antonio, Texas is one of the most populous cities in America, with about a million and a half people and, perhaps, as many electric scooters and bikes scattered around town.
It’s not at all uncommon for folks to ride from the River Walk to the Pearl District on an electric scooter or bike, or just commute from home to work or school.
San Antonio is not unique in this regard. Many cities around the world are experiencing a surge in the use of electric vehicles including scooters and bikes, and this is true be it, Boise, Idaho or Santa Monica, California.
The surge in demand for electric scooters and bikes is going to be the starting point for this episode of The Electric Bike Podcast from EVELO. My name is Armando Roggio. Shall we get started?
Electric Bike Trends
Armando: Our guest, Percy Chien, is an expert in the electric bike market, so I asked him about the trends he saw for e-bikes.
Percy: This is a very interesting question because I tried to rehearse in my brain, in my mind, if you ever asked me this question, how would I answer?
I think I can probably answer from the point of view of micro-mobility because this is not about sports any longer. This is about everybody. There are different purposes for using an e-bike or electric vehicles, whatever you want to define it. We look at Santa Monica. We look at the Westwood area in California. There are so many Lyfts. There are so many Jump Bikes. There are so many Birds and there are so many Limes. Every product represents a very, very tiny little definition of a person’s need to go from A to B.
Armando: There is a sense in which the need for basic, efficient transportation is leading folks towards light electric vehicles, and even in the face of some problems, commuters and recreational riders still want micro-mobility.
Percy: Even though we know that right now the injury rate has hiked, people don’t seem to mind at all using the scooters. With electric scooters in many, many places, this seems to be a well-accepted means of transportation.
What is the big difference between mini scooters and bicycles? Only pedals and the sizes, nothing else. By adding bigger wheels, by adding a pedal and a seat, then you make a mini scooter a bicycle. Then if you add stronger engine with a strengthened frame, much faster speed. Then this will become an electric motorcycle.
In the way these products are linked and also separated, supplying different forms of transportation to different consumers and satisfying what they need in their daily lives.
Yes, there are electric bicycles that can be a very nice toy, let’s say, for the mountain bikers. Perhaps even an electric mountain biker, that probably never rode a bike before. They could use an electric mountain bike to go and explore the beauty of nature.
On the other hand, there are also people who need to go one mile from where they live to where they work or go to school. That one mile, it takes a while to walk so it will be faster to ride an electric bike or a scooter to go to the places where they need to be. I think this market will be diversified, but this market would not end anytime soon. This will continue for a very, very long time. That’s why Jump is there. That’s why Bird is there. That’s why Lyft is there. There seems to be enough money flowing around to support those companies, either you call that a venture or you call that an experiment.
Armando: Percy’s insights about micro-mobility and the electric bike market should probably be heeded since he is the executive director of Fairly Bike Manufacturing Company, a high-quality contract manufacturer that has built bicycles and electric bikes for leading brands all over the world.
A Family in the Bicycle Business
Percy: Fairly Bike was established in 1977.
Armando: Although Fairly Bike is a large, internationally recognized enterprise, it started as a family business.
Percy: My dad is actually the first generation of this company, but as far as the bicycle industry goes, my dad was the second generation. My grandfather had the factory in the 1940s and 50s, where at the end of the day a fire took the life of the business.
Then my dad started this company in 1977. This is the 42nd year. Yeah, it’s quite a history because now basically we’re talking about the company history coinciding with the history of the contemporary bicycle industry. You can find every single bit of company history linking together with a certain type of bicycle’s development.
Now in the next 10 years or so, if I have enough time to start collecting some of the old stuff that we made and then I will see if we can fill a museum.
Bicycle Industry Milestones
Armando: I asked Percy to speak about some of the bicycle industry milestones that Fairly Bike participated in.
Percy: In the beginning, let’s say, 1977 to the early 80s, we were basically producing very basic ten-speed bikes.
Then in the early 80s, there was a big boom of mountain biking. We started making some mountain bikes for, let’s say, Fuji brand or even earlier, the Japanese brands, but then Diamondback came out. It was the very, very interesting time when their company grew from basically one container or two to a multimillion dollar company.
It was quite a bit of history on mountain biking. As you know, when mountain biking was really hot and BMXs were very hot, we were the first company who actually helped the brands in the States to develop products and make those products very successful. This is something that we’re proud of.
Then after mountain biking when the whole industry was not so clear about what is next, we started with Lee Iacocca in 1997 with the first e-bike.
That was called eBike by EV Global. Then from 1997 until now, it’s already, what, 20 years? This is also quite a development for the e-bike market. We are happy that we were part of this successful time.
We’re part of the start of the e-bike industry and really every category of products when they were young when they were on the drawing tables, we were part of that. Then we brought or we helped our clients to bring the product up to a certain extent when they became popular. Then we moved on to the next one. That’s quite an interesting history. I myself was only involved with the company since 1993 so this is my 26th year with the company.
Are Electric Bikes a Fad?
Armando: Fairly has obviously manufactured for many high-quality bike brands. Your company has even helped those brands to innovate. You’ve seen trends come and go. Do you think electric bikes as a category have staying power?
Percy: Personally, if I didn’t believe in e-bikes, I wouldn’t have stuck with it for 20 years. In 1997, I think the bicycle industry was facing a dilemma. What happens next. What’s going on and what is our next replacement to the bicycles at that time? We believed by looking at the Japanese market at the moment, we believed that e-bikes would eventually be a very, very promising alternative to just the regular bicycles. At that moment, even until now, the entire bicycle industry focuses on individual sports. We’re talking about the dealership, what they sell on a daily basis. Those are one way or the other connected to some type of sport, either BMX or even trekking bikes, city bikes. They are pretty sporty if you look at the models that they are selling in the bike shops.
Armando: The focus on bikes for sports and exercise may be shifting.
Percy: On the other hand, the bicycle industry will or has been facing quite a bit of difficulty in terms of getting people outdoors to do sports, but people do need to get around one way or the other.
Electric Bikes as Transportation
Armando: The need to get around brought us back around to the idea of mobility.
Percy: Let’s say in Europe where the cities are very close to each other, those cities are not huge, but they are somewhat congested. Bicycles become a very good alternative to public transportation because at the end of the day, not all public transportation can take you to the last mile. Some people need to walk two miles or a mile or even three miles. A bicycle, an e-bike, would be a very, very good option for those people.
Fairly Bike Builds Quality
Armando: Percy believed a significant portion of the electric bike market in the future could be focused on mobility in addition to recreation. This made me wonder if, given Fairly Bike’s solid reputation, more brands were approaching him to manufacture electric bikes for them.
Percy: There are many approaches that we have received in the last 10 years. Not every single one of them would be able to fit in or, let’s say, we don’t fit into their equation.
Number one is the price point, the type of design and also the manufacturability. They affect how and whether we can actually help them to manufacture. Some brands are just too inexpensive. I wouldn’t say cheap, but inexpensive. That means the material selections, the functionality, the lifespan of the product itself, they are all in question. We don’t really fit into all of the companies that actually approach us and ask for manufacturing or development, but there are some companies that sell electric bicycles in a very high-end approach to good quality, fun to ride, e-bikes. Those types of companies, we work with them really well.
Armando: I’m just going to sum that up and say that Fairly manufacturers very high-quality bikes.
Percy: That would be a very good statement, I would think.
Armando: What do you believe are the most important components or maybe the best measures of electric bike quality?
Percy: Number one, I think because it’s an electric bike, by definition, we need a very good battery. We need a very good motor. Without those two, an electric bike would not be defined as an electric bike.
Armando: Beyond the motor and the battery, the bicycle should be designed to handle the additional weight and power.
Percy: As you know, there are kits that you can buy aftermarket that you can fit into your ordinary bicycles. I’m not saying that those are not good quality. You can definitely find expensive kits that you can actually build into your bicycle to make your bicycle as an e-bike, and they’re still fun to ride, but remember bicycles are not built to carry such a heavy load after the conversion.
Armando: In contrast, purpose-built electric bikes are designed to go faster and carry a heavy battery.
Percy: When we start from scratch saying, what is a very, very good electric bike, we, number one, need to have a robust motor. We also have to have a robust battery that can actually juice up the motor to perform to how it’s supposed to perform by definition. These definitions are different in the world. I take Europe as an example. A regular pedelec is defined as 25 kilometer per hour speed with a 250 watts motor, and you have to pedal, but with the same token, this is too low in terms of selling bicycles to North America, the United States for example.
CPSC (Consumer Product Safety Commission) defines bicycles not the same way as what the federal government would define them. If you go to DOT…This is a part of history also. In the beginning, in 1997, when we started with Lee Iacocca, he was actually the person who went to DOT and got them to notice that there was something like the electric bike coming in.
Back then there was no e-bike regulation. CPSC didn’t know about electric bikes and they had no intention of redefining what actually it was. DOT didn’t really want to touch it. At the end of the day, I think one year afterwards, maybe in 1998 or 99 at most, they decided, okay, everything that’s under 20 miles per hour with a one horsepower motor is not under DOT. This will go belong CPSC. CPSC had to take it because DOT said so.
From then on in the US, e-bikes were under 20 miles per hour, under one horsepower, which is a 750 watt electric motor and you don’t have to pedal. You could use a throttle. You could also use throttle together with the pedal assist. That’s how liberal the US definition was back then.
In contrast of what we define right now in three classes in California, which is now going throughout the entire country, I don’t know, maybe 20 states now that have, or maybe 21 states have defined the three class electric bicycles. The remaining states, eventually they will follow. That’s the way I see it.
Manufacturing in Asia
Armando: Percy, let’s change the focus from electric bike classification laws back to manufacturing. Why are so many, really all, electric bikes manufactured in Asia?
Percy: Let’s say, electric bicycles are bicycles by nature. They are bicycles with strengthened design and engineering. Then you add the motor and you add the battery. Whether you do integration or you don’t do integration, its nature is a bicycle.
In the past 20 years, whether it’s Taiwan or China, Cambodia or Vietnam, these places are essentially the heart of the bicycle supply. The component, the suppliers, materials, they are all in the neighborhood. It would naturally become a very, very essential part of where we want to build bicycles. Asia, where else?
I mean if we sit in the US…I personally have a place in Thousand Oaks, California. If I sit there, I put the office together and say, okay, today I’m going to start building a bike. Where do I go first? I need to go to Japan, to Shimano. I need to go to Chicago to but the supply is also from Asia, from Taiwan. Their factory is located in Taichung City.
If I want to buy wheels, tires, pretty much 99.9% of the components, you can only find them in Asia. What else are you going to think? Of course, naturally, you go there.
The US as a market, Europe as a market, they are very good in terms of designing the nature of the products they want to sell in retail because they are connected directly with the market, but in terms of manufacturing, they are really not built for a quick reaction, quick sourcing. The material flow is very difficult. That’s the way I see it, why everybody goes to Asia for electric bikes manufacturing or bicycle manufacturing.
Taiwan, China, Cambodia, or Vietnam
Armando: You mentioned four nations as hubs, if you will, for the bicycle manufacturing industry. Can you compare and contrast these?
Percy: Quality level. Taiwan started first in the 70s, 80s, and 90s, replacing Japan as a very natural resource to take over the Japanese supply because Japan got too expensive.
After 20 years of manufacturing in Taiwan, it was very natural that the component makers, the sourcing managers, material makers, they would find a way, always find a way, to try to manufacture less expensively. They would go next to China. I think maybe, if I remember correctly, 1993, 94, Giant, let’s say, Shimano. They started their first Chinese factories in the Shanghai area. Of course, the other component makers followed, scattered in different cities around China. Some of them went to the Shanghai area or somewhere close to Hong Kong, but the political situation limited the possibility of the widespread of moves to China.
Then the European Union anti-dumping measure came against the Chinese bicycle manufacturing. Then these manufacturers, they found a way to go to Vietnam and then continue their vision of manufacturing inexpensively, but at that time, I think the market has already bisected, if not trisected to a different level of quality required. The cheaper ones that were required in the marketplace would naturally go to China or Vietnam. After the dumping of the Chinese bikes to the European Union then Europe was probably looking at Vietnam as a source of export. Cambodia came along because at the border it was conveniently located to supply to Vietnamese companies or to export to the European Union since Europe provided them with a GSP, which is a preferential duty. They have an advantageous situation compared to other manufacturers, let’s say, in Taiwan or China. But on the other hand that also changed the supply paradigm. The cheaper bicycles were manufactured and supplied to the United States from China, while Taiwan became a major supplier for mid-to-higher end specialized bicycles.
Armando: In some sense, it was politics and anti-dumping measures that segmented the market, both along cost and quality.
Percy: That’s how the supply markets were segregated in terms of their different advantages, their current functionality, and different price points.
Armando: Given the trade climate at the moment, it would be difficult to have a conversation about Asian manufacturing, and especially Chinese manufacturing, without talking about the U.S. tariffs. Would you discuss this?
Percy: Mr. Trump decided one day that he wanted to post tariffs against the Chinese made products. Personally, if I wear my hat as a U.S. citizen, I would totally agree with what he had done.
As a trader and manufacturer, it puts everybody in a very, very difficult position because you don’t know what to expect next. What I’m saying, not knowing exactly what to expect, that means we don’t know exactly when the tariff will be lifted or if it will be continued. We don’t know how severe the result will be in terms of the trade talks with China. Are the U.S. and China going to settle one way or the other or are they going to go into a higher level of trade war? I have no idea.
That makes everything very difficult, but I know the fact that the importers, now on the electric bikes, they have to either pay 25 percent tariff or they have to go somewhere else to manufacture. Because the quantity wasn’t very significant, so far everybody was able to find a remedy for it, for their own situation, but if the market becomes bigger, there will have to be a way to supply enough to the U.S. market. That’s the way I see it and I’m pretty sure it’s going to happen the way I see it.
Armando: Do you believe the tariffs will cause some brands to move their manufacturing to Taiwan?
Percy: Not necessarily, because some of the electric bike importers, number one, they don’t know about electric bikes. They don’t know the details of the technology. They don’t want to invest money into R&D. They would just go to the show in China. They would say, “today is the first day of Shanghai show,” so that if I were an ordinary buyer that would buy a container or two a year and try to sell to the consumers, I would just go to Shanghai and I spend two days there. I look at the bicycles and I go to the vendors and I say, “I want to buy one container or two containers of this. Now, what would the price be?” These are the people who are, I would call them opportunists. By no means, I’m looking them down. I just saying that they grasp the opportunity to sell without long-term planning.
Armando: Opportunistic companies that focus more on short term might simply buy ready-made bikes from China and pay the tariff, but established brands might do things differently.
Percy: They would sit down and then they would plan on defining their own market, what level bicycles they would bring in and what are the target consumers they go after. Some of the companies that are in the marketplace at this moment, that everybody knows, are the later ones, not the first ones. The first ones are here. They come and they go. These people will not buy anything from Taiwan because the prices do not match what they are looking for, but the second type of brand would definitely be more in favor of buying from Taiwan because the quality levels are more stable and more up to the consumer’s, I would say maybe, taste or the consumer’s expectation, if you will.
Armando: I really learned a lot speaking with Percy Chien. He got me to think about micromobility and the dynamic electric bike manufacturing industry.
I hope you learned something too in this episode of The Electric Bike Podcast from EVELO.
EVELO was one of the original American electric bike brands, and we really care about the industry and our customers. If you want to learn more about electric bikes, please subscribe to this podcast and check out The Complete Electric Bike Buyer’s Guide. Thank you.