Transportation Deployment Casebook/2018/The two-wheel-miracle: an analysis of the life-cycle of Electric Bicycle in China


Electric bike, or E-bike, is a variation of the traditional bicycle. E-bikes entered the Chinese market in the late 1990s with the production and ownership rates skyrocketing since 2004. In 2014, 90% of the world's E-bike production was completed in China[1]. In 2017, China had 250 million E-bikes and had the most E-bike owners in the world[2]

The following article analyses the historic life-cycle of E-bike in the context of China from qualitative and quantitative aspects. Regarding qualitative aspects, this article introduced the life-cycle from its birth, grow and mature phases and the technology as well as related policies in each phase. In the quantitative analysis, a regression model was used to find the curve of best fit for the production of bikes. Using the curve generated, the three phases mentioned in qualitative analysis can be justified.

Purpose of studying the life-cycle:

Although the development of E-bike in China has been relatively successful based on the figures, the process was not smooth and the future prediction is relatively negative. From the data prediction from Citron[3] and the quantitative analysis section in this page, E-bike in China has entered mature phase and the production/sales are declining. The miracles achieved by E-bike indicates that this industry plays a vital role in China's development and cannot be simply abandoned. To revitalise the market and prevent E-bike, a technology with potentials, from entering an end phase, a life-cycle study is conducted to analyse the technology and policy issues during the development and therefore provide suggestions for this industry.

Quantitative AnalysisEdit


Using the model described below, an S-curve is generated to analyse the life-cycle

S-curve for the model


The core equation for the model used to predict annual production is shown below


In which K is the saturation level (in thousands), b is the slope of the linear regression, t is the year and  is calculated by   .

For the linear regression, the independent variable was selected to be the years and the dependent variable is calculated by  

For the regression analysis, the Data Analysis Tool in Microsoft Excel 2016 was used.

First, the dependent variable Y for each year under different saturation level was found and a linear regression was conducted. The spacing between K was narrowed down to 100 to provide a more accurate saturation level.

Regression Results
K 37000 37100 37200 37300 37400 37500 37600 37700 37800 37900 38000 38100 38200 38300
R square 0.938339 0.957721 0.963934 0.966841 0.968334 0.969084 0.969393 0.969422 0.969265 0.968978 0.968599 0.968154 0.967662 0.967134

Using the preliminary results, it can be seen that when K=37700, the R-squared was the closest to 1. Therefore, K=37700 was used to find and plot the S curve. The summary of the regression results for K=37700 is shown below.

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept -1256.87322 59.60483124 -21.0867676 5.2423E-12 -1384.71287 -1129.03357 -1384.71287 -1129.03357
Slope 0.626146566 0.029720605 21.06775961 5.307E-12 0.562402208 0.689890925 0.56240221 0.689890925

As shown the t-Stat is greater than 2 which indicates that the variables are statistically significant .

Analysis & Validation on the results:Edit

The annual production of E-bike represents a good example for the life cycle for a new transportation method. From the S-curve, it can be roughly decided that the birth phase is from 1999-2004, the growth phase is 2004 - 2009 and the mature phase is 2009 - now.

Even though E-bike business is booming fast in a global scale[3], there has been a significant contraction in Chinese market which results in the decline of production after 2013. Since the 2008 financial crisis, there had been a trend of slow in grow of annual production. The government policies became the last trigger that caused the contraction in 2013. The detailed discussion is in mature phase below. According to third party prediction, if the policies are still as tight as the current policy, the Chinese market is likely to further contract for the next 10 years but remain at a level of 30,000,000.

China remains the major market for E-bike. In 2017, over 30,000,000 E-bikes were sold in China while the total sales for the rest of the world were about 3,000,000. China dominates about 90% of the market in E-bike sale and 50%-80% in E-bike production. With no grow of demand in Chinese market, it is rational that the annual production in China stop expanding and even experience minor contraction.

From a more practical perspective. At the start of 2018, it is estimated that there are over 250 million E-bikes in China. The total production throughout years roughly adding up to 357 million E-bikes in total. If omits the production before 2007 (since E-bikes over 10 years old are likely to be recycled already), the total production is around 340 million. This figure is reasonable for the current ownership and stock in the storage.

Data set used:Edit

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Annual Production (thoudsands) 58.6 129 293 586.7 1594.5 3997.2 6757.1 12090 19500 21382 21880 23690
Predicted Annual Production (thoudsands) 112.2248 209.3714 389.7563 722.6122 1329.786 2414.442 4281.627 7299.864 11715.18 17314.29 23257.14 28484.27


Year 2010 2011 2012 2013 2014 2015 2016 2017
Annual Production (thoudsands) 29540 30960 35050 36950 35510 32570 32150 31131
Predicted Annual Production (thoudsands) 32374.53 34924.73 36460.26 37337.96 37824.78 38090.3 38233.8 38310.96

Data source: Zhiyan Consulting Group[4], The Ministry of Industry and Information Technology of the People's Republic of China (MIIT), Bike Europe[5], The China Light Industry Year Book (2010, 2011, 2012) and Zufang Sheng[6]

Qualitative AnalysisEdit

E-bike background and current status:Edit

E-bike is a variation of traditional man-powered two-wheel pedal bike with a battery to provide assisting power. It has features similar to a motorbike such as headlights, horns, turn/brake lights and a motor. However, it is more closely related to bike with pedals, brake and can only travel at 25 km/h[2][7][8]. E-bike is very similar to E-motorcycle and the only differences are speed limit and weight. E-bike is environmentally friendly, produce nearly no noise and affordable so it is welcomed by the general public and environmentalists. Unfortunately, this travel mode was under suppression due to safety concerns from many local governments. The policies to restrain E-bike not able to accommodate the fast grow speed so some local governments decided to ban all the bikes temporarily. Recently, more and more cities started to embrace E-bike by carrying out new policies but the general policy environment is still harsh.

A typical E-bike on a street from China

Essential technology characteristics:Edit

The following is a list of essential technology components involved in a common E-bike.

  • Bicycle drive-train systems: the chain system on a bike to transmit power to kinematic energy. In this case, it helps to combine and transport both man-power and electric power to movement of the bike.
  • Battery: Battery is the core of energy source for an E-bike. An E-bike can also work without electricity, but it would simply be an over-weighted bike. The quality of the battery is important since it is directly linked to the length of travel per charge (endurance)[2]. More importantly, poor design or low quality battery would cause partial overheating and trigger the combustion of lithium[9] or explosion.
  • Lighting system: unlike a bike, E-bikes are generally equipped with a front light for lighting and brake/turn lights for indication.
  • Controlling system: an integrated circuit that is designed to optimise the current from battery and pedal to the motor and prevent the entire system from overload. It is also known as the 'brain'[6] since it separated E-bike with a simple combination of bike and battery.

Main Advantages:Edit

For individual For the community
Affordable price[10][11][4] Lower time-space resource consumption[10]
Allow people with physical limitation to ride a bike[11] Help alleviate environmental impact (noise, air etc.) from commute activities.
Easy to park Use renewable energy

Main Target Market:Edit

The areas discussed might overlap with each other since they are not categorised using the same standard.

  1. Migrant Worker: E-bike is affordable. Migrant workers in China are normally former farmers from rural areas. They seek to improve their economic status by working in cities and generally have lower average income. An affordable option for a daily commuting vehicle would be an E-bike.
  2. White collar: E-bike helps them to avoid congestion. This group mainly works in CBDs which are the most congested. E-bikes help them travel better through the traffic flow in the congested areas.
  3. Senior: E-bikes overcomes the physical limitation. In China, many of the seniors take part in purchasing daily house consumption. Physical limitation restrained their ability to use a bike and using a car would be quite inconvenient. The senior in a typical family would go for morning exercise in a nearby park[12] and make the purchase afterwards. This group would experience difficulties in maneuvering a bike but can easily use an E-bike.
  4. Homemaker: E-bikes is light and convenient for them. Homemakers generally will use E-bike as a method to send children to school and buy daily consumptions.
  5. Small business: E-bike is ideal for small-cargo transport. For small businesses, the moving of goods either from wholesalers or to customers normally will not require a vehicle with large capacity. Instead, they might need a vehicle that can park freely along the side of the road and low in cost, which makes E-bike a reasonable solution.

The miracle of E-bike in Chinese Market:Edit

  • Fast grow speed. Unlike a typical transport technology which experiences a long birth, growth period, E-bike in China only had less than 10 years for these two periods in total. It quickly overcomes the technological difficulties and started mass production with an affordable market price.
  • Largest ownership: In 2017, China has 250 million E-bikes, making it the largest E-bike owner country in the world[2].  The Sales of E-bike in China is in dominant position comparing to other markets and is estimated to continue for a long time[3].
  • High economic outcome: MIIT estimated that E-bike industry generates over 4.8-billion RMB direct benefit in 2017[13].

Detailed Life-cycle AnalysisEdit

Before E-bike era in China:Edit

Previous modes:Edit

Bus (public transport), car, motorcycle and bicycle. The new e-cyclists were mainly from motorcycle and bicycle users[10].

Limitations for previous modes
Car Bicycle Motorcycle Public Transport
High price Energy consuming High Fuel cost Inflexible schedule
High maintenance cost (fuel, repairing) Time-consuming License required Forced to share space
Less useful for medium distance trip Geographical constraints (long distance, hills) Time-consuming
Parking issue Inflexible routes
License required

How the market for transportation evolved:Edit

In the 1990s, the Chinese Economic Reform took place in the mainland, and the economy started to grow. At this stage, people were only able to afford normal bikes, and E-bike was impractical due to a technological constraint on battery. At that time, China had a large population using bikes and was on the brink of massive motorisation. In the early 21 centuries, the technology revolution and the boost of economy encouraged the production of the E-bike. The mass production lowered the market price which stimulates the market and eventually achieves economy of scale. The evolving of the market in the growth period is a typical example of 'magic bullet'[14] in which the large demand helps achieve economy of scale and therefore lower the price as well as improve the quality. The lower price and higher quality trigger more demand and form a positive loop. Therefore, the market for E-bike should keep expanding according to 'magic bullet' theory.

However, the end of the growth period for E-bike entered only 10 years into the growth period. It was caused by disincentive policies from local governments. Many local governments banned E-bike due to either road safety concern or manufacturing safety concern[15]. For example, Beijing has restricted the use of E-bike in the inner-city region to alleviate the congestion issue[16]. E-bike became useless if riding on the road is not allowed, and therefore less costumer will make the purchase. Further discussion will be conducted in the mature phase.

How the factors stimulated the rising of new E-bikes:Edit

E-bikes are most useful during medium-distance travel. Comparing to the car, the E-bike is more affordable and does not require a well-defined rectangular space for parking. Comparing to bike, it helps an individual with insufficient strength to ride a bike for medium-long distance. Comparing to public transport, it allows individual to travel at their schedule and grant them with a certain amount of private spaces. Based on all the demand for improvement in various transportation technology, the opportunity for E-bike emerged and industrials stared to seize the opportunity to provide a solution: E-bike.

Preparation for the Birth Phase:Edit

The invention of E-bike in China:Edit

E-bike is an end-driven, applied innovation. The invention of this technology can be described from two perspectives.

From hardware perspective:Edit

Using the experience from Japan[10], engineers in China started to combine bike with an electric motor to provide suit with the market demand. The engineers from different areas cooperated to combine components for a bike and a electric together and invented e-bike.

From software perspective:Edit

Initially, E-bike was designed to substitute for gasoline scooter and bike. In the late 1990s, the Chinese government predicted the dramatic increase of traditional gasoline in the future, so it invested in alternative methods to travel as a way to reduce the needs for gasoline in daily commuting[6].

Technological expertise involved in the design:Edit

  • Mechanical engineers: They designed and improved the structure of E-bike. They have to combine aero-dynamics and human body mechanics to minimise the energy input required and maximise the effect of output.
  • Chemical engineers: They select the most suitable material for a battery for higher energy density and safer working environment.
  • Mechatronic engineers: They designed the mass production technology of E-bike. These engineers designed and improved the assembly line for an E-bike to achieve the highest efficiency to lower the cost of production.
  • Information Technology engineers (late entry): Recently, IT engineers entered the industry to develop advance programs in the controlling system to optimise the energy allocation and battery use to prolong the life of E-bike.
  • Traffic engineers: They are the consulting group for policymakers to decide how to fit the new transportation mode in the existing system.
  • Lawyers: They help the policy maker to decide if the certain behaviour of the E-bike is abiding the existing law. They can also help in designing new road rules for the E-bike to encourage more standardised
  • Government officials (policy makers): These are technological experts in a loose definition since they are experts in politics. They are in charge of approving law bills or standards related to E-bike to legalise the position of the E-bike. They have to consider beyond the hardware aspect and combine the real-life situation and decide whether or not it is feasible to use E-bike under certain circumstances.

Evolution of design:Edit

An early design of E-bike in 1932. It can been seen that the appearance dose not change significantly comparing to E-bike in the 21st century.

Early in the 1890s, patents of E-bike design were filled in the U.S. Early in the design; there was no gear with the battery attached either at the crankset or the top of the rear wheel[17]. This initial design was quickly substituted with gear design (which is now the predominant design) in the early 1900s. The gear design was considered to be more efficient.

In China, after the taking the initial design from Japan, the engineers quickly modified the design by combining it with gasoline scooter. However back in the 1990s, the price of an E-bike was significantly higher than a gasoline scooter[18]. The price disadvantage greatly suppressed the evolution of E-bike. At the starting point of the growth phase, the large market demand and central governments’ wishes to explore higher efficiency, cleaner fuel resulted in the next surge of new E-bikes.

From then on, the design of E-bike started to shift thanks to technology development in other fields. First, lead (Pb)-acid battery was substituted with predominant li-ion battery for higher energy density and lower environmental pollution. Second, the steel/iron frame design was changed into alloy frame for more stubborn and less weight. Currently, the E-bike has a mature design with the potential to go as high as 80 km/h[15].

From a software perspective, the initial intention was to serve as a substitution for only gasoline scooter and bike. Nowadays, E-bikes are fulling its duty to substitute bike and motorcycles and additionally, also substituting other methods like cars or public transport during daily commuting.

Birth Phase (1990-2004):Edit

The analysis on birth phase was conducted on researching the market niches, the functional enhancement and its functional discovery. Furthermore, the policies associated with E-bikes in the birth phase are discussed.

Market niches:Edit

  1. Individuals who lack physical strength in riding a bike need a similar method for medium-long distance travel or overcome a hill.
  2. Individuals who are suffering congestion in metropolis need a non-sweating way to commute.
  3. Small businesses need a convenient way to transport their goods at lower cost.
  4. Lower income class needs to purchase an affordable vehicle. The average car will cost about 100,000 – 150,000 RMB, which is about six times more than the average income of a city dweller. Meanwhile, an electric bike would only cost 2000 RMB which was 1/8 of the average income[10].
  5. China was at the edge of a large-motorisation, so the potential market was gigantic[18].
  6. Metropolis, like Beijing, Shanghai, have limited parking resources, so the commuter has to reduce the size of their private vehicle.

Functional enhancement:Edit

In the early market, E-bike was a fashionable new way of substituting other types of vehicles. It was quieter, cleaner and does not cause traffic congestion (superficially speaking). In 1999, Shanghai Economy and Trade Committee listed E-bike as a 'highland' for light industry construction[18].

Functional discovery:Edit

E-bike in the early market encourages a considerable number of seniors and housewife who would generally not travel and stay home to travel.

Policies in the birthing phase:Edit

Being a new method of transportation, E-bike had many policies following it, and they can be categorised as either borrowed policies or new policies. They can be further subcategorised as either embedded policies, imposed policies or both embedded and imposed.

In the earliest stage, the government couldn’t accurately define the electric bike: they weren’t powerful enough to be motorbike but had a higher average speed than a normal bicycle. In 1999, Electric Bicycles. General technical requirements (GB17761-1999) identifies E-bike as a two-wheel vehicle who uses electricity from the battery as assisting power and able to operate either pedelec- style (from pedal electric cycle), manual-pedal-style or fully hand throttle[8]. Even with the bike loosely defined, the legal right of E-bike on the road was still not officially granted. It borrowed the policies from both bike & motorcycles for management during this period. Some examples of borrowed policies include:

  • Ride on the right[19] : similar to the U.S., China adopted a Right-hand traffic system , and E-bike is also required to following the same rule. This item is an embedded and imposed policy.
  • Braking system[7]: similar to the bike, an E-bike is required to have both functional front and rear brake to be qualified to ride on the road. This item is an embedded and imposed policy.
  • Age limits[19]: individuals have to be older than 16 years old to be qualified to operate an E-bike.
  • The size of the front and rear wheel should be the same: this design can help maximise the efficiency of the drivetrain system. This is an embedded policy since it is not sanctioned by the government but for the benefit of the user and manufacturer.

The Road Traffic Safety Law of the People's Republic of China in 2004 officially granted E-bike a legal position. However the right of way was not clear and each province, the city has different rules about E-bike.. Among the policies imposed by the government in the birth phase, the following are some of the significant new policies:

  • The speed limit on the product itself: instead of imposing a speed limit for E-bike on different road sections, GB17761-1999 requires the manufactures to produce E-bike with speed limit of 25 km/h. This item is an imposed policy by the government.
  • Battery quality standards: the battery has to follow the according to national battery standard to be qualified to be installed on an E-bike. This item is an embedded and imposed policy.
  • No need for a helmet: a helmet is required for motorcycle but not in the regulation for E-bike since it is a variation of the bike. A helmet is only advised to be worn. This item is an embedded policy.

Growth phase (2004 - 2009):Edit

Roles of different sectors in this period:Edit

The public provides an excessive amount of ‘demand’ in this period, and the private sector was in charge of producing supply to fit the need. The supply and demand are hard to fit, and the large demand caused some illegal private sector players to enter the period. The fast grown public sector and illegal supplier eventually caused the government to intervene.

Policy issue in the growth period:Edit

  1. Insufficient regulation about manufacturing the E-bike: there was only a general national standard without clear definition about parts. Also, the policies on supervising the manufacturers were loose which gave chance to illegal manufacturers to massively produce unqualified e-bikes with either weak frames or bad batteries.
  2. Insufficient regulation about operating an E-bike in some cities: At the start of the growth period, there was insufficient regulation about operating about E-bike in some cities.
  3. Over regulation about operating an E-bike in other cities: Despite some cities had almost no regulations on E-bike, some cities accused E-bike for causing casualties. Several cities even banned the E-bike entirely from riding on the road or retailing in the city, which inevitably gave a hard time to the industry. For example, Fuzhou city completely banned the sale of E-bike on June 1st, 2003, which result in the start of 'Black June for E-bike'[20].
  4. No clear lane assigned: E-bike was classified as bike but has the potential to travel on the road. Without a clear designation for E-bike, they are free to travel between roads and pedestrian lane which caused a chaotic situation. When riding on the road, it is generally slower than a car and is vulnerable to any form of impact. When riding on the pedestrian lane, the E-bike is significantly faster than pedestrian or a normal bicycle and could injure both of them.

Policy environment:Edit

During the growth phase, the regulations in China tends to become more and more strict. No more subsidies were provided to e-bike purchase and many local government started to view E-bike as a source of trouble. To prevent injury related to E-bike, many local governments directly banned E-bike to 'solve the problem from source'[21]. As a matter of fact, the harsh policy together with the economic recession ended the fast growth of E-bike market in 2009. In 2013, the growth of annual production ended at 370 million and started to contract afterward.

Mature Phase (2009 – Now):Edit

During the mature phase, the increase of new users remains steady. The mature phase of E-bike arrived partially due to the harsh policies imposed by the government. Even now, many of the cities are still not allowing E-bike to ride on the road for safety concerns. Such disincentive policies directly impacted the growth of E-bike market.

Attempts to adapt the changing market:Edit

  • Building higher end brand: Instead of focusing on selling affordable E-bikes, companies like Yadea and NIU have been trying to promote their higher end brand to lead the sale from the top – down[22].
  • Legalise the right to ride on bicycle lane: Many of the cities, like Shenzhen, banned E-bike from entering the bicycle lane since the average speed is too high[23]. Currently, bicycle lanes that are massively being constructed all around China[24] and E-bikes are required to operate on roads which increases the unsafety factor and congestion level[10]. Companies have been trying to legalise the use of bicycle path to enhance user experience.
  • Adapt the change of policy view: China is still using the 1999 standard for classifying E-bike which was out-dated and less useful. It wasn’t until 2018 that a new specification was announced and about to be implanted. On Jan 16th, 2018, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) together with Standardization Administration of the People's Republic of China (SAC) published a beta version of the new specification and starting to collect feedback from the public[7]. The new policy proposed a different policy value than 20 years ago with a stricter definition of the E-bike. For example, to ensure safety for the user, the new standards now require the manufacturers to add fire-proof circuit and need to prevent the battery from self-combustion. 

How has ‘lock-in’ constrained these adaptions:Edit

Lock-in in this context stands for the constraint of mind or method of production after standardisation when economies of scale is achieved[14].

For the higher brand sale attempts, NIU has been successful in Europe market, but the Chinese market is hard to open. A stereotype of E-bike has formed that E-bike only belongs to low-income class so the public, to some extent, does not consider E-bike as a new ‘fashion’ method of travel. The current impression is a lock-in for the promotion of new E-bikes.

For the improvement of manufacturing technique, the existing assembly lines are designed especially for the current model and have already minimised the cost. This is the result of achieving economies of scale. If major improvement is to be implanted on the new model, the current standard and machines have to be updated which would inevitably increase the cost. The factories may be unwilling to accommodate the new standards as a result.

Opportunity for better market share:Edit

With the life-cycle reaching mature phase and started to decline, the industry urgently requires new opportunities for further improvement market share. Otherwise, this method might be abandoned by the public in a few years. The following are some advice proposed based on the suggestion from Garrison and Levinson[14].

  • Tune product to markets & special service:

Shared E-bike: as the sharing economy recently becomes a new business thanks to the development of dockless sharing bike, a new possibility for E-bike present

Specially designed for delivery: Food and small parcel delivery often requires light and swift design vehicles. Short distance delivery service in China is more advanced than any other country and has higher demand. E-bike inherently will have a lower cost than cars so a new design of E-bike especially for courier can potentially increase the market share by bulk sale to the delivery companies.

  • Avoid high capital cost: The manufactures can lower their cost by consolidating different companies and cooperate in developing safer E-bike. By combining assembly line and factories can minimise the cost of capital.

Future Prediction:Edit

Due to the strict constraining policies in both manufacturing and operating perspectives imposed by the local governments, the prediction of the market share in the next five years is relatively negative. However, since the existence of E-bike aligned with many of the goals that major metropolis are trying to achieve: use clean energy, less time-space resource consumption, less noise more chance for people to exercise etc. The current recession might be a temporary setback in the long term.


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