By the management team of the ODDO BHF Active Small Cap range of ODDO BHF Asset Management.
STORY OF THE MONTH
The European e-bike market is expected to grow at a CAGR of 19% between 2020 and 2025, reaching 11 million units sold by 2025. E-bikes are expected to account for more than half of total estimated bicycle sales in 2030, or 18 million units.
Demand for electric bicycles has risen sharply with the COVID-19 pandemic. As consumer mobility preferences have shifted towards personal over public transport, e-bikes have emerged as a viable option for urban dwellers, boosting demand over the year.
E-bikes as a new means of transport
Bikes are increasingly seen as a cheap and healthy alternative to cars and public transport. Traffic congestion, growing interest in environmental issues, rising fuel prices and the high cost of parking have stimulated the use of bicycles as a means of daily transport. According to a study by SD Worx, the average commute to work is 29 km in the EU, and almost 80% of workers surveyed travel less than 40 km per day to work. The average distance travelled by bicycle is 10 km, while with electric bikes it can reach 20-25 km. Therefore, we argue that in a large number of cases, the electric bicycle could be used to commute to work, thus providing an alternative means of travel. Furthermore, other surveys have shown that 62% of people are willing to give up their current means of transport if they could use an electric bike to get to work.
E-bikes as a way of life
Cycling is healthy, environmentally friendly and socially responsible, all of which are important factors when consumers think about meeting their mobility, sports and leisure needs; cycling becomes a lifestyle. Moreover, when exercising or commuting by bike, the carbon footprint, apart from the manufacture of the bike and its transport to the consumer, is zero.
More importantly, the momentum for sustained growth appears to be sustainable thanks to an increasing supply of electric bikes, such as cargo bikes (ideal for last mile deliveries), electric mountain bikes, electric racing bikes etc., thus meeting the leisure and service demands of a much wider target population. As a result, the perception of the electric bicycle has evolved from a product for "expert users" to one that is gradually becoming trendy and indispensable to all.
Regulations favourable to the adoption of electric bikes
Regulations and infrastructures are designed to respond more effectively to the problems of congestion in cities and discourage the use of cars in metropolitan areas and favour the use of bicycles, as can be seen in London, Paris, Hamburg, Copenhagen, and many other cities in Europe. Bicycle lanes on boulevards, special bicycle paths through forest areas and increased bicycle parking (even in underground facilities) near public transport hubs are all part of this.
Governments, provinces, cities and the European Commission (Directive on road infrastructure safety management) encourage the use of bicycles for commuting and other purposes. The French and Italian governments have implemented specific measures related to COVID-19, amounting to 20 and 120 million euros respectively, to stimulate the use of bicycles (mainly subsidies for electric bikes), while the list of cities that are expanding the number of cycling facilities is growing.
With all this in mind, we have selected several companies from our broad European small cap universe that, thanks to their niche positioning and competitive advantages, should benefit fully from this fast-growing market.
