Network Effects on E-Bikes
https://www.nytimes.com/2021/11/08/business/e-bikes-urban-transit.html
The article that I read is about an increased popularity of E-bike use. E-bike use has picked up significantly since the pandemic boosting sales byt 145% from 2019 to 2020. This uptake in sales has likely been caused by the shrinking of lithium batteries (ones used to power electric cars), so that they ar4e small enough to fit into smaller vehicles like a bicycle, an increase in the urban biking fad, and the development of bike-sharing programs or apps. Apps like Lyft have reported that electric bikes are becoming more popular than the classic bike with 70% of users without subscriptions choosing an electric bike, and on average the electric bikes are choosing 3x more than a classic bike. The electric bike is also becoming more popular than the electric car with about 500,000 e-bike sales and only 231,000 electric car sales. Moreover, it is predicted that these bikes are likely to continue to outsell electric cars for the next few years (2020-2023).
Despite an overall increased interest in electric bikes, there are still many obstacles for the bikes to overcome to maintain their success. Firstly, the bikes do not qualify for any commuter tasks, often making them an unexpectedly expensive way to get around. Also, the United States has poor infrastructure to accommodate bikes as it is not the most prominent form of transportation here, so people may not feel safe riding them. Lastly, another major issue with trying to implement these bikes on a large scale is that they aren’t very “new” user friendly as they are kind of heavy and awkward to use. However, in response to this issue they are trying to make these bikes less heavy and more accessible to new users.
Overall, the electric bike fad is still in its infancy, and it has a lot of potential to grow, but also a lot of potential to die out. This will likely depend heavily on network effects and will have a large impact on the success or failure of the electric bike revolution. When considering the success of this new product where its z’ and z” land will likely determine its success because if the product can reach a z value between z’ and z” its usage will continue to increase until its z” score is reached. In the case of the electric bike it appears that currency the bike sits above the z’ margin as the article cited that the 500,000 2019-2020 US bike sales is likely to continue to increase up until 2023. Therefore, the assumption can be made that the bike’s overall popularity proportion in the United States per year just needs to surpass 0.001504 in order to continue its growth. This z’ was generated because there are 332,278,200 people in the United States with 500,00 of them buying bikes, so the proportion of them buying bikes is equal to .001504. Since the fad is relatively new its maximum growth is unclear.
However, looking at the domination of cars in the United States, including electric and not electric, the continuation of growth of e-bikes without it dropping below its z’ will likely come down to the implementation of effective marketing strategies. For one, the price needs to be dropped by having the commuter tax benefits in play, so that the bike is actually significantly cheaper to own. The lower prices on these bikes will lower the z’ that they need to be successful. Additionally, some type of buzz needs to be created around these bikes and it likely should involve something to do with their increased accessibility or safety. As stated before, the city doesn’t have great infrastructure for these, so there needs to be a way to generate buzz about increased safety, so that people will opt to take these bikes over an uber.