| From The Economist print edition Pedestrians beware PEDESTRIANS in China are often terrorised by electric bicycles zipping along the country’s pavements. China’s authorities, too, seem to have been caught unawares by an industry that, like the bikes themselves, has emerged speedily and stealthily from the shadows: local output grew from a few thousand bikes a year less than a decade ago to more than 22m last year, along with millions of kits to turn ordinary bicycles into electric ones. Annual sales have reached about $11 billion. The government is suddenly paying attention—but its urge to regulate is pulling it in two different directions. More and more Chinese cyclists, it seems, would like a battery and motor to turn the wheels for them. Production of ordinary bicycles, which peaked in 2006 at nearly 80m units, has since fallen by more than 25%. But as with many businesses in China, the electric-bike industry is plagued by too much capacity, thin margins and variable quality. More than 2,600 firms had permits to make electric bikes last year, although only around 1,000 are thought to be using them. Most started as conventional bicycle-makers; others have come from the motorcycle business. The biggest manufacturer, Jiangsu Xinri Electric Vehicle Co, produced 1.8m “e-bikes” last year. Its lead is under threat from at least half a dozen other manufacturers. One rival, Tianjin Aima Science and Technology Co, says it is gearing up to make more than 5m bikes a year; Jiangsu Yadea Technical Development Co hopes to triple its sales to 3m this year. Manufacturers believe exports will grow quickly, especially to Europe and North America, which accounted for more than 70% of the nearly 1m bikes sent abroad in 2009. One in every eight bicycles sold in the Netherlands these days is electric. Better yet, Chinese manufacturers secured an average price of $377 per exported bike, compared with less than $100 three years ago and just $46 for a pedal bike. But the government is threatening to put a legislative spoke in the industry’s wheels. Until recently there were few laws regulating electric bikes: they do not need to be registered, nor do their drivers need a licence. Unsurprisingly, the 120m bikes in use are involved in a growing number of accidents. Almost 2,500 electric-bike-related deaths were recorded in 2007. At night pedestrians are at particular risk, because many e-cyclists drive without lights to save power. More than a dozen cities have introduced restrictions of one sort or another. In theory, the government has limited electric bikes’ top speed to 20kph (12mph), but in practice most can go much faster. Yet the government also wants to encourage electric bicycles to curb the pollution and congestion created by other vehicles. Local authorities in some cities have stoked sales by raising the price of permits for petrol-fuelled scooters or banning them altogether. The authorities are also trying to make e-bikes themselves greener: manufacturers are being compelled to invest in lighter materials and to replace lead-acid batteries with lithium ones. Market leaders such as Xinri and Yadea are partnering with universities to improve their technology. Some ambitious producers are talking about turning their hands to electric cars. Perhaps then their customers will stick to the roads.
May 17, 2010
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