Must Bike Sector Brace for Automotive Invasion?
HAMBURG, Germany – From four to two wheels, that might be the motto for many car components suppliers. As e-bikes pick up speed and car makers are turning to electric mobility what are the huge number of makers of mechanical car parts to do? Will they follow the examples set by Bosch, Continental, Brose and others? In other words; must the bike sector brace for an automotive invasion?
The scent of the Diesel-Scandal still lingers in Germany, fuelling the political pressure for cleaner mobilty. No wonder car manufacturers, whilst still producing combustion engines by the millions, work on electric cars. Sounds good for the environment, sounds good for politicians always willing to sing the praise of the aptness of the German industry. But what about parts suppliers heavily dependent on the car industries’ demand for waterpumps, turbo’s or gear boxes? They think of an unexpected direction.
Safeguarding market shares
Base of those thoughts is simple math. Whilst a classic combustion engine is set up from roundabout 2,500 parts, electric motors with their 250 parts are much simpler. They do without the named waterpumps, turbo’s and gearboxes along with many, many other mechanical parts. In a nutshell that means lesser parts and lesser chances for suppliers to sell their goods. Especially given the fact that the future of electric mobility seems to glisten while the lights of conventional motors fade. In 2025 the share of electric vehicles of newly administered cars could move in the range between 15 and 25%, said the president of the association of automobile industry Matthias Wissmann (Verband der Automobilindustrie) last December.
More demand of electric cars in future goes hand in hand with a lower demand of conventional cars; this arithmetic implies a smaller market for suppliers. Option one to safeguard their business and market share is switching to be an e-supplier. A valid path, but also an obvious one for many in the automotive sector bringing intense competition. This leads to the distinct possibility that the electrification switch might not be enough for companies to remain afloat. It brings in option two; the two-wheeled option.
Driving forces for making e-bike turn
E-bikes are getting increasingly popular. Cheaper than electric cars and no need for an exclusive infrastructure like supercharging stations. These facts are only two of the driving forces for companies to make the e-bike turn. And it’s precisely what car parts suppliers are looking for. Not only in theory; the change has already begun as many examples show. Bosch for example. The well-known German brand does not only produce e.g. motor control units, but also has turned into one of the big shots in terms of motors for bikes. A producer with a firm belief in the two-wheeled electric future. “We think it is realistic that in ten years’ time every newly sold bike in the European core markets will be an e-bike”, said in 2017 Claus Fleischer, MD of Bosch eBike Systems. Another goody for suppliers – most bike manufacturers don’t develop their own motors as it just does not pay off given the ample supply of good of-the-peg-solutions.
Other companies follow suit. The Rheinmetall Gruppe e.g. has a solid reputation as a producer of cylinder blocks. Now it turns to the production of e-bike motors with its own start-up Amprio. Marquardt Group has helped BMW building an e-scooter and sells displays for e-bikes. The companies’ main business is still known e.g. for switches and applications for the automotive sector. Another Tier1 auto-supplier is Öchsler; well-known e.g. for its central lockings but to further diversify the company has not only developed a motor for e-bikes but also an automatic gearbox – all integrated in one unit.
Building ‘e’ business
Continental is another example of a supplier with an automotive pedigree. Long time the company has been producing (among other parts) tyres. But silently built up an ‘e’ business resulting in the introduction of a 48-Volt drive system for multiple purposes, including cars and e-bikes. Recently Continental made it into the headlines as the company is considering a split-up. One idea is to shape a holding-company and different daughters that could be listed separately at stock exchange markets.
Although those thoughts being in an early stage, investors seem to like them; the Continental-stock picked up as the news made its way. Presumably investors appreciate companies doing all they can to be as flexible as possible. Perhaps even regarding e-bikes. And precisely that is the advice of sober-minded institutions like the Fraunhofer Institut in Germany. “Every company of the industry is well-advised to consider intensively the upcoming changes and to position its own technology management accordingly”, wrote the think tank. An advice that evidently is urging the electrification of car parts suppliers.