No, was my thought today, they will be squeezed out of the market. Let’s face it, the big brands have extensive R&D capability, massive marketing machines, deep pockets, great quality assurance, dealer networks and manufacturing expertise that smaller brands can only dream of. I was thinking this as I saw a press release from a major brand that released an eMTB – actually a whole range. There were entry level models plus 3 different spec levels up the range, women-specific versions and five different sizes (XS, S, M, L, XL). If you compare that to some of the smaller brands, you can have “too big” or “too small” in one spec level (oh but you can get a bigger battery). Then you know that they have been tested and refined to the n-th degree including pro riders who can spot the difference of half a degree in the head angle and one millimeter in the chainstay length. In contrast, I heard from a local brand who is really trying hard to improve their bikes 1 container-load at a time.
But is it really be so cut-and-dried? Are the smaller brands doomed?
Perhaps not. Consider the price chart below. Not everyone is buying at the premium end of the market; not everyone is buying a premium eMTB. So while the big brands are probably going to squeeze the little guys, there is still space left.
In that sub $4000 space there is little incentive for the big brands. They’d rather occupy the high ground where the bigger margins lie. For most commuters, paying >$4k is just too much, so they’ll settle for the lower end. And that is perfectly fine. Less than $3k gets you a Magnum Metro or Metro+, great value for money ebikes. What’s more, most of the more expensive commuters (Bosch-powered for the most part) are speed limited and the cheaper ones will go 36-40km/h with no assist limit, and a throttle. That is important to many in NZ. I do however think that there will be downward pressure from the value-oriented major brands eg Merida, Giant etc.
The same I feel will happen in the eMTB market, where ~$6000-6500 is the current benchmark for a full-suspension eMTB compared to $4500 for the Smartmotion Hypersonic – what I am referring to as “Niche e-Bike Branded”. As you can get a quite nice entry-level MTB for $2500, there is then no reason why you couldn’t in time get that in an e-version for $4500, in five different sizes. At that point, the Hypersonic would find the going quite tough.
In conclusion, I think there will be a niche for smaller players to exist in, and in today’s money that looks like $1-2k for the drop-and-run merchants, $2-3k for local-only brands (coming in by the container-load from a random factory in China with their own spec and stickers), and perhaps $2.5-4k for Niche ebike brands such as eZee and Smartmotion. And if they continue to take chances and innovate, who knows. As long as their pockets are deep enough to survive the attack.