“So, where are your electric bikes made?”
This question comes up often in our interactions with customers.
There is a simple answer and a more complex one.
The simple answer is that we work with two factories – one is based in Southern China in a large city called Guangzhou. The other factory – which we recently began working with — is located in Taiwan.
The more complex answer is that the final assembly is done in China and Taiwan from parts sourced from dozens of different suppliers all over the world, although mostly from Asia. So even though many of the components are designed elsewhere – our unique mid-drive motor, for example, was designed in Italy — most of the production and assembly of our electric bikes is done in Asia.
So, why China? Like the previous question, the answer is a bit more involved than it appears to be on the surface.
The assumption that many people make is that lower costs and lower wages are the only reason our bikes are put together in China, but that’s not really accurate nor is it the main reason behind our decision.
The finished cost of a bike made in Asia vs. a bike made in the U.S. isn’t actually that different. The cost of labor — which certainly is a big factor in the manufacture of any product these days — is only a portion of the total cost of the bike. Materials, freight, independent quality control, product design, and assorted other costs all factor into the mix – and their economics change drastically when the location of the final assembly changes.
So what’s the biggest reason for building bikes in Asia?
The biggest reason that production of electric bikes is done overseas is that Asia is where the bike industry and the electronics industry are both centered.
It’s amazing how much simpler it is to develop, assemble, and continuously improve our products when all of the suppliers we work with are located close to one another.
Of course, it is possible to do some final assembly of overseas components domestically, and some companies do, but managing the supply chain of Japanese battery cells, Taiwanese control boards, tires from Thailand, and so on is infinitely more problematic when the assembly location is weeks away from the source of the parts.
Even in Asia, the lead time can be a couple of months for parts and components. Time to market would be even longer if the final assembly were done in the U.S. Lead time has a direct correlation to our ability to predict and stock the inventory that will be most in demand. This is already a huge challenge that would grow even larger if we had to make those decisions 6-9 months in advance. As well, shipping a variety of parts from many different manufacturers to the U.S. for final assembly would significantly drive up costs.
For a young company, being flexible, nimble, and ready to adapt to changing conditions is even more important than the cost savings. In the end, we realized with this model, we have more flexibility with production, can make changes more quickly, and improve both our product and predictive power regarding supply and demand than if we were coordinating parts deliveries from several countries an entire ocean away.
The two questions on everyone’s mind
Even given the above motivations, two main concerns arise when overseas production of products to be sold in the US is discussed: 1) the loss of American jobs, and 2) the quality of goods made in China.
Question #1: The effect on American jobs
No one can deny that the manufacturing of many products has moved from the U.S. to overseas locations over the last several decades.
In the bike industry, the overwhelming majority of bike parts (tires, spokes, frames, etc.) are currently made in Asia, as are bike electronics. Most of the bike brands that you’re familiar with today – even if the companies that sell them are U.S.-owned and U.S.-based — will produce the components overseas.
As a U.S.-based company, we do want to provide more U.S. job opportunities here at EVELO and we do – 80% of our team is based in the U.S. We expect to double in size within two years and keep growing – with most of the new openings also being filled team members in North America.
So, we certainly do provide new jobs – but the jobs that we provide are different – rather than manufacturing positions, we have customer support, sales, warehousing, logistics, design, QA and other positions.
Overall, the best opportunity EVELO has to provide jobs for Americans is to grow as a successful U.S. company — which means being competitive in today’s marketplace. We’ve taken the approach that the best way we can build a successful U.S.-based company is to fully implement international resources to produce our bikes when that makes the most sense, to offer the best value to our customers for the price, and to hire locally whenever we can for other positions.
Question #2: The quality of products made in China
When considering the quality of goods manufactured in China, it’s worth keeping in mind that we’ve known for years that Asian companies are very good at producing bikes and electronics!
Of course, a wide range of quality exists. Plenty of low-cost, low-quality products are produced, but on the other side of the spectrum, the vast majority of high-tech (not to mention all of our iPhones) comes from Asian sources.
It’s important to remember that the quality of a product depends to a large extent on an organization’s management and team members. If the focus is on continuous improvement and quality control, an organization can product high-quality products – regardless of whether located in the U.S. or China.
In fact, a former colleague of mine likes to tell the story of a group of welders from a high-end Italian brand visiting an Asian factory to learn the intricacies of tig-welding aluminum frames!
The Asian factories that supply parts for electric bikes have decades of experience in producing high-quality products. Electric bikes originated in Asia, and currently more than 40 million of them are built every single year.
The final assembly of our own bikes is done in a fairly small, privately-owned factory with whom we work directly. There is a team of around 30 folks – from assembly line workers to management — most of whom have been with the factory for years and are extremely good at what they do. At this point, we know them personally having spent a fair amount of time there.
To ensure that all of our rigorous quality standards are met, we employ our own Quality Control inspectors to inspect every bike in every production run that we do. Each bike is fully assembled and ridden on an indoor test track, after which the bike is packed for optimal shipping and easy assembly. As with any mechanical device, problems can occur, but we work closely with our factory to minimize these problems, and to address them when they arise.
Our objective at EVELO is to make our customers happy. Our goal is to provide a high-quality bike, built with attention to detail and care, backed by phenomenal customer service, and sold at a fair price point.
When we make decisions at EVELO, we aim to balance all factors – the cost of production, the cost to the customer, the needs of our workers, and ways to make use of the best resources in the U.S. and abroad.
It ends up being a team effort – with our U.S.-based team working very closely with our counterparts in Asia to produce high-quality electric bikes that we can be proud of offering to our customers.
Article is written by John O’Donnell & Boris Mordkovich