Podcast: The Electric Bike Design and Manufacturing Process

Meet John O’Donnell

Armando: Bicycles and even electric bikes seem pretty simple. There are a frame and some pedals. What else do you need, right? There are some nuances, some challenges, some interesting little tidbits that make the bike industry fun to learn about.

My name is Armando Roggio, and this is The Electric Bike Podcast from EVELO. I’ve asked John O’Donnell to join us. John is responsible for product development at EVELO Electric Bicycles, and we’re going to learn why electric bicycles — and really almost all bicycles — are manufactured in Asia. Hint, it has to do with supply chain and market size. We will talk about what goes into designing an electric bicycle, and perhaps, by the end of this podcast, you’ll know more about how the industry works and what really electric bikes are and maybe even why you’re interested in them.

John, would you mind starting us off by telling us what is product development or, really, what do you do for EVELO Electric Bicycles and, perhaps, describe some of your background in the bicycle industry?

John: Sure. I head up the product team here at EVELO, which handles all the product development, basically from the design to implementation to actually getting the bikes in the warehouse, so all the steps along the way. Obviously, we’re a small team, so everyone wears many hats, so it’s anything from picking up the phone for a warranty or sales questions to traveling over to Asia to do QC on the bikes and everything in between. That’s my role here now.

As far as my background, most of my adult life has been spent in the bike industry. I’ve managed a shop in D.C. many, many years ago, and then, from there, actually went over to what at the time was Univega, one of the Raleigh brands, and during my time there, I also did lots of different things from basic customer service to managing an inside sales staff to working as an outside rep, and saw a lot of changes there during my time there just not only within the company, but within the bike industry because it’s right around the time that the move from production in the U.S. to Asia was being finalized.

The Move Toward Asian Manufacturing

John: An interesting thing, Raleigh was actually one of the last manufacturers of domestic bikes that were at a reasonable price point. There were some specialty manufacturers doing high-end stuff, but, at the time, we were one of the last people making $200 bikes in the U.S., and it was around that time that Bill Austin actually ended up moving production from Kent, which was where we were located, over to Taiwan, and it was interesting because I got to see the production facility. It was actually right next to our office, so we got to see exactly what was going on. I got an early taste of the production side of things then, and so it’s interesting to see how it’s come full circle, traveling to Asia and seeing the bikes made over there.

Armando: What was the driver that moved bicycle manufacturing to Asia, and what’s the reason, I suppose, that so much bicycle manufacturing is done in Asia?

John: I can tell you first hand that the driver at Raleigh wasn’t cost, which I think is the first thing people think of, that it will drive the price down. The big thing was lead time.

Our factory was literally across the street, and we would basically place orders to the factory and they would produce the bikes for us, and lead times were generally 180 days, best-case scenario. Sometimes, they would run all the way up to 360 days, and although that sounds ridiculous, I got to see… again, see first hand how one part not being there would just shut the assembly line down, and, whereas in Asia, if you are out of front derailleurs, you can put them on a cart, drive them over to the factory, get the production line back up. Back then, air shipping was prohibitively expensive, and pretty much everything involved, putting it in a containing, shipping it overseas. All the supply chain is in Asia, China, Taiwan, so that was a big part of it was just the lead time.

The other thing was the level of assembly. At the time, it was pretty antiquated. It was a legacy factory that we kind of Band-Aided together. The factories over there were newer, more modern, more automated, and the end result was that our customers at the time were getting a much higher level of assembly on bikes from companies that were producing overseas, and we would get feedback a lot of times from dealers that it would take anywhere from 45 minutes to an hour to build one of our bikes, whereas competitors’ bikes, Trek, Specialized, they were putting together in 15 to 20 minutes, so lead times and level of assembly were really the two big drivers for it.

Armando: The fact that most of the supply chain was already in Asia and the idea that the decision was maybe to go to Taiwan because of lead time, these things seem like symptoms or indicators of something larger, so could it be market size? Is the consumption, if you will, of bicycles greater in Asia than in the U.S. or the E.U.?

John: By far, that’s one of the reasons that the sub-suppliers have been over in Asia. I don’t have the exact numbers in front of me, but it’s several orders of magnitude larger over in Asia and in Europe, to a lesser degree, than the U.S., so, consequently, that’s where most of the derailleurs are produced then.

We’re really a niche market for the global bicycle industry in the U.S., so, yeah, from derailleurs, tires, spokes, you’ll find some high-end specialty stuff that to this day is still made in the U.S., and even that seems to be less and less as more high-end suppliers go offshore, but for large production of basic bicycle components, things like chains, spokes, rims, tires, we’re doing so much more volume in Europe and in Asia than in the U.S. that all of the sub-suppliers have moved over there. I honestly can’t remember the most recent derailleur, front or rear derailleur, shift cables that have been made in the U.S. It’s probably been I would say since the ’70s that when Schwinn was manufacturing in Chicago that the sub-suppliers were actually producing stuff in the U.S.

Designing New Models

Armando: Okay, so, this year, EVELO has introduced some new models, the Aries hub-drive, the Aries mid-drive, the Aurora hub-drive are all examples, but given that all the sub-suppliers and all the manufacturing is done in Asia, how do you bring a new bike model to market here in the United States?

John: Actually, it starts with feedback from the customers as far as trying to design something that folks want, so it really does start as a clean sheet of paper and trying to figure out what we’re selling now, what people like, what they’re looking for, and then, once we wrap our head around a design that people want to ride, then we start from there, design the frame, pick the components and then source all the parts.

It’s really a collaborative effort. We do the basic frame drawing and then work in conjunction with the factory’s engineers to finalize the drawing. There’s always a bit of a divide between what you want and what the factory can efficiently produce and they’re not always necessarily the same thing, so there’s a fair bit of work on that side of things, tweaking the frame design so that it’s something that can be produced efficiently and work for what we want it to do.

After the frame drawing is done, we basically go through every single nut and bolt on the bike and then decide what parts are going to be on there, and we get feedback from multiple people on the team to decide not only what people or what the end users are looking for, but things like ease of service out on the field is always a consideration as well. We want to make sure that not only is it a good bike to ride, but if it does need service, servicing can be done relatively easily. Things like the position of the motor housing, like how easy is the controller to get to on the bike, all of that sort of stuff is factored in, and, yeah, so it’s a pretty big project because, obviously, there are tons of moving parts on a bike, from the bike design to the box that holds the tools that are shipped with the bike, to the packaging, which is also another big part of the process. All that has to be figured out before anything runs down the production line.

Armando: As you are working through a new electric bike design, are there some known problems or bottlenecks where you always know this is going to be a challenge, or is each new electric bike design is sort of its own adventure?

John: A little of both actually. I mean, every time there’s the first production of something, it brings some new challenges. That said, there are things that are always going to be a challenge. For us, especially since we ship direct to consumer, one of the most tricky things is packaging because, when a bike shows up to a bike shop, the first line of defense is going to be the shop unboxing the bike and, potentially, fixing anything that goes wrong in shipping.

The other thing is how the bikes are shipped is a bit different when you’re shipping to a bike shop versus shipping to an end user. Typically, if a bike ships to a bike shop, the shop will normally order 15 to 25 bikes at a time, and they’ll show up on a pallet, shrink-wrapped, and it’s a lot more safe environment for them to travel. In our case, we’re almost always shipping individual bikes, and they’re going by individual carriers such as FedEx or UPS. They lead a harder life en route to the end user. There is no way around that, so packaging is one of those things that we’ve done really well with. That’s always a moving target. We’re always trying to improve and makes sure that the bikes arrive as good as possible.

Armando: The solution I’m guessing is not to include more bubble wrap, right? You’ve got to be more efficient than that.

John: Correct. It’s funny when you asked that. At one point, we were throwing more and more foam at the equation, and it actually worked pretty well, but the end user experience was pretty poor when they would be covered in this foam that would be broken into millions of pieces when they pull the bike out of the box. You have to balance getting the bike there in one piece with not wasting a ton of resources and making it a positive experience to pull it out of the box and build.

Fortunately, particularly the factory we’re working with right now, they brought a lot to the table in terms of ideas on packaging, so we were able to use not a ridiculous amount of packaging to keep it in the box, but also do a good job of getting it there. Also, things like the quality of the box, it’s not something you really think about, but there are different levels of cardboard. Some of the boxes use a very, very high level of recycled cardboard that’s really soft and is a lot more prone to damage in transport, so using higher quality cardboard or sticker box ends up paying some pretty big dividends in getting the bike there in one piece.

EVELO Electric Bikes are Assembled Then Packed

Armando: What about getting the bike in the box? You have a product that is going directly to the consumer. You want to make it relatively easy to assemble. How does that impact your packaging?

John: That’s a good question. It’s one of the things that I think most people don’t realize is that all of the bikes are actually fully assembled and test-ridden before they actually go into the box. That is actually not typical from the normal production situations particularly on bikes that are shipping to a bike shop. Those bikes are normally not 100 percent assembled. They’re actually built as they go in the box.

In our case, the bikes are completed, standing in a row for us to test ride and then are broken down and then put back in the box. One of the big advantages there is that you’re able to check things like shifter adjustment, brake adjustment, make sure the wheels go through. It basically reduces the amount of time that the end user has to get the bike together and increases the likelihood that, when it’s put together, everything works correctly as it should, so… but it also makes for extra steps for the factory.

In terms of how it goes from that bike to being put back in the box, it actually goes back on the assembly line for packaging, and there’s a dedicated line that’s just for that, and, at that point, it’s disassembled to a point where the customer has to then put it back together. It’s normally pretty straightforward stuff. We pull off the front wheel, pull off either the stem or the handlebars and then pull off the pedals. All that stuff is put in the box, and then the protective wrap is then put on the bike and then put into the box.

Electric Bikes and Conventional Bicycles

Armando: Obviously, EVELO doesn’t make conventional bicycles, but rather an electric bike. Would you describe the difference?

John: It really starts with the frame. There are different ways obviously to make an electric bike. With ours, the frame is actually a purpose-built electric bike frame, and I think you’re seeing that across the industry more and more. When we started seven years ago, it was a bit different in that there were a lot of bikes out there that were basically conventional bikes with the motor stuck on the back, but there’s a lot more power going through the bike, so, having the frame, spokes, tires, all of that stuff being operated for the extra weight that you’re going to be carrying with an electric bike and the extra power, all of that stuff is a consideration.

Besides that, I mean, the basic parts are actually the same but will be more durable. Take, for instance, spokes, they look the same, they’re just going to be a heavier gauge. Same with rims, the extrusion will be a little bit thicker, so that it will weigh a little bit more, but it’ll be able to withstand the extra weight of the bike and the extra power that’s going through it. The basic bike components, for the most part, are similar, just built a little more durable, and then, the electric components, that’s obviously something that’s specific to the e-bike, which should basically be comprised of the motor, the controller, the battery, and then the display panel.

Electric Bike Trends

Armando: You mentioned the trend toward purpose-built electric bike frames in the industry. What are some of the other trends you’re seeing in electric bike design?

John: I think more and more folks are realizing the benefit of a mid-drive design. I know, when we started, we were one of the few in the U.S. selling a mid-drive bike, and now I think it’s generally accepted that, for the most part, a mid-drive is more preferable. It comes with an extra cost because, again, you need a purpose-built frame and motors. It’s little more complicated than just sticking a hub motor on the back, but there are a lot of benefits to it, and, now, you’re seeing more and more companies that are incorporating a mid-drive.

In addition to that, I would say that things are being a little bit more integrated, having the bike look less and less like an electric bike. The first electric bike, when you would see one rolling down the street, it was pretty obvious what it was, whereas now the batteries are a little more in line with the bike, more and more center-mount batteries, so the battery isn’t included in the rear rack. We still do one model that has that because it offers the advantage of having a really, really low step-through height, so it offers the easiest on-off access than any bikes that we have, but, for the most part, batteries are migrating towards the middle of the frame. Motors are migrating towards the middle of the frame. I think those are the biggest trends right now.

Electric Bike Step-through Height

Armando: John, you mentioned step-through height. Why is that important for some customers?

John: I would say two reasons. First off, I think our average customer is probably a little bit older than we initially thought right at the beginning, like six years ago. At the beginning, I think our basic thought was that commuters, people using the bike as a car replacement would be really the biggest market, and what had turned out was there are a lot of Boomers looking for exercise, looking to get back into riding. People that used to ride, been off the bike for 15, 20 years, are looking to get back into it, has started to ride, and a lot of those customers are a little more limited in flexibility and they want the ease of access to get on and off the bike.

That said, I think there’s more to it with an electric bike. The bike itself, even a lightweight electric bike, is still going to be relatively heavy, and it is just easier to get on and off the bike. I mean, I ride a conventional bike. Most of my riding is done with a nonelectric bike actually, just a regular pedaling bike, but if I’m riding an electric bike, I prefer the step-through. It’s just easier to get on and off with a heavier bike. Even a lightweight electric bike is going to be anywhere from… They’re going to be roughly double the weight of a conventional bike, so it does make it easier to get on and off.

Electric Bike Battery Technology

Armando: A key contributor to weight is the battery, so why not talk a little bit about battery technology, perhaps how it is evolving and where you think it might be going?

John: It hasn’t evolved as much as folks might think. For instance, the 2700 cells that were just introduced, everyone knows it as the Tesla cell, it’s an evolutionary product. It’s really not anything that’s revolutionary. It will basically take the weight of an electric bike battery from about eight pounds down to maybe six pounds for the same range or it will increase range a little bit.

For the last probably 10 years, the basic technology on batteries really hasn’t changed that much, and if you look at battery technology in general, it generally goes in cycles of about 20 years. When lithium-ion cells were first introduced, that got full acceptance and then gradually became the standard for all consumer products. Things like power tools used to be NiCad. Now, it’s almost exclusively shifted over to lithium-ion, but it isn’t a change that happened overnight. It was a long time in coming, and then if you go back before that, the lead-acid battery packs, it’s the same thing. They had a period of about 10 to 15 years where they were the standard for consumer products.

As far as where it’s going for the foreseeable future, I don’t see any huge changes. Things like solid-state batteries have a lot of promise, but we’re talking 15 to 20 years before there’s going to be something that’s going to be commonplace in not just E-bikes, but consumer products in general.

Electric Bike Costs

Armando: John, you’ve done a good job describing the electric bike production process, but is there anything else you’d like folks to know about how electric bikes are designed or made?

John: I think one of the things that’s worth discussing is the issue of cost because, obviously, and this isn’t just with electric bikes, but bikes in general, bikes can ranges anywhere from 10,000 and up, down to $200. There are obviously pretty big differences between the $200 road bike that you’re going to buy and the $10,000 road bike.

What I will say with electric bikes is you really don’t hit the law of diminishing returns until you get to probably four or $5,000. When you get above that price point, you start paying lots of money for small increases in performance, so, for the most part, if you’re making the jump with an electric bikes from, say, $500 up to about $4,000, you’re getting a commensurate increase in performance for the amount that you’re spending, and then once you start going above that, you’ll start spending a lot of money for small increases in performance.

Just to give you as kind of a for-instance, I’ve seen electric bikes through various online channels where the retail price of the bike is roughly the same cost of the battery, not what we retail a battery for, but our actual cost, so, obviously, if they’re doing a large volume, they can get some break on pricing, but they’re doing it by using lower cost components. It’s not necessarily a bad thing. I mean, if it’s people’s first entry into an electric bike and it gets them on an electric bike, that’s great, but if they’re using it regularly, chances are they’re going to run into reliability issues.

The other thing we run into pretty frequently is that we’ll get calls from customers looking for parts to service the bike that they bought online a couple of years ago from a company that went out of business, and, unfortunately, we rarely can help those folks because the bikes used proprietary parts, and so part of selling and serving electric bike is making sure that you have replacement parts in stock. From the bikes that we’ve discontinued and sold seven years ago, we still support out in the field. We still have replacement parts for them. That’s also one of the drivers of cost.

Armando: Makes sense. John, you have been great. I really do appreciate you for taking the time to chat today.

John: Hey, it’s my pleasure.

Armando: Thank you, everyone, for listening to The Electric Bike Podcast from EVELO. We want to cover topics that interest you, so, if you have suggestions for a podcast topic or maybe you want to share your electric bike experience, please email us at contact@evelo.com. Let us know what you’re thinking. We’d love to hear from you. Also, if you want to learn more about electric bikes, please visit evelo.com and look for The Complete Electric Bike Buyer’s Guide.

Take care. Thanks again for listening.