Could Financing Be The Savior Of The Electric Bike?

BY Cameron Newland

The financial case for electric bike ownership has a few problems.

First of all, electric bikes bought from speciality bike shops aren’t cheap, often selling for $2,500 to $6,000. Second, electric bikes often only see use for a year or two before they are either confined to the corner of one’s garage or sold to a third-party buyer at an extreme loss which is often greater than 50% of the original retail price. As a result, the total cost of ownership for an e-bike can easily surpass $100/month, which is an important psychological barrier to e-bike ownership, as entry-level economy cars can often be leased for similar amounts, often as low as $100-$139/month.

According to AAA, the average total cost of ownership of a sedan in the US was $8,689 last year, or just under $725/month, however, due to slick marketing from car dealerships and their associated financing arms, most customers have no idea what the total cost of ownership of various vehicles are, but rather compare vehicles solely on the basis of the purchase price or the monthly lease price.

Is comparing the monthly cost of financing an electric bicycle to that of leasing a car fair, though? Certainly not, especially since the total cost of ownership of a car is significantly higher than the car’s depreciation cost (analagous to the monthly leasing cost) alone, and with the e-bike, you’ll soon own it, whereas with leasing a car, you’ll have to give it back at the end of the lease term. However, consumers don’t really use logic in the same way that you might think they would. To most consumers, an electric bike only really makes sense if it’s less expensive than a car by every reasonable measure, and if it fails just one of these comparisons, the consumer might opt to continue doing what they’re used to doing: buying a gas-guzzling car.

Electric bike financing, then, could serve as an important tool to get more motorists out of their cars and on to a bicycle. By allowing direct comparisons between cars and electric bicycles when it comes to their monthly financing costs, consumers will at least be given the chance to make a rudimentary comparison and make the decision that they feel is best. When electric bikes are sold solely on the basis of upfront purchase price, this monthly-payment comparison isn’t available to the consumer at all.

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A sample electric bike pricing sheet that might serve to open up the idea of buying an electric bike for someone who is used to thinking in terms of monthly lease price.

So are electric bike retailers stepping up to the plate and offering consumers the opportunity to finance their purchases? There is some evidence that they are.

San Francisco’s The New Wheel is offering promotional 0% financing on the Stromer ST1 and ST2 models as a holiday special:

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Another example is Canadian electric bike dealer Scooteretti, which has been listing the monthly financing prices of its electric bikes on its website for quite some time.

Electrobike has offered 0% financing for some of its models at its Los Angeles-area stores, including one model for just $80/month for 9 months.

Like many large dealers, The IZIP Store in Santa Monica offers financing through Synchrony Bank, the same company that handles Amazon.com Store Card program. According to Steve Ryu, manager of the IZIP Store, one of the major benefits to the Synchrony Bank financing program is that often, there’s no need for a down payment as long as the credit approved for the customer covers the entire purchase. Also, there’s generally a no-interest tier that a customer can qualify for depending on the amount of purchase and length of the term, with 12 months seeming to be the standard, according to Ryu.

As evidenced by the above-mentioned financing deals, some electric bike retailers are taking note of the trend. As more electric bike shops offer financing for their bikes, they might just see their sales grow significantly, as it’s much easier to sell a $3,000+ electric bike to a customer when the monthly financing cost is such a small fraction of the upfront purchase price, which otherwise might cause the customer to balk. Car companies and car dealerships have figured this out. When will the rest of the electric bike industry follow?