CORRECTION: An earlier version of this story reported that a tariff on Chinese-made lithium-ion batteries would apply to e-bikes no matter where the bikes were made. As Matt Moore, policy counsel for People for Bikes, explained after this article’s publication, bikes are treated differently for import duties than most other products, and a tariff on Chinese-made batteries would not apply to complete bikes unless the bikes themselves are categorized as made in China. This article has been updated, and Escape Collective regrets the error.
Last week, a ripple went through the cycling world with the suggestion that e-bike prices in the United States might be due for a sharp boost, thanks to import regulations – specifically a tariff exemption on Chinese-made e-bikes that is due to expire.
You might’ve read stories in cycling media and on other sites that this will result in a big jump in e-bike prices. Not quite. There may well be a price hike coming, but it could be uneven across brands, and the reasons for a potential bump in price are complex.
What is even happening??
Last Friday, the United States Trade Representative’s office announced that an exclusion to a 25% tariff on Chinese-made e-bikes will finally be allowed to expire on June 14. That exclusion relates to so-called “Section 301” tariffs on Chinese products imposed by the Trump administration in 2018. E-bikes have been exempted from those import duties almost from the start, and the USTR has extended that waiver several times, but as of mid-June the runway ends.
That’s what led to the various stories you might have seen. And yes, brands and advocates are concerned. People for Bikes, the main policy advocate for the industry (and cyclists) in the United States, has publicly called for a waiver extension, saying that sudden large tariff increases could impact the health of the American bike industry.
But the impact of a fully active Section 301 tariff on Chinese e-bikes may be more muted than it seems, said Ed Benjamin, the founder and president of light electric vehicle consultancy eCycleElectric. Benjamin’s primary business for the past three decades has been advising companies in the LEV industry, in particular those that make and sell e-bikes. Those bikes, increasingly, aren’t made in China.
“When the 301 tariffs were first applied, there weren’t very many (e-bike) companies that had made alternative arrangements” for their supply chains, Benjamin said. “As an industry, we were scared to death.” But lately, he said, there’s little to no panic in conversations he’s having with brands.
Tariffs are levied based on a product’s country of origin. For most consumer product imports, that’s decided by where in the manufacturing process the most value of a product is added (called a “substantial transformation test”). But bikes are a rare exception, said Matt Moore, policy counsel for People for Bikes. “A longstanding policy decision in the US is that it’s where the frame of the bicycle is manufactured that determines country of origin,” he said.
And in the few short years since the 301 tariffs were enacted and then waived, eCycleElectric’s Benjamin said, “a lot of the bigger or more sophisticated e-bike companies have successfully moved most of their production to Vietnam, or Taiwan, or in some cases Thailand.”
A good example of a sophisticated brand is Tern – not remotely among the largest bike companies overall, but a major player in e-bikes – which sources bikes from Vietnam and Taiwan. Those countries, Benjamin noted, have what’s called “most favored nation” trade status with the United States. “The taxes there are as good as it gets at this time.”
Tern is not alone. Benjamin said that last year, eCycleElectric did a market analysis that found of the 344 businesses that imported 25 or more e-bikes to the United States, roughly 90% of the volume came from just 40 or so companies. Most of those brands are in the group that has successfully diversified supply chains. So the impact of a 25% tariff on Chinese-made e-bikes may not hit the overall market that hard, and likely even less so the brands sold at independent bike shops. But the other 300-odd e-bike importers, often consumer-direct, that make up some 10% of the market? “We have a lot of little brands that are going to suffer,” predicted Benjamin.
Not out of the woods
Whew, so if most of the e-bikes sold in the United States aren’t made in China, can we breathe a sigh of relief that the great e-bike price scare of 2024 is a nothingburger, unless you’ve got your eye on that sweet Chinese-made Ancheer Gladiator that’s all over Amazon?
Not quite. Two other issues may cause problems with pricing and even availability of e-bikes in the US. That’s wild to think given the massive discounting going on right now, but stay with me.
Issue one is that the Biden administration, again through the United States Trade Representative, also plans to levy new Section 301 tariffs of 25% on batteries and battery parts that are made in China.
Tariffs on electric-vehicle batteries would start this year under the proposed tariffs. But lithium-ion batteries fall under several different categories, or codes, in the Harmonized Tariff Schedule. The USTR has yet to say which HTS code would apply to e-bike batteries. But in a written response to a question, Claudia Wasko, VP of Bosch’s American e-bike division, indicated that currently, e-bike batteries are classified under a non-vehicle HTS code, which would put them in the 2026 schedule. People for Bikes’ Moore also expects that will continue to be the case. And of course, there’s always a chance that a waiver may apply, and Moore said PfB will use the public-comment period to argue expressly for a waiver on e-bike batteries.
Virtually every e-bike sold today is powered by a battery with lithium-ion technology. The lithium battery industry – from mining the raw materials to making the finished products – is a dirty and energy-intensive business that we’ve mostly outsourced to developing nations, particularly in the Global South. China and South American countries like Chile, Bolivia, and Argentina are major producers of lithium (so is Australia, however), and 75% of the world’s cobalt – which plays a key role in a Li-ion battery’s cathode – comes from one country: the not-so Democratic Republic of the Congo.
The vast majority of finished Li-ion battery cells – some 75% of current global production – come from China, even some from major battery suppliers that aren’t themselves Chinese. While there are some exceptions in e-bikes – Tern only specs motors and batteries from Bosch, Tern’s global product manager Steve Gluckman said, and Bosch’s Wasko said that Bosch batteries are not Chinese-origin goods – China’s dominance in batteries is not changing anytime soon. According to projections from the International Energy Association, even in 2030 lithium battery production in China will outpace by more than two times the total production of the rest of the world combined (4.65 TWh to 2.14 TWh, if you’re scoring at home).
Normally, that would hit e-bikes hard; batteries are the single most-expensive part on any e-bike, making up some 30-40% of the total cost. But because of the longstanding rule that classifies bikes’ country of origin based on where the frame is manufactured, even Chinese-made batteries won’t be subject to the new tariff – as long as they enter the country as part of a complete bike. The TL;DR – if import duties on Chinese-produced batteries do come into play, they’ll hit other consumer electronic products and micromobility devices harder than e-bikes. (For this reason, Benjamin said, he’ll be unsurprised if there isn’t a waiver at least for some products, including e-bikes.)
The second looming concern is a different kind of regulatory change. Right now, there are no federal safety standards on the electric systems of light electric vehicles like e-bikes, especially the battery and charger. A few states and municipalities (notably New York City, last year) have enacted laws, largely in response to battery fires and careless or dangerous charging practices, but it’s a patchwork. That’s not unique to the US; the UK and France have mandatory certification rules, but most of the rest of the Europe does not.
There’s a growing swell of support in the US – including from much of the bike industry – for all e-bikes sold here to be certified to safety standards. Many other consumer electronics abide by those standards – check your phone charger and you’ll see (in very tiny type) a small “UL” logo, for Underwriters Laboratories, the de facto official body that writes safety certification standards for electric products sold in the US. (As an aside, both the UL and accredited independent labs carry out the actual certification testing. Claims of “UL tested” and “UL compliant” mean that the manufacturer has done its own testing on its products, but only products tested at an independent, accredited lab can carry a “UL certified” logo.)
A number of reputable e-bike and motor brands already certify their products to the UL 2849 standard for electronic systems on e-bikes; others have their bikes certified to the European Union’s standard, EN 15194, which is considered roughly equivalent. Somewhat confusingly, although UL 2849 covers the bike’s entire electric system, there’s also a separate UL standard – 2271 – for light electric vehicle batteries themselves. But UL testing and certification is costly – around $15,000 in fees, not including the substantial numbers of systems or batteries companies must provide for the testing – and so some smaller brands or those that focus on the lower end of the market skip independent testing entirely, although they may use the squishier “UL tested” or “UL compliant” language.
The problem, noted eCycleElectric’s Benjamin, is that if UL certification becomes mandatory, cost is not the only hurdle; there’s not enough testing capacity to certify all those bikes: almost three million e-bikes were imported into the US in the last two and a half years. “The bandwidth on nationally recognized testing labs is not quite big enough yet,” he said. That could be an issue as a bill in Congress, which has passed the House of Representatives, expressly directs the CPSC to issue a safety standard for Li-ion batteries used in micromobility devices. It’s not law yet, but if more states and municipalities enact laws, or the Senate does pass it, that could force importers to quickly dump non-certified bikes at blowout prices ahead of those rules coming into force.
Bikes on sale, what’s the problem?
In a word, whiplash. The potential for certification requirements is already present in importers’ minds. “Most e-bike importers ordered too many bikes during COVID, and they’ve got inventory on hand; they’re scared and they want to get rid of it,” said Benjamin. “But most of that inventory is not 2849-compliant.” He noted that he personally just bought a Serial 1, the e-bike brand from motorcycle icon Harley-Davidson. It’s “an awesome bike,” Benjamin said, but he added that it’s tested to EN standards, not UL. The price? “Too good to tell you.”
If importers drop prices to clear out non-certified inventory and new tariffs come into force, that may result in both fewer bikes available – especially bikes certified to UL standards – and higher prices. “What we may see is consumers a little bit startled to find out that new bikes are a lot more expensive,” said Benjamin.
How soon might that happen? Much depends on the tariffs, but it could be as early as this fall, Benjamin thinks. When new tariffs are levied, they tend to force up prices on existing products already in stores, because suppliers (importers and retailers) need that extra revenue to cover their higher costs going forward. If your wholesale cost for e-bikes jumps from, say, $1,000 to $1,250 a unit, you have to charge that premium on your existing inventory to cover the cost of buying replacement inventory at the new, higher price. And, since pass-along costs often grow at every step of the wholesale-to-retail chain, that may mean progressively higher prices for bike buyers, although some brands may try to absorb some of the hit.
What probably won’t happen is a major ripple effect to other markets. The European Union, for example, has had strong tariffs (called anti-dumping duties) on Chinese products for years, and the market there has largely absorbed those price increases. And so far, EN 15194 certification is still voluntary in most countries in the EU. But if you’re stateside and planning an e-bike purchase, keep an eye on prices, and whatever you buy, look for that little UL 2849-certified logo.
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