This analysis starts with a blue box because setting the context is essential.
That's not a high penetration ratio (6.7%) for a continent with environmental concerns on its collective lapel. That merely puts Europe's two-wheeler electrification levels at par with a developing economy like India.
Drill down deeper into the data, and what is startling is that more than 1000 brands make up the three million. Beyond the top ten, no one has enough meat on the bone. A closer look also reveals that on the E2W front, hardly any brands may be called 'European.'
The Chinese factories have steamrolled the market.
Europe is the centre of the world, the place where we gather every few decades to sort out differences. In better times, it remains the collective tourism capital of the globe. We also know Europe for its automotive passion and a collective penchant for industrial design. In recent years, it has become the answer to every Chinese or Indian question: "Where should I set up my automotive design studio?"
Thanks to that, Europe occupies a high pedestal in our collective automotive mindscape.
However, leaving the beauty and the pains aside, the continent has some rather big problems.
Europe's First Problem...
Any geography is the sum total of its inhabitants. Sooner or later, the numbers, or lack of them, become the most important factor. Europe's population is growing slowly and is expected to start declining post 2026. As per Eurostat, the EU's population in 2023 was less than 450m, about a third of India or China.
That's good when doing the business plan for the next Ferrari but not when planning a 6kW commuter scooter.
Over a decade, Europe's population increased by only 1.7% on an absolute basis. To re-emphasize, that's the total increase, not the annual increase. In numbers, this was about 7.5m people. Even more alarming, all of this was driven by net immigration, as it offset an overall decline in population.
As a result, Europe's pecking order is coming down. From a 12% share in the world population, Europe now represents less than 6% of today's global population.
Experts blame it on low fertility rates. They cite a fertility rate of 2.1 as needed to keep the population stable. Europe sits at less than 1.5.
Apart from the low fertility rate, Europe also has an aging population. In 2003, there were 3.8 working people (age 20-64) for every pensioner (age ≥ 65 years). That came down to 2.7 in 2023 and has a strong downtrend.
Thankfully, the continent remains a high-income economy, which is good for electric car sales. They rely more on the purchasing power and are less affected by absolute population numbers.
However, when it comes to electric two-wheelers and L-category vehicle sales, both are heavily dependent on the actual population numbers. To put it in perspective, Europe does not have too many people. The ones that it has are aging.
Few, and aging, people don't buy too many motorcycles.
Europe's second problem
The second major problem is that manufacturing in Europe is not optimal. It has never been in any high-income country. However, while manufacturing in Korea, Taiwan, and now the US, is protected through technological advancements and/or government policies, the EU could never offer that. Add to that the high energy costs compounded by the Ukraine war and Europe's manufacturing problems have reached a crisis situation.
The post-Covid downturn in manufacturing has been the sharpest since 1991, without Europe officially being in a recession.
However, the downturn in manufacturing has more fundamental reasons. The primary reason is that the cost of money has increased significantly. High-Income countries like Japan, the US, and Europe had very low inflation levels for a long time. However, that has changed post Covid, especially for Europe, and is further amplified by the ongoing war.
The cost of money has also made capital investments difficult. Debt funding is expensive, and because of the challenges compounded by that, private money is hesitant.
If we drill it down to L-category electric vehicle levels, your prospective customers have no money to buy your electric moped. Worse, the rental companies running ride-sharing networks in all prominent European municipalities have no money to add more or even replace an aging fleet.
Worst, (since it makes no business sense) there is no one thinking of making a Europe-centric product with design, engineering, supply-chain, and manufacturing in Europe.
Outsourcing Manufacturing - Boiling the Frog with the water
As this chart from UNIDO illustrates well, the European share in global manufacturing has fallen sharply.
In 2000, it was estimated that Germany accounted for 8% of global production, Italy had a 4% share, France and the UK 3% each, and Spain had a 2% share. Together, the five major economies of Europe produced 20% of the world's industrial output. Together, the Eurozone was sitting at about 25% share. In contrast, China only made 6% of the world's industrial output.
The situation is changing rapidly - by 2030, UNIDO estimates that China will be producing 45% of the total global industrial output while the Eurozone would not cross 15%. The most industrialised, Germany, would see its share fall to 3% of the worldwide output.
The local high cost of manufacturing in a globalised world meant that over the last twenty years, the EU has outsourced all its major manufacturing to China, India, and Southeast Asia. This outsourcing is good for companies (in the short-term) but bad for people with manufacturing jobs.
Over the long-term, it meant that decision makers in Europe started preferring services more than manufacturing. It works for some time, but in the long term, a lack of investment in industrial research and development has made Europe even less competent.
Even if you want to manufacture in Europe, one has to contend with a highly regulated environment, high wages, environmental regulations, and energy costs. Precisely the factors that make Europe an attractive EV market also make it a sub-optimal manufacturing base.
The decision making was also impacted by the improvement in manufacturing, especially in China. While Indian manufacturers could consistently deliver Europe-acceptable quality, the Chinese took some time. At the same time, they are making the more significant impact.
That loss of industrialisation is pretty much the reason why Europe has been reduced to a market and European electric mobility startups are chasing niches rather than tackling the mainstream.
As a result, whatever Europe buys today in terms of electric mopeds, is mainly produced in China.
But it wasn't always like that.
The First European E2W Renaissance
We fondly call the period starting in the mid-2010s (and continuing?) the First European E2W Renaissance. This began electric two-wheeler mobility in Europe, and multiple startups mushroomed. Most ICE incumbents - fashionably - stayed away.
The rising popularity of shared moped services in major European cities drove the renaissance. So we had startups at both ends of the spectrum —Electric Moped sharing service operators and Electric Moped manufacturers. Since investors typically like rapidly scalable business models, sharing service operators raised significant funding while the actual manufacturers attracted very little.
With little funding support, no regulatory protection (like in India, Taiwan, Indonesia, African markets, etc.), and an already high manufacturing cost in Europe, homegrown Electric Moped manufacturers had a disadvantage.
As we shall see, this will eventually shape the European electric two-wheeler market to where it is today.
Moped Sharing and its Impact on Manufacturing
During the mid-2010s, many European cities started taking measures to control emissions and improve mobility. Many large European cities announced decisions to phase out ICE vehicles and move their populace towards electric two-wheelers. Cities like Barcelona, Berlin, and Paris were at the forefront of these initiatives, but were soon joined by nearly every major city in the continent.
One of the common vehicle formats that all cities agreed on was the Electric Moped - an electric scooter with a top speed capped at 45kph. Everyone also realized that moped sharing would push the initiative more than vehicle ownership. As a result, shared mobility services started mushrooming, and cities began handing out licenses to operators who ran these services. It was a mobility start-up fest in Europe during 2017-20.
Keep in mind that cities offered licenses that put a cap on vehicle numbers. No one wanted their roads & pavements to be littered with an unmanageable number of electric mopeds.
Barcelona gave out ten licences to operators - Acciona, Avant, Cityscoot, Cooltra, Iberscot, MOVO, OIZ, SEAT Mó, TuCycle, and YEGO. Together, these ten operators initially offered a fleet of 6500 electric mopeds on the streets of Barcelona.
Berlin offered licenses to three operators - emmy, felyx, and TIER Mobility. Together, they initially put more than 5000 mopeds on the streets of Berlin.
Similarly, Paris counted five operators - Cityscoot, Cooltra, Lime, Troopy, and YEGO. Together, they put 6000-7000 electric mopeds on the city streets.
Often, operators offered moped sharing across multiple European cities for a better scale of operations. The operating model was asset-heavy, with the operator owning mopeds and the license to operate moped-sharing services in certain cities. Operators were also required to offer a single helmet along with the moped on lease, though most operators have now switched to offering two helmets with the mopeds.
A report by Invers, a technology provider to the moped-sharing industry, estimated that 2022 18k electric mopeds were under operation in the sharing market in Spain. The Netherlands had nearly 17k mopeds, Germany 11k, Italy 10k mopeds, and France accounted for another 9k mopeds. Invers estimates that Europe has mopeds-sharing operations in more than 100 cities (with the UK included).
These startups needed to buy electric mopeds. So along with the start of moped sharing in the mid-2010s, many European start-ups also came up to manufacture electric mopeds. The primary players were Govecs, Askoll, Unu, Silence and Torrot. Other startups, like Etergo, never reached the industrialisation stage.
This was the mid-2010s, and the mainstream (incumbent ICE players) interest in electric mopeds was non-existent. Chinese factories had no significant offerings compliant with European regulations (EEC).
European E2W Brands - the four stages of (d)evolution
Almost all of these manufacturing start-ups had the same journey:
Stage 1: Put together a team and develop an Electric Moped/scooter. Limited funding was available in the early to mid-2010 era. Govecs raised EUR 10m in financing. Silence raised a slightly smaller amount.
But these were pennies when compared to the funding raised by the ride sharing companies - Cooltra (EUR 140m), Acciona (EUR 862m, at the group level), and Cityscoot (EUR 78.6m). The sharing companies had more money than the manufacturers.
Stage 2: Start assembly in limited numbers. None of these start-ups needed a mega-factory to start production. In many cases, they outsourced production to a third-party producer. A limited assembly of scooters would suffice and deliver high quality. However, it also provides poor economies of scale. Most of the players did not even have manufacturing plants of their own
Stage 3: Loudly say that your products are manufactured in Europe. This was good in 2017 when Europe delivered better quality than China, and customers were fussy about the scooter being manufactured in Europe. That vanity is now over. Chinese quality levels are high and customers are more conscious of their cash.
Stage 4: Run out of cash when the weather deteriorates.
Reality Bites
Manufactured-in-Europe mopeds are expensive. It was fine until operators had generous funding and funds to splurge. Every business has to tackle reality eventually, and so did the sharing operators, who until now were buying European-designed, European-made products.
Meanwhile, the Chinese upped the quality game. Niu and SuperSoco (Vmoto) became prominent players by designing scooters for outside China markets. Segway-Ninebot and Yadea have now joined them. More are on the way. European operators now had access to scooters that were cheaper and as good in quality as Europe-made scooters.
The Chinese have mastered their weak areas—engineering, styling, and quality—to reach and surpass European start-ups.
The Chinese did not waste effort on passion projects like the Govecs Schwalbe or much of the Cake range. They better understood the European market, the winds of change, and the focus on value for money. They also had deeper pockets - they were not start-ups.
In comparison, European start-ups were always short on money. Their lack of scale meant they had no money to spend on new product development and improvement.
Vertical integration was out of the question. Components like batteries and motors would be forever outsourced. The Chinese hustled and developed, creating a much larger scale, considering they were selling in their vast local and high-volume markets like ASEAN.
Eventually, the first generation of moped manufacturing start-ups faltered. At one time, Europe-based shared mobility operators were sourcing most of their electric mopeds from European manufacturers. By the time these vehicles reached their end-of-life, the operators had started replacing them with Niu, Vmoto Soco, and other Chinese brands.
As of today, the first-gen European brands have little to show.
Manufacturers in the First Renaissance (and where are they now?)
Askoll: Askoll EVA S.p.A started manufacturing electric two-wheelers in 2014 and is one of the surviving European brands from the first wave. It is listed on the Euronext Growth market of the Italian Stock Exchange. The brand’s 2024 sales were just short of 2000 units. Askoll has a significant presence only in Italy, but the Italian market has seen a sales decline of nearly 20% in electric mopeds. Cooltra is a prominent customer, but without strong retail sales, it is not easy for Askoll.
Govecs: Munich-based Govecs was formed in 2009 and lost its way quickly after initial success. In 2022, sales were just north of 200 units. The website has lost most of its functionality, so Govecs may not be doing well.
unu: Berlin-based unu created a fashionable scooter for ride-sharing. However, a lack of demand and high operational costs led to the company's bankruptcy. Its assets have now been acquired by EMCO.
Rieju: Spain-based Rieju never really participated in the first European EV revolution. A profitable, family-run company has more wisdom and understanding of the market. In 2010, Rieju developed the MIUS (Sustainable Urban Individual Mobility), a large wheeled electric scooter. However, Rieju would sell off this product platform to Askoll. Another small wheel platform was sold off to Govecs.
Etergo: The Netherlands-based start-up created a scooter (AppScooter) that would have been used in the sharing market. However, the plans were derailed because Covid and Etergo ran out of money, eventually selling to India-based Ola Electric. The Indian manufacturer now sells a modified AppScooter as the Ola S1.
Torrot: Spain-based Torrot has had an exciting history. In 2015, Torrot merged with off-road bike manufacturer GasGas but demerged again in 2019 when GasGas was acquired by the KTM group. It was a popular vehicle choice when European ride sharing was at its peak. In recent years, Torrot’s focus has been on kids' electric balance bikes and has been selling off older IPs to other manufacturers.
Silence: Barcelona-based Silence was established in 2012, and sales in 2022 were slightly less than 7000 units. The number may appear small, but Silence remains one of the few 2EV startup brands to survive, though the ownership has changed. In 2021, the climate tech specialist group Acciona acquired Silence. The Spanish brand also has a strong working relationship with the VW group’s Spain-based SEAT division. Being part of Acciona provides Silence stability.
What happened with ride sharing companies?
The last five years have been tumultuous for Europe's micromobility and moped sharing companies. They have been going through a tough patch as private money in the sector has evaporated. Debt has become expensive. When the micromobility wave started, ECB rates were near zero. Those rates sit close to 4% today after spiking to 4.5% in mid July 2023-Mar 2024.
The decline in electric moped sales in Europe is because the ride-sharing fleets are not expanding anymore. There is consolidation in the industry. In February 2024, Cooltra announced that it had acquired Cityscoot. The deal value was only EUR 400k, essentially Cooltra acquiring Cityscoot's user-base. The Paris-based Cityscoot deploys Askoll electric scooters.
In early 2023, Turkey-based BinBin acquired Go Sharing, a ride-hailing platform that deploys mopeds. Go Sharing was in trouble because its scooter supplier GreenMo had filed for bankruptcy. Go Sharing deployed Vmoto scooters
Much before that, Coup had gone bankrupt in 2019. The ride sharing company was Gogoro's entry into Europe. Tier Mobility acquired the assets (5000 scooters) with investments from Bosch. However, in 2020, they shuttered the moped sharing operations.
Europe Gen-2....any better?
With the first wave crashing at the shores, Europe has now learnt its lessons and is stronger and leaner.
Wish, we could have said the above...
Unfortunately, the European E2W startups have gone the other way entirely. They are ever crazier and chasing niches that don't exist. There is a collective reduction in ambition and no desire to lead or create long-term sustainable companies.
At the lifestyle end, we saw startups like Arc Motorcycles chasing something that did not exist. They closed down, twice. Respect!
Then we had Cake with a strong emphasis on industrial design, very little on reality and practicality. They went bankrupt. While Cake has now come out of bankruptcy, the business plan needs a major upheaval. There are also new Chinese contenders like GoWow, Sur-Ron and Tromox who make equally cool electric motorcycles.
Sure, there are Maeving and they seem to be doing well, but the market for British classic style electric motorcycles is relatively tiny and the RE Flying Flea is headed that way.
Editor
There is also Brekr, a moped that we admire for its design. They went bankrupt and were saved, recently.
With Yadea now manufacturing acceptable quality scooters and motorcycles, Vmoto and Niu already there, and Segway-Ninebot upping their game, the climate is very challenging for a new European startup. Also, Honda has finally launched the CUV e: last year, and there is a lot of high quality competition; competitors with bottomless pockets, bigger manufacturing plants, more control on quality, and greater vertical integration. The honeymoon period for European startups to capture the market ended in 2023.
Even in the lifestyle segment, the scope of making cool products with great industrial design is now over. A single good design has a one-year shelf life, if it has been commercially successful. Good companies ensure good designs every year, something the Europeans expected to do at the start of the journey.
Sadly, they lost their mojo.
Editor
