Twice as expensive as Gogoro? How Merida conquered the European market with electric mountain bikes

An electric mountain bike priced at around NT$160,000 could buy you two Gogoro electric scooters, yet Merida has managed to sell them like hotcakes in the European market—this series now accounts for over half of Merida’s total electric bike sales.

In fact, over the past two years, Taiwan’s overall bicycle exports have been declining, and the rise of shared bikes has posed challenges to the traditional bicycle industry. However, the rapid growth of electric bikes has gradually offset the decline in traditional bike sales, with Merida being one of the standout performers.

New breakthrough !  Largest share in electric bike exports  Focusing on mid-to-high-end models  Driving revenue surge

From January to August this year, Merida’s revenue grew by 22.79%, with electric bike sales nearly doubling and accounting for as much as 30% of total revenue—far exceeding expectations. “We originally expected to reach this level by 2020,” said Merida Vice President Cheng Wen-hsiang. “Market growth has surpassed our expectations, so now we’re facing capacity shortages.”

The average export price of electric bikes is three to four times that of traditional bikes, driving up Merida’s overall product average price—from $619.87 in 2015 to $990.5 in the first half of this year, a 59.79% increase. Moreover, from January to August this year, Taiwan exported 173,900 electric bikes, with Merida contributing about 101,500 units—over half.

“Within just a few years, we couldn’t compete in the market and had to move production to China,” recalled Tseng Sung-chu. Back then, they started too early and the technology wasn’t mature. “In the end, we had to shut it down.” At the time, Merida handled all R&D in-house, developing its own motors and controllers, but due to limited scale and high costs, the venture ultimately failed.

After that setback, Merida soon faced another blow when Schwinn/GT, its then-second-largest client, went bankrupt. Writing off bad debts from the client’s collapse caused Merida’s profits to turn from profit to loss in 2001, plunging the company into a low period. This forced the OEM-turned-brand Merida to rethink its strategy, deciding to focus on building its own brand and maintaining a premium strategy to solidify its position in the mid-to-high-end market—carving out a path with its own brand.

Turning point ! Bicycle industry declines  Electric bikes make a comeback  Higher quality raises prices

As chairman of the Bicycle Association, Tseng Sung-chu is well aware of the pressures facing the industry. “Annual output and value have been continuously declining, which is a concern for the entire sector,” Tseng said. Traditional bike volumes are shrinking, global price competition is intensifying, and Taiwan struggles to compete with China in the low-price segment. Finding a way forward has naturally been a constant concern.

Even as Giant, the leading bicycle brand, began setting up operations in Kunshan, China as early as 2005 to tap into the electric bike market, Merida remained inactive.

“I never wanted to make low-end products,” Tseng Sung-chu said firmly. “In China, some said, ‘Just buy and rebrand, or slap on a cheap shell.’ But I never wanted to do that, so I kept delaying.” For Tseng, the earlier failure in electric bikes felt like yesterday—he wouldn’t act until he was fully prepared.

What made Tseng decide to revive the electric bike production line was Bosch, the major German auto parts manufacturer, entering the electric bike field about five years ago and starting mass production of electric bike motors and power systems.

“I believe Bosch’s entry means they’re highly focused on motors,” Tseng said. Brands like Mercedes-Benz and BMW use Bosch motors, which have consistently met high quality standards. Over twenty years ago, Merida tried making its own motors and power systems, but due to immature technology, it shut down its China electric bike production line and only produced small-scale electric bikes in Taiwan. This time, with the electric bike supply chain technology finally mature, in 2013, Merida decided to expand its factory, re-prioritize electric bikes as a key product line, and focus on mid-to-high-end models for sports use.

Cheng Wen-hsiang said the average manufacturing cost of electric bikes is more than double that of traditional bikes, but due to their higher prices, gross margins currently remain around 12%, though the profit amount is definitely higher.

For more exciting content, please check out the latest issue of CommonWealth Magazine (Issue 1136).