Putting the Brakes on E-Bikes
New tariffs on e-bikes will hurt the environment and our cities.
I recently returned from a trip to Cambridge, Massachusetts and was astounded by the number of cyclists riding along on the city’s extensive, new bike lane network. It reminded me of videos I’ve seen of bicycle-friendly northern European cities like Utrecht. Most of the riders had the focused look of people who had somewhere to be – work, school, etc.. These were not leisure riders. Many of the cyclists were on electric bicycles (e-bikes).
More and more city-dwellers are using e-bikes as an alternative to passenger vehicles. In doing so they are reducing local air pollution, greenhouse gas emissions and traffic congestion. Given the alignment of e-bikes with federal policy goals I was shocked to learn that President Biden’s administration has reinstated tariffs that President Trump placed on e-bikes in 2018 and that the Biden administration had previously paused. Trump had included e-bikes among the $250 billion in Chinese goods that he targeted with tariffs due to unfair technology transfer and other practices. No reason was given for the e-bike tariffs in particular. What’s clear though is that the reinstated tariffs will raise the prices of e-bikes and slow down e-bike adoption, just as momentum for this mobility option begins to grow.
US E-bike sales have been growing rapidly, climbing from 2% of pedal-only bike sales in 2016 to more than 18% of pedal-only bike sales in 2023, representing over one million bikes. This trend is despite the average e-bike costing $2,000 to $3,000, as compared to $1,000 for a typical commuter pedal-bike. According to the American Community Survey, just 0.5% of people bicycle to work and that number has not changed much for decades. But I am optimistic that e-bikes are a technological innovation that could increase how often people commute on bikes.
E-bikes are one more technology that has been enabled by low-cost lithium ion batteries, like mobile phones, laptops, electric vehicles and large scale energy storage. The extra power from the electric motors supplements human pedal power to move larger bikes that can carry more cargo and passengers. The bikes make it easy to climb hills and appeal to a wider range of riders. Also, e-bike cyclists arrive at work less sweaty and smelly than their pedal-bike counterparts. In addition to private ownership, e-bikes are part of the shared bicycle networks that are popular in many urban areas like Cambridge. With these advantages, I expect e-bikes will replace more passenger vehicle trips than pedal bikes have. Research on e-bikes in Sweden bears this out.
Nearly 100% of bicycles sold in the US are manufactured abroad, with the vast majority coming from China. The last major US bicycle manufacturer was closed by 1999. About 3% of bikes sold in the US are assembled domestically, but using Chinese-made components. China has quickly dominated the e-bike market too, taking advantage of their battery dominance.
As of this month, the Biden administration has put into effect 25% tariffs on imported e-bikes and bike components made in China. An additional 25% tariff on Chinese-made battery packs used by e-bikes goes into effect in 2026. Biden, like Trump before him, relied on Section 301 of the Trade Act of 1974, which gives the executive branch broad discretion to put in place new tariffs without a robust regulatory cost analysis. E-bikes are among billions of dollars of Chinese goods that are being targeted.
The President’s tariffs on Chinese goods are intended to counteract unfair subsidies in China and develop domestic supply chains. However, the administration’s trade policy conflicts with its climate policy. James Sallee has described how the new 100% tariff on electric vehicles, for example, is bad for the global environment and could slow down innovation among US automakers. The rationale is even weaker for tariffs on e-bikes because there are no domestic manufacturers to help or domestic supply chains to strengthen.
Since essentially all e-bikes sold in the US are made in China, the 25% tariff on Chinese e-bikes is essentially a tax on all e-bikes. Sure enough, e-bike companies have already announced price increases. These companies face little competition from non-Chinese manufacturers to keep them from doing so.
The research on the Swedish e-bike market that Lucas Davis blogged about found that e-bike rebates flow entirely through to buyers, that the rebate attracted new buyers and that the recipients drove less. Because the Biden e-bike tariff is essentially the opposite of a rebate, I would expect 100% of the tariff cost to flow through to buyers, fewer e-bike buyers and more driving. As Lucas has pointed out, a shift from driving to biking in cities can have a number of societal benefits including reducing traffic congestion, lower tailpipe emissions and the virtuous cycle of non-cyclists being inspired to start riding when they see other people on bikes. Reaching a critical mass of riders can also help motivate governments to make the sort of bike lane improvements I saw in Cambridge that bring more reluctant cyclists onto the streets.
The Biden administration should remove the tariffs on e-bikes and let the market continue its rapid growth. Going forward, Biden should set the precedent of conducting more thorough and transparent evaluations before applying Section 301 tariffs, including considering the environmental impacts of tariffs. With changes like these, the federal government can help our cities roll into a cleaner and less congested future.
—
Follow us on Bluesky and LinkedIn, as well as subscribe to our email list to keep up with future content and announcements.
Suggested citation: Campbell, Andrew. “Putting the Brakes on E-Bikes” Energy Institute Blog, June 24, 2024, https://energyathaas.wordpress.com/2024/06/24/putting-the-brakes-on-e-bikes/
—
By default comments are displayed as anonymous, but if you are comfortable doing so, we encourage you to sign your comments.
Categories
Andrew G Campbell View All
Andrew Campbell is the Executive Director of the Energy Institute at Haas at the University of California, Berkeley. At the Energy Institute, Campbell serves as a bridge between the research community, and business and policy leaders on energy economics and policy.
Energy Institute Blog 
biden is not going to do anything to help anyone in the US. Has he done anything to make our lives better? Maybe for, but for me I retired sold my car bought an ebike. Now if the prices go through the roof I won’t be able to replace my battery when it quits. It will cost more than I paid for the bike. You try and be more green and look what they do to you. They are all getting around telling us need to go green then when you do they screw you. Incredible.
Thanks to Biden’s Inflation Reduction Act, you can get up to 30% of your e-bike paid for: https://www.heybike.com/blogs/heybike-blog/electric-bike-tax-credit-rebate
In addition, in California you can get up $1750 in credit: https://www.calbike.org/bike_purchase_incentives/
I wish this were true, but e-bike tax credits and rebates at this time are only available on a state-by-state basis. The California program has a very limited amount of money and will probably “sell out” in very short time once it is open to the public. The federal Ebike Tax Credit is NOT in effect and probably won’t even see the light of day until well into 2025 according to a conversation I had with a staffer of Rep. Panetta (one of the bill’s authors.) And that’s only if it actually gets into a bigger tax bill. It’s unethical for Heybike to suggest this tax credit is available now.
Good. E-bikes are currently unregulated and it leads to abuses, accidents that are caused by novice users that suddenly have speed and distance capabilities that their cycling skill set doesn’t match, and city infrastructure doesn’t account for e-bikes so they’ve just flushed the market with no plan, letting all hell break loose.
Tax them so then people will use choose real bikes and problem solved all around.
Having recently switch to an ebike as my daily commuter, I’m incredibly upset with my government. Are there not enough vehicles on the road? How much brake dust and asthma must we endure?
So, just let China own the entire market?
“There are no pockets in a shroud.” At this point, we (you, me, and every other human on the planet) need to do what we can to mitigate climate change. I’d rather let my offspring deal with untenable socio-economical-political environment than none at all.
Yes, but let’s see the whole story. What is the climate and human impact of how China manufactures E- bikes? Just like EV’s, we need to know the whole scope, from mining for the batteries to the output of the factories. I see no reference the the Carbon footprint of those facts…
Numerous studies show that the lifecycle carbon impacts of electric vehicles are a fraction of those from conventional vehicles. This concern is a distraction foisted by the fossil fuel industry.
And the real alternative to e-bikes is the automobile, not human powered bikes. Most people live in locations and are not in sufficient condition to use bikes for commuting or short errands. E-bikes potentially can get them out of their cars for these trips. Cargo e-bikes may be the real game changer.
Interesting to have the federal government imposing a tariff on E-bikes, while several states are offering government-funded rebates on E-bikes. Offsetting tax policies. The federal tariff increases federal revenues; the state credit decreases state revenues.
The Washington State credit was sponsored by Sharon Shewmake, an Economist and tenured professor at Western Washington University; she teaches in the environmental economics program from which I graduated 50 years ago this month.
https://www.theurbanist.org/2024/04/30/statewide-e-bike-rebate-program/
Jim Lazar, Olympia
Admittedly this is a long time off but — assuming commuting returns (or gets closer) to pre-pandemic levels, will e-bikes mean that transit schedules will have to include additional days (and costs) for “rainy day peaks”, and how will the fixed costs for that be factored into fares? I still remember all the complaints about the morning “casual carpool” in the SF East Bay leading to higher AC Transit fares!
“The President’s tariffs on Chinese goods are intended to counteract unfair subsidies in China and develop domestic supply chains.”
The logical and rational response to such protectionism would be to impose a tariff sufficient to offset China’s export subsidies and use the tariff revenue to subsidize all e-bikes — domestically-produced and imported — at a uniform subsidy rate. If there is no domestic production, the subsidies would all go to imports, but they would at least remove the market barrier to new, domestic market entrants that are competitive with imports.
Aren’t there WTO rules that deal with unfair subsidies and tariffs?
Ken Johnson
Fires are an increasing problem with Lithium batteries of some types. Bikes and skateboards especially by fly-by-night vendors are causing substantial damage, and that may grow until some effective regulation happens.
A social good would be to bias tarriffs towards demonstrated-safer batteries. Having a good long warrantee and liability insurance against damages, and a way to prove the entity will exist to back it, is the best way to demonstrate safety.
I wouldn’t want to see a rule like “Only lithium ion phosphate batteries get a lower tariff.” That would eliminate the incentive to innovate.
I wish I could say “Any battery which meets spect UL-blabla is safe enough for the low tariff”. But I don’t trust the underwriters or CE labs anymore- they have been replacing employees with newbies that are cheaper.
You hit the nail on the head. This article is misleading. Most U.S. based bicycle manufacturing companies (Trek, Specialized, Giant, etc.), while producing bikes overseas, are not producing their bikes in china. As for Ebike system manufacturers, the quality systems either are not made in China like Bosch which produces batteries in Hungary, or have manufacturing capabilities outside China (Shimano and Panasonic). Tariffs on Chinese made bikes won’t impact bicycle manufacturers using these systems.
Low quality bikes coming out of China are hugely problematic for local bike shops tasked with servicing these bikes. Parts are difficult to get, support from the manufacturer is non-exist, and any issue with the electrical systems will usually render them garbage. Not to mention, these companies typically do not carry any insurance in the U.S., and bike shops that work on these bikes end up in the line of fire if the batteries start a fire, or the rider gets hurt and the inevitable lawsuits happen.
If e-bikes are to be truly considered environmentally friendly, they need to be higher quality than the disposable bikes coming out of China and being sold direct to consumers. Tarrifs will raise the price of cheap e-bikes to be closer to that of better quality e-bikes and hopefully we will see less of the disposable, questionably safe e-bikes.
I agree that foregoing tariffs on Chinese bikes is a good idea. Would just like to point out safety measures and public education are needed with more bike traffic even with dedicated bike lanes. Cambridge has seen two bicyclists killed by right-turning trucks in the last two weeks.
eBike adoption hurts US auto workers. It is counter to the US policy of not limiting the use of fossil fuels. It is a socialist in every sense of the word in that it encourages people to get out their isolating car (and we know that socialism is anti-capitalism and therefore anti-democracy and communist). eBikes are only for woke liberals. In addition, eBike adoption will cause congestion in parking lots, particularly of grocery stores and high schools. And don’t forget there have been more than 300 lithium battery fires due to eBikes; and lithium mining is inherently dangerous and necessarily polluting. eBike riding shifts the rising cost of gasoline to the poor because only rich people can afford to ride an eBike.
Driving an SUV is so much safer. Consider the result of an SUV/eBike accident. Helmet hair is very unattractive.
The list goes on and on.
OSD
I think the entire tariff/protectionism program is flawed, but something needs to be done about Chinese subsidized dumping of ebikes on the US market, and a blanket tariff is an easy solution, if only to level the price between junk and decent bikes. I don’t agree with this solution, however. We are building multiple battery factories in the USA; we should encourage domestic production at scale. I’m VERY glad I bought my ebike before this tariff nonsense started; I ride that bike all over and I’m 68.
John Spoly, VT
One could argue that getting an ebike results in more independence and freedom due to lower cost of owning, repairing, insuring, and fueling compared to a traditional car or truck for people who live in urban environments. Isn’t rugged individualism and independence one of the hallmarks of conservative values? In either case, car or ebike, you’re still dependent on the grid but if you don’t need a car or truck living in the city, then why not buy an ebike instead?
You say ebikes will hurt the poor auto industry. Is this an admission that an entrenched industry such as auto manufacturing can’t withstand changes brought on by new technology? They don’t have the autonomy to pivot and provide products to satisfy the demands of the times? Maybe they’re outgrowing their usefulness and they’ve been pumping out excess new vehicles for too long? I don’t think we have the problem of too few vehicles, just go look at any dealership.
Are you scared of a couple of wheels and a bike helmet coming to hurt you?
We make millions of cars every year, most of which come from imported materials, all of which could be subject to tariffs given the right set of circumstances. We need solutions for regular citizens just as much as we need solutions for corporations like auto makers. But the solutions for people should come first. And that includes for people who want to buy an ebike for their urban commute. Tariffs on the cheapest ebikes which will end up in landfills would be helpful to promote change that would keep out the junk and allow quality to proliferate.