High gas prices, convenience help boost Providence company’s product overseas
Becky Wagner, co-owner of a café and bakery in Providence, bought her eGO Cycle
about three years ago. She said the electric bicycle seemed like a great way
to scoot around town, driving to work from her home a few miles away and making
bread deliveries and picking up supplies.
“The ride from my house to here is probably quicker than in my car,” she said, sitting outside her café, Olga’s Cup & Saucer on Point Street. “And the parking can be so tough, especially if I’m heading down by the hospital, there’s no way taking a car makes any sense.”
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Since Providence-based EGO Vehicles took its product to the European market earlier this year, EGO has seen its sales more than double and expects sales from independent European distributors to outpace U.S. sales for the first time within the next six months.
The eGO Cycle 2, the current model of the electric bicycle being sold in the United States (slight adjustments were made for sale in Europe), has a top speed of 23 mph and goes from 0 to 20 mph in under four seconds. Using a single battery pack, the distance range is 20 to 25 miles in the “GO FAR” mode and 15 to 20 miles in the “GO FAST” mode. By switching out battery packs (which take about five hours to recharge when completely sapped), a cycle’s range can easily be doubled. The cycle retails for around $1,000.
While Europe may be the most logical market for the cycle, Andrew Kallfelz, EGO’s president and CEO, said rising gas prices on both sides of the Atlantic certainly haven’t hurt the company’s business.
“I wouldn’t say it’s been a driving force,” Kallfelz said. “People rarely make the decision to buy for an economic reason, but at the same time a lot of our leads from the Web come from people who mention they’re sick of paying the high price for gas.”
James Hamann, vice president of sales and marketing for EGO, said he’s also hearing the occasional political grumbles from buyers who talk about the need to become less dependent on foreign oil.
Brian Wynne, president of the Washington, D.C.-based Electric Drive Transportation Association, a trade group, said the industry is certainly a growing one that has been aided by the marketing campaigns for hybrid cars like the Toyota Prius and Honda’s Insight and Civic Hybrid.
“There’s a tremendous interest in this technology,” Wynne said. “The challenge facing electric drive is not the technology. The advances have been tremendous in what electric drive can do.”
Wynne said in addition to the general public beginning to accept the technology more readily, fleet managers are also interested in anything they can do to reduce fuel costs. He said the military, which is certainly interested in moving people from one place to another quietly, is also interested in the soundless technology, as are municipal police and university campuses.
EGO Vehicles Inc. was actually founded in Alabama, but didn’t officially launch its signature product until January 2002 after relocating to Providence. Kallfelz said when the company first began selling the bikes in the United States, the question he was constantly getting asked was, “What about Europe?”
The plan was for EGO to redesign the aesthetic look of the bike before bringing it overseas. Kallfelz described the U.S. model as a “little retro,” compared to a more “mod” look that they hoped would appeal to the European market.
Before that redesign could happen, EGO found that the demand for their product already existed.
In March 2003, the company began shipping to a distributor in the United Kingdom and set up agreements with other distributors across the rest of Europe this February. That business – in France, Germany, Switzerland, Sweden, the Czech Republic, the Netherlands, Denmark and Austria – along with an existing network in Britain, now makes up about half of the company’s sales. Hamann said the expectation is for the European market (without yet having entered Italy or Spain) will exceed the company’s business within the United States in the next six months.
In the United States, EGO has organized its own distribution channel through 70 dealers around the country and fields a considerable amount of business through its Web site. The company found that it actually hasn’t been the real dense, urban environments that provide the biggest number of customers.
“A city like Sacramento or Providence are really the perfect examples,” Kallfelz said. “There’s more residential and commercial integration in some of the smaller cities and small towns. All of Europe is that.”
The vehicles are now all manufactured in Taiwan, where production has doubled since the cycles hit the European market. After orders initially got a little backlogged this spring, Kallfelz said the company is confident there is room for further production growth.
“Whether by luck or by plan, we don’t have a lot of competition,” said Kallfelz, as Hamann adds, “It was mostly by plan.” Both men note that the competitive environment could quickly change if a giant like Hyundai or Yamaha entered the market.
Kallfelz and Hamann work out of Providence from EGO’s Allens Avenue office, which also has a large warehouse space. Two other salespeople and a service technician are also based there. A sixth employee is based in Europe.
The eGO’s motor continues to improve as part of rolling changes with each new shipment of cycles. EGO will soon be introducing a model for the Australian market, as well as looking to sign its first distribution deals in the Asian market. A luxury model is planned for release in the United States and soon three different models, at a variety of price points, will be available to both the U.S. and European markets. And though no release date has yet been set, work has begun on the EGO 3, which will be based on a new platform.
“We’re selling thousands and thousands of units a month and it wasn’t that long ago that it was hundreds and hundreds,” said Kallfelz, noting that EGO is among the first, if not the first, electric drive company to make a profit. “The sky’s the limit as to how big this industry can get,” he said.
