This Substack series is about value for money (VfM) assessment. But today I’m writing about e-bikes. What’s the connection? Well, I think e-bikes are a case study in VfM, providing both tangible and intangible returns on time, effort and money. Let me explain…
Full disclosure: This post draws on personal experience. Your mileage may vary. Nonetheless, the focus is on transferrable learning.
Backstory
A fairly early adopter, I bought my first e-bike in 2015 with no business case - I just wanted it.
I loved it. It was powerful, well-engineered, and its rear hub motor was completely silent. But like a lot of e-bikes at the time it only had a small battery and not enough range. Eventually I realised this was just my gateway e-bike. It now has a new owner.
One fine day in Vancouver I rented a Specialized Turbo, and from that moment on I wanted one of my own.
Not long after, they released a new model and I was there with the readies. Here’s a photo when it was brand new and the rear tyre had just blown out when I was seeing how fast it would go 😶
A wise friend taught me that the right number of bikes to own is always N+1 (clearly he’s not a VfM expert, but to be fair he does know a lot about bikes). I took his advice to heart when I realised an e-gravel bike would make my life complete (pic at the end). To make room for it, I sold my regular pushbike, which I wasn’t using. Here’s why.
I think there are five economic cases for e-bikes:
1. Return on effort
A simple qualitative cost-benefit analysis (CBA) explains the first economic case: On an e-bike, the benefit (speed and distance) for a given cost (physical exertion and time) is greater than that of a pushie.
You still have to pedal. The bike multiplies the effort you put in, providing a positive return on exertion.1 It responds instantly and proportionately - as Specialized advertises, it’s you, only faster. It incentivises and rewards effort, increasing enjoyment and encouraging you to ride more.
2. More exercise, better health
In case you haven’t heard, cycling is exercise, and exercise is good for you. For example, this systematic review found that cycling has benefits for cardiovascular health and all-cause mortality. It’s a magic pill. It turns out that e-bikes may even be better exercise than the old pushie (or “acoustic”), making them an extra-strength magic pill.
According to this research, e-cyclists put in less effort per km than acoustic riders, but still maintain a moderate intensity heart rate and oxygen consumption, consistent with beneficial exercise.
Meanwhile, the increased enjoyment of more speed for less effort nudges you into getting more net exercise. I can attest that I’m spending more time on a bike than I used to. What’s more, a good hard sprint on an e-bike is sensational and depletes glycogen just as well as a pushbike.
Incidentally, exercise is good for the brain too. For example, some of my best problem-solving moments have happened on rides. I thought up this article while hurtling along on two wheels and thumbed the first draft into my phone under the influence of dopamine when I got home (does it show?)
I am not you, but if e-bikes incentivise enough of us to ride more, there’s a population health benefit.
3. The financial case
Most bikes are cheaper than most cars. You don’t have to spend a fortune on an e-bike but it’s worth paying for quality - cheapies can be unreliable with uncertain supply of parts and service. Can it stack up financially? Ultimately it comes down to what you’re willing to pay - but you may end up paying less than you think. You’ll need to run your own numbers but here are a couple of ways of approaching it, using my situation to illustrate.
My estimated whole-of-life (of the vehicle) average costs per km are in the ballpark of NZ$1.90 for the car and 25 cents for the e-bike. I guarantee your numbers are different because it depends on individual factors like your choice of vehicles and how much you use them.
Comparing modalities on average cost per km makes a strong case for buying an e-bike if it takes away your need for a car - and I know of some families that have swapped out their second car for an e-cargo bike. But that hasn’t been the case for me.
I live in Auckland, a sprawling city with only the beginnings of decent cycling infrastructure. The bike paths don’t always go where I need to go (same for public transport), and it’s not always safe or convenient to ride for every trip. According to my judgement, I still need my car. So the cost of a bike is on top of the car.
That affects the financial case, because I need to see to what extent bike usage might reduce my car running costs. Using the bike instead of the car just reduces the variable costs of running the car (principally petrol) - but unfortunately, most of my car costs are fixed costs (incurred whether I use the car a lot or a little, e.g., insurance, annual maintenance checks, and depreciation).
The marginal cost of driving is about 29 cents per km - that’s the amount I pay to drive one extra km or save by driving one less km. The marginal cost of bike electrons is 0.1 cents per km - so every km I travel on the bike instead of the car saves me a net 28.9 cents, gradually offsetting the cost of the bike. To fully recover the costs of owning and running an e-bike, I would need to reduce car usage by around 100km per week for ten years (note: it’s not enough just to ride that distance - these have to be km that would otherwise have been travelled by car).
That seems achievable. It’s another incentive to ride more, because every time I ride instead of driving it brings me closer to breaking even (getting the bike ‘for free’ in the sense that I would otherwise have spent the same amount of money on petrol).2
4. The congestion case
E-biking is quicker than driving, for the routes I choose to cycle. I can say that categorically because I studied it back in 2016 on my first e-bike. The bike computer showed an average speed of 28kph while the car computer showed 16kph for trips with the same origin and destination. If I ran the study again I would expect to see an even greater difference because my newer bikes are faster, while Auckland traffic is more congested than ever.
Time is money, and we could work out a monetary value of getting places quicker by e-bike. Add that to the financial case and the bike is even more likely to break even. Our transport planners do this all the time when justifying new roads.
But travel time is more than just money, as I explored in an earlier article: a study found each hour on a bike to be more worthwhile travel time than an hour in a car, in terms of the average value people place on it. Nice to know it’s not just me.
There’s an altruistic argument too. Every time an extra person decides to ride instead of driving, they’re incrementally reducing congestion for everybody else.
5. The happiness case
Happiness is partially factored into each of the cases above. That surge of ‘turbo’ power always brings a smile. Riding makes me healthier, and a healthier me is a happier me. I’m also happy that I incrementally reduce the cost of the bike every time I take it out instead of the car. Sitting in congested traffic is no fun, but riding alongside a motorway during rush hour and overtaking lines of cars brings a particular kind of happiness I don’t have a word for and don’t feel entirely proud of. But above all those things is the endorphin factor. An e-bike just is a happy place to be, even if (especially if) I have no particular place to go.
In summary: e-bikes give an instantaneous positive return on effort, make you smile more, live longer, get places faster, and (if substituting car trips) their cost decreases with each pedal revolution. How’s that for good VfM?
Thanks for reading!
There’s a huge variety of e-bikes to meet different needs and I recommend taking your time to understand the different options, go for lots of test rides, and choose one that meets your needs and budget. Here’s just one website to get you started.
I heard that clicking the ❤️ button increases the visibility of this post on Substack.
There are different power modulation setups. My bikes have a torque sensor which means the harder I push, the harder the motor pushes. It’s very intuitive and feels like having bionic legs (probably). In some countries like UK and Australia, the motor only assists up to 25kph. Luckily we don’t have that rule in NZ and my bikes can keep up with city traffic. Some other e-bikes have a cadence sensor which engages power based on the speed of pedalling, but not in proportion to your effort. It feels more artificial and less satisfying in my experience but some people like them. A third type has a throttle on the handlebar so you don’t have to pedal at all, just hold on and enjoy the ride as you deliver Uber eats around town. Each to their own.
Based on a 10-year time horizon at a 5% discount rate, NZ$12k present value of e-bike costs (purchase, insurance, and maintenance) divided by marginal fuel savings of 28.9 cents per km = 103km per week. This estimate is principally sensitive to car running costs. Taking an e-bike out instead of a car always produces a saving, but the savings have a wide range. To illustrate, if you have an electric car you’ll have to cycle over 600km per week to break even on the 10-year cost of an e-bike at a marginal cost offset of around 4.8 cents per km. On the other hand, if an e-bike reduces your use of Uber rides, you could break even at just 15km per week at a marginal cost offset of about $2 per km. YM, as they say, MV.
As Adrian Field pointed out on LinkedIn, factor in parking and the savings mount up even faster!
Inspiring to hear!