Battery-boosted bikes a hit with moms, firms

by Jason Clenfield

Bloomberg

Tokyo housewife Chie Igawa, 38, is part of a trend that’s transforming the streets, zipping her kids around on a battery-boosted bicycle without breaking a sweat or having to worry about traffic rules.

Domestic sales of the bikes eclipsed those of scooters for the first time last year and have jumped 24 percent since January, according to the Tokyo-based Bicycle Promotion Institute. In 2008, Yamaha Motor Co. sold more of the bikes in Japan than motorcycles. Rival maker Panasonic Corp. predicts the market will triple to a million units a year.

“I started riding it a few months ago,” said Igawa, pausing on a sidewalk near the Imperial Palace, with her two boys strapped into child seats. “You couldn’t do this on a moped, it would be illegal.”

The bikes, which have a brick-size battery tucked behind the seat post, aren’t bound by traffic laws because they’re not classed as motor vehicles. That appeals not just to housewives, but also companies, including Fuji Xerox Co., which bought a fleet of them to avoid parking tickets.

“It’s a very interesting trend,” said Morten Paulsen a Tokyo-based analyst at CLSA Asia Pacific Markets, who covers the bicycle industry. “There are some fairly big funds out there that are looking at this. We might see quite a lot of growth.”

Fuji Xerox, Japan’s largest maker of color copiers, bought its fleet of Panasonic hybrids for field technicians after it became illegal to park motorcycles on the sidewalk. Competitors Ricoh Co. and Canon Inc. followed suit.

“We’d been going to Fuji Xerox and other companies with a sales pitch about how the bikes were eco-friendly and cost-effective. They’d nod politely, but nobody took us seriously,” said Akira Tatsumi, 58, head of Panasonic’s electric bicycle division. “When the law changed in 2006, it changed my life.”

Xerox’s 540 hybrids have more than paid for themselves in three years, according to Kenichi Niizeki, a manager at the company’s Tokyo headquarters. The company saves 2,500 liters of gasoline each month and service times have been cut by 10 percent.

“I got mine a year ago and I love it,” said Naoto Shindo, a 27-year-old salesman at Fuji Xerox in Tokyo, who says he visits about 10 clients a day on his bicycle. “You don’t have to stand up in order to ride up hills.”

Panasonic’s most advanced model, priced at ¥150,000, has a regenerative braking system like the one on Toyota Motor Corp.’s Prius electric hybrid car. It can run 182 km on a single charge of its lithium-ion battery, the company says.

Earlier models adopted the nickel-hydride battery cells Panasonic codeveloped with Toyota for the Prius hybrid.

Riders have to pedal to make the bikes go, with a battery-powered motor boosting the strength of the rider’s step. The motor shuts off at 24 kph, the legal limit for the vehicles.

Best-selling models by Panasonic and Yamaha sell for about ¥100,000 and have cruising ranges of around 40 km. Batteries recharge in three hours, using about ¥10 worth of electricity.

Yamaha lobbied for three years to have the hybrids classified as bicycles before it marketed the first model in 1993.

“We knew the bike wouldn’t work as a product if it was classed as a motor vehicle,” said Kazuhiro Murata, 45, business development manager for Yamaha’s electric bicycles.

Fifteen years earlier, an electric bike ordered up by Panasonic founder Konosuke Matsushita to mark the company’s 60th anniversary failed because it was treated as a motorbike. Production stopped after 1,000 units.

Yamaha sold more than 130,000 of the bikes and battery sets last year in Japan, compared with 122,000 motorcycles. Panasonic sold 120,000 units.

Sales got a boost a year ago after gasoline prices peaked at ¥185 a liter, prompting people to look for alternatives, said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc. in Tokyo.

“That’s kind of the plus-alpha,” said Sakurai, a bicycle fan who helps manage about $10 billion in assets. “The main thing is you get the convenience of speed without having to follow the traffic laws.”

While Yamaha’s revenue from motorcycle sales is still about four times its ¥9.9 billion from the bicycles, the company said the rapid aging of Japan’s population will shift demand toward the battery-assisted models. Japan’s elderly will outnumber children 2-to-1 within four years, according to the health ministry.

In December, manufacturers were allowed to double the assistance the bikes can provide at low speeds, a concession to older riders. Tokyo and other prefectures last month allowed the bikes to be equipped with two child seats, legalizing a practice that was already widespread.