With a boost from a growing number of cities and states, the souped up two-wheelers are increasingly displacing cars for short trips — and outselling EVs.
By Rina Torchinsky, Forbes Staff
Last Tuesday, at 11 a.m. local time, the city and county of Denver put the latest batch of applications for e-bike rebates online. By 11:07, all 1,100 of them were gone.
That’s par for the course, says Sarah Thorne, a senior program manager at the Colorado Energy Office, who snagged a $900 Denver rebate herself last year within two minutes of a similar portal opening. After applying the rebate, she shelled out about $1,400 for an e-cargo bike that she uses for trips to Costco and the local grocery store and to pick up her one-and-a-half year old daughter from daycare – effectively replacing what would have been car trips, with the “minivan” of e-bikes. “Honestly, I don’t really drive anymore,” says Thorne. “I pretty much use my e-bike for everything.” She even relies on her e-bike for her six mile commute to work, which she used to do via bus.
The car-addicted U.S. has traditionally been a laggard in the adoption of e-bikes. But sales of the battery-powered motor-assisted two-wheelers, which can reach a maximum assisted speed of 20 miles per hour (or for some models, 28 mph) have finally taken off. The Light Electric Vehicle Association estimates the U.S. imported a record 1.1 million e-bikes last year, up from 880,000 in 2021 and 450,000 in 2020– a good proxy for the growth of the total import-dominated market. In sheer unit numbers (though obviously not dollars) e-bike sales have outpaced U.S. electric car sales, which jumped to 809,739 in 2022, according to Kelley Blue Book.
Now, a growing number of state and local rebate programs are helping to keep the momentum going for e-bikes, which, in contrast to electric cars, don’t qualify for federal tax credits.
An e-bike incentive tracker developed by Portland State University’s Transportation Research and Education Center shows 62 currently active programs offered by states, localities, local power districts and other entities. These incentives are distributed across 19 U.S. states, with California and Colorado offering the most. Moreover, there are an additional 17 approved (but not yet launched) programs, eight pilot programs and more than 30 programs listed as proposed. Counting all those, interest in e-bike incentives has spread to 29 states and the District of Columbia. (The tracker was last updated on September 18th.)
“I call 2023 the year of the e-bike,” says John MacArthur, who manages the Sustainable Transportation Program at Portland State and is co-creator of the tracker. The spread of e-bike incentives in the last year has been dramatic, he adds.
E-bikes start at around $1,000, though higher end bikes (with more powerful motors and longer lasting batteries, for example) can run up to $6,000, or more. Models designed for delivery workers (or parents with groceries and toddlers they want to transport) range from about $2,000 to nearly $9,000. The incentive programs vary greatly in their generosity, with around a third of active and approved programs offering additional incentives to people who are lower income. Denver’s program currently offers at least $300 for any Denver resident who can snag a rebate, but up to a $1,400 rebate for lower income residents buying e-cargo bikes.
MacArthur says buyers want to see the discounts at the point of purchase, as opposed to a tax credit or refund collected later. A rebate linked to an in-store sale also adds a human element, observes Chris Cherry, a professor in civil and environmental engineering at the University of Tennessee. “Having that kind of personal connection is an important part of the process. I think that would be something that would be a little bit lost with a tax rebate, where you click a square on your tax rebate forms.”
Some programs have a set amount of money allocated to them, meaning the available rebates are limited. So, for example, last month the Washington, D.C. council approved what sounds like an extraordinarily generous program—up to $2,000 for a low income resident buying an e-cargo bike. But the amount appropriated for the total program was just $500,000 for the year beginning Oct. 1. A few of the programs are part of broader efforts aimed at reducing carbon emissions from older gas powered cars. Vermont’s Replace Your Ride program, for example, grants vouchers of up to $5,000 to residents who swap old gas-guzzlers for new or used plug-in cars, or an electric bicycle. The state also offers vouchers of up to $400 for e-bikes, or $800 for e-cargo bikes.
While e-bikes are not the vehicle of choice for long distance trips, evidence is growing that they can reduce car use for local chores. Denver studied the first residents who got rebates last year and found they rode their e-bikes an average of 26 miles per week, replacing 3.4 round-trip vehicle trips. More than 70% said they were using their gas-powered cars less.
In fact, according to the U.S. Department of Energy, more than half of all vehicle trips in 2021 were less than three miles–a distance which would take around nine minutes on an e-bike, assuming the rider travels at a speed of 20 miles per hour. Federal law specifies a 20-mile maximum speed for e-bike travel with motor power alone, but the Consumer Product Safety Commission, which regulates e-bikes, has clarified they can travel faster than 20 miles per hour when it’s via a combination of human and electric power; Class 3 e-bikes can do a combined 28 mph. Motorcycles are regulated separately by the National Highway Traffic Safety Administration.
Of course electric cars are a lot pricier, with an average cost of $53,469 for new ones, compared to $48,334 for gas powered autos, according to July data from Cox Automotive, parent of Kelley Blue Book. But there’s a hefty $7,500 federal tax credit available for eligible electric vehicles thanks to the Inflation Reduction Act–that grab bag of green incentives Congressional Democrats pushed through in 2022. An electric bike credit was included in an early version of the IRA, but didn’t make the final cut.
This past March, several Democratic congressmen introduced the E-BIKE Act, which would provide a refundable tax credit of up to 30% of the purchase price of a new e-bike, with a maximum credit of $1,500. The full credit would be available for single filers who make less than $150,000 and for joint filers who make less than $300,000. A companion bill was introduced in the Senate. Neither has gone anywhere and the idea would seem to have little chance of getting through the Republican controlled House.
10 For The Road
The following are some of the more generous e-bike incentives currently being offered.
Rep. Earl Blumenauer, the Oregon Democrat and bicycle devotee who founded and cochairs the Congressional Bike Caucus, isn’t giving up. “If not this Congress, the next Congress will be able to get it across the finish line,’’ he told Forbes.
Still, the Urban-Brookings Tax Policy Center’s Renu Zaretsky says a federal tax credit might not be the right policy tool in this case. People are buying the bikes anyway, she notes, and this would grant a tax break to folks who would buy e-bikes without it. “I like the idea of any policy that’s trying to encourage broader use across income groups. And if it’s targeting low income groups (as many of the local rebates do), I think that’s a good thing,” she says.
Significantly, the Denver study of early rebate users found that the lower income folks who got the larger vouchers used their new e-bikes nearly 50% more than standard voucher recipients–suggesting the program’s targeting made sense. One common provision of the local rebates that couldn’t be done on a national basis: More than half of active and approved e-bike incentives require or reward buying locally, thus encouraging the development of a local dealer and service network.
Martin Rahmani is co-founder and chief revenue officer of The Hub Bicycles, a Covid era start-up that rents and sells e-bikes and e-trikes to both delivery services and consumers from its original Queens, New York dealership. The company opened a Colorado outlet in 2022 after it won a contract from the Denver Climate Action, Sustainability and Resiliency office to bring its e-bike delivery services to the city. The individual Denver rebates, a satisfied Rahmani reports, have helped “open up the market to a whole lot of people who may not have considered e-bikes as a viable form of transportation.”