Only a couple years ago, electric bicycle manufacturers couldn’t keep e-bikes on the shelves as they were being snatched up faster than they could be produced. But while some e-bike companies have managed to keep up a steady cash flow and balanced operations, others have run into financial difficulties. For European e-bike maker VanMoof, those difficulties turned into a dire situation just a few months ago.
As reported by Dutch media company Financieele Dagblad, VanMoof nearly ran out of money to pay its bills late last year.
The company has since managed to raise sufficient funding from its original British and Chinese investors to make it out of the woods, but there were surely some sleepless nights for the management team at the end of 2022.
VanMoof’s annual report, filed at the end of last year, described the company’s immediate need to raise capital. Without a quick injection of funds, the company could not guarantee its “ability to continue its activities beyond the first quarter of 2023.”
The report revealed that VanMoof had asked its suppliers to defer payment until after additional capital had been raised. That’s a move that other large bike companies including Giant have been forced to make recently, according to Cycling Industry News.
VanMoof’s electric bicycles fall into an interesting niche among European e-bikes. The e-bikes, which range from around €2,500 to €3,000 in Europe, rely on more affordable hub motor drivetrains and thus undercut the higher-cost European e-bikes made by companies like Urban Arrow, Riese & Müller, Gazelle, and others.
Those lower prices along with sleek design and strong branding have helped VanMoof scoop up higher sales volumes.
But VanMoof maintains a massive workforce, reaching as many as 900 employees at one point. The company also operates brand stores in several countries across North America, Europe, and Asia.
Despite reporting tens of millions of euros in revenue each year, maintaining that large employee base and broad geographic footprint of brick-and-mortar stores hasn’t been cheap. Fortunately for VanMoof fans though, the company’s most recent 11th hour cash infusion from its existing investor base seems to have helped VanMoof return to steady footing for now.
Such economic hardships haven’t only affected e-bike companies like VanMoof. Other light EV companies have found themselves in similarly precarious financial standing. We recently reported on Oregon-based Arcimoto suspending production and laying off a large number of employees while it seeks to quickly raise enough funding to continue operations.
In that case, Arcimoto has been hampered by its much higher cost of production for highway-legal motorcycle-class electric three-wheelers that have so far failed to achieve the demand required to meet Arcimoto’s large-scale production goals.
I can’t fathom how VanMoof can sustain such a large workforce. Companies like Rad Power Bikes sell considerably more e-bikes than VanMoof, and even Rad had to undergo several rounds of layoffs in the last year or so. I imagine VanMoof’s payroll must be a huge part of its burn rate, especially since you can’t put off paying employees the way you can with suppliers of brakes and pedals. And of course those e-bike hunters don’t work for free.
I’m glad to hear that the company found the money it needs to go on though, especially since I’m still waiting for them to get around to producing that VanMoof V concept e-bike that is supposed to reach 31 mph (50 km/h). No one can let VanMoof die until I get to ride that slick-looking thing.