LEV INDUSTRY OVERVIEW

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LEV INDUSTRY OVERVIEW

• Ed Benjamin

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Who is Benjamin?

• 30 years normal bicycle business, USA
• 14 years focused on electric bicycle business,
  world wide.
• Chairman of LEVA, an international group.
• Co-Author Bi-annual report Electric Bikes World
  Wide Reports, with Dr. Jamerson PhD. Author of
  book on running bike stores.
• Strong believer in bright future of Ebike
  industry. Speaker at many international trade
  shows.
• Constant traveler to and observer of, Electric
  Bikes in use as transportation.
• Owner of consulting company focused on light
  electric vehicles.
• Former bicycle retailer, former ebike importer,
  VP in 2 ebike companies.

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Ongoing Market Research

• We attend major trade shows in US, Europe, Taiwan
  and China every year. We observe the trends,
  identify the major players, talk with successful
  manufacturers and local government and
  associations to provide our customers with
  customized reports.
• We visit retail stores, hypermarkets and talk
  with local retailers and consumers in different
  countries to learn about their needs and get
  first-hand market information.
• We visit the factories that make bikes and
  components.
• We talk with designers, engineers, battery and
  motor professionals to learn the lessons in the
  past and forecast the trend in the future.
• We communicate with major trade journals
  worldwide on a regular basis to keep updated with
  changes in laws and regulations and market
  trends.
• We collect and use the data from Associations,
  government, trade groups.

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LEVA

• Based in Maine, USA
• Founded by Ed Benjamin and operated by Sid
  Kuropchak
• Over 105 members from 17 different countries
• Six prestigious industry experts serving as board
  members
• Mission Statement
• Our purpose is to provide a service to light
  electric vehicle companies by helping to
  establish a favorable operating environment, by
  providing a forum for discussion on
  non-competitive issues, and by providing
  information to assist them in the promotion of
  their business.

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Light Electric Vehicle LEV Definition

• Less than 100 Kg (Usually)
• 2 or 3 wheels
• Electric motor
• Variety of Energy Storage methods usually
  battery.
• Electric Bicycle, Electric Scooter, Electric
  Motor Cycle, Three Wheel Cycle Truck

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LEV?????
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LEV?????
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Three Wheelers

• Local transport
• Short range taxi
• Handicapped vehicles

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Post Bikes

• More and more of world post and parcel will move
  by two wheels and electric power.

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Light Delivery????

• Particularly food delivery

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EU Pedelec
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Segway???
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Electric Scooters
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Electric Mini Scooters

• Not just a toy.
• Valid tool for many indoor and short range out
  door tasks.

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Streamliners??????
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Not LEV???????
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Current Market Status

• The LEV industry today is something like the car
  industry before 1910. Horseless carriages were
  the idea at that time. No one in 1910 really knew
  what the car would look like in 2010. Or what it
  could do, or that it would be a declining
  industry.
• Most LEVs today are electric bicycles. Does that
  sound a bit like horseless carriage?
• World wide, about 22 million LEVs were built in
  2008. Roughly 11 Billion Dollars.

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Markets Today

• China will continue to be largest market.
• India large population, large need, not as
  prosperous as China.
• EU environmental issues, plus dense
  populations, this will be the highest value
  market for top quality.
• Japan dense populations, need for folding and
  compact vehicles.
• USA- longer distances, need higher speeds and
  power.
• SE Asia tough environment, need sturdy, weather
  proof.
• Rest of World - most will need sturdy, cheap
  vehicles.
• China exports ebikes to 170 different countries!

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Estimated Sales (units) 2008

• China 21,000,000
• EU 400,000
• Japan 300,000
• India 270,000
• USA / Canada 150,000
• SE Asia 200,000

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China Is The Main Event For Electric Bikes - Today
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International Market Will Be 5 Times Greater Than
China in a Few Years
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2009 Trend

• Economic Crisis does not appear to be affecting
  ebikes heavily.
• Most ebike sales are reported as stable, to
  perhaps down a little.
• EU sales up.
• Japan sales up.
• China domestic sales down. Exports may be up over
  first Half.

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Year 2007 2008 2009
2010 2011 China 21,000,000 22,000,000
23,000,000 25,000,000 30,000,000 India 85,000
120,000 300,000 500,000
700,000 Japan 300,000 300,000 300,000
325,000 350,000 Europe 250,000 550,000
800,000 1,200,000 2,500,000 Taiwan 10
,000 10,000 11,000
12,000 14,000 SE Asia 200,000
800,000 1,000,000 2,000,000
5,000,000 USA 120,000 170,000 220,000
350,000 500,000 Total 21,965,000
23,950,000 25,631,000 29,387,000
39,064,000
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EU Markets

• Holland 26 all bicycle units are now electric,
  but more than 50 of Euros in bike industry.
• Germany Gaining on Holland
• Switzerland 10 of all units are now ebikes
• Italy No data, but obviously on streets
• UK Lower price, ebikes.
• France
• All Others

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Markets Tomorrow

• Electric Bikes will become more powerful,
  becoming more like electric mopeds or electric
  motor scooters.
• Weather protection will be an important
  improvement. The streamlining effect of a shell
  will also increase speed and endurance.
• Safety will be an important issue, with
  innovations in controls and protection.
• Sales will expand to about 130 million pieces per
  year at a higher price - or 104 Billion
  dollars.

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Reasons for Market Growth

• Fuel Price and Looming supply issues
• Increasing urbanization leading to Traffic and
  parking congestion
• Air pollution
• Government encouragement
• Alternative sources of energy all work with
  Electric.
• Personal awareness of green issues
• Low cost, high utility.

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Prediction Total Oil Production 1600 - 2200
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• Ready for 262/barrel oil?
• Two of the world's most successful investors say
  oil will be in short supply in the coming months.
• By Nelson Schwartz, FORTUNE senior writer
• January 27, 2006 440 PM EST
• In this article, the author explains that
  disruptions in the Mid East and South America
  will result in Oil prices between 89.00 and 262.00

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Just Published Book
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Parking

• Auto Parking spaces (including access) requires
  37.2 square meters of land and pavement per car.
  Cost ranges up to 25,000 per space to build in
  some cities.
• Electric Bike Parking Spaces require ¾ of one
  square meter of any open surface.

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Some Cities Have No Chance for Parking of Four
Wheelers
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Vehicles Per Lane

• At 40KPH, one lane can support 300 500 cars per
  hour. High speed roads up to 2,000 per hour.
• Same Lanes can handle 6,000 bicycles per hour.

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Electric Powered Two Wheelers are the Answer

• Light Electric Vehicles are the solution to many
  of these problems.
• Electric vehicles of many types will be used
  buses, trains, battery cars and trucks, hybrid
  cars and trucks but the individual transport
  solution for most of the world population will be
  electric two wheelers.

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Other Transport?

• Metro and Train are natural allies and companions
  to LEVs.
• Buses and trains can carry LEVs as they do
  bicycles now.

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Distribution Channels Today

• The distribution channels for LEVs are not yet
  well established.
• Since the most popular products are electric
  bicycles, the bicycle brands have had the most
  success at distributing electric bikes so far.
• We believe that LEV specialty retailers will
  dominate this in the future.

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Taiwan and China Main Suppliers Today

• Taiwanese invested and managed companies dominate
  the production and distribution of electric bikes
  for USA and EU.
• Chinese factories provide almost all components
  and most assembly.
• Even Japanese ebikes made in Chinese Factories
  today.

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CKD and SKD

• The largest selling SKUs in EU and India are
  shipped from China in SKD or CKD for final
  assembly in local Plants. These do not appear
  on CBA figures or most other export / import
  reports as ebikes.
• The largest variety of models are shipped as
  complete bikes from China to importers.

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Prices

• Ebikes are retail range from about 200 USD to
  9,000 USD.
• Typical Chinese Price 2400 RMB
• Typical EU price 900 to 1800 Euros
• Typical USA price 400 to 1700 US

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Competitive Landscape

• EU Accell Group, Other old bike brands,
  Biketec, small importers.
• USA Bike brands, ebike specialists
• Role of Taiwanese
• Role of Japanese
• Role of Chinese brands
• Opportunities not well organized, consumers do
  not know where to find ebikes.

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Margins

• On average, a bike that has a BOM of 500 USD will
  sell at retail in Holland for 1800 Euros.
• On average, a bike that has a BOM of 430 USD will
  sell in USA for 1500.00 USD.

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Warranties

• EU warranties of 2 years are easily achieved on
  all components except batteries.
• USA is slowly following lead to 2 year
  warranties.
• Batteries are problems. Several ways to deal with
  this.
• Method of warranty service is important.
• Extended warranties.

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Sourcing

• Almost all components are sourced from small
  Chinese factories.
• Most bikes are assembled by OEM factories managed
  by Taiwanese.
• Not enough testing is done.
• Lowest priced units are usually problematic.
• This could be the subject of many hours of
  discussion.

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Bike Shops 101

• Benjamin operated bicycle shop chain in USA for
  15 years Trek top 25, Schwinn top 50, etc. He
  has visited more than 200 ebike retailers in
  USA, EU, China, Taiwan, India, Thailand, Vietnam,
  Japan. Benjamin has worked the sales and service
  areas of ebike retailers in USA to learn how the
  consumers act.
• Key issue with specialty retail is training,
  salesmanship, ability to deliver information to
  consumer, and After Sales Service.
• Certain that ebike specialists will dominate this
  category. What format they will take is not yet
  clear, but likely to resemble motorcycle dealers,
  and emerge from bicycle industry in a way similar
  to exercise equipment shops.

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Retail Channels

• USA Bicycle shop, Wal Mart, Costco, Best Buy,
  LEV Specialist, Internet.
• EU Bicycle Shop, Halfords, Electronics shop,
  LEV Specialist
• China E bike shop, bicycle shop, department
  store, electronics store.
• India Bicycle shop, Ebike specialists
• Japan bicycle shop, motor sports retailer.

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Training and Equipment

• Key issue for retailers is ability to train staff
  . A lot of information needs to be exchanged or
  delivered before the consumer can make a buying
  decision.
• Test rides are necessary. On floor charging
  required.
• Service department and spares are essential.
• Appropriate relationships with suppliers are
  needed so that information flows back to
  suppliers.

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Warranties and Refunds

• Easy refunds are disasters for ebikes consumers
  use them as a way to test or play with the bikes
  for a few days.
• Warranties require training, a service
  department, data logging, spares, and a way to
  communicate effectively with the suppliers to
  correct problems.
• Extended warranties on batteries issues.
• Battery data tracking.

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We Have a Great Future!?????????!