Despite the popularity of electric bicycles, manufacturer VanMoof is currently not doing well. The fast-growing company has recently received a much-needed capital injection from its shareholders. According to The Financial Times without that money, the company would have been in serious trouble in two months.
In the provisional annual accounts of 2021 and the management report on the situation until the end of last year, it can be read that VanMoof hoped to raise between 10 and 40 million euros from suppliers and investors in the latest investment round.
Red numbers are neither new nor unexpected for VanMoof. Turnover continues to grow every year, as do investments in better models and services. As a result, the company made a loss of around 78 million euros in 2021 and is expected to last year as well. A lot of money is also spent (about 8 million in 2021) on repairs to bicycles that are still under warranty. Suppliers have already been asked whether invoices can be paid later in anticipation of the new capital injection.
At the end of December, the accountant did not want to sign the provisional annual accounts for 2021 and the management report. The outcome of the new investment round was still too uncertain at that time, according to the recently filed document.
VanMoof was founded in 2008 by brothers Taco and Ties Carlier. In recent years, the company has always raised large amounts from investors to keep up with its rapid growth, especially during the corona crisis. Turnover increased from approximately 10 million euros in 2017 to 83 million euros in 2021. We also focused on expansion abroad. The electric bicycles are now for sale in more than twenty cities worldwide.
However, that turnover growth is still accompanied by a loss at the bottom of the line. Founder and then-CEO Taco Carlier said in an interview with NRC cautiously hoping for a small profit in 2021. But he would rather see greater growth at the time. “We develop our parts ourselves, which is very expensive and can only be done when it becomes very large. Then the cost price can be further reduced and with it the sales prices. That is ultimately the intention.”
But there seems to be an end to a period of structurally spending more than what comes in. VanMoof’s management writes that it will pay more attention to this, among other things by continuing to improve the bicycle models S3 and X3 in order to reduce repair costs after the sale. In addition, the prices of both products and services have already increased, and sales are also expected to increase due to the more expensive new models S5 and X5.
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Electric bicycles continue to grow in popularity. E-bikes made up more than half of the total number of new bicycles sold in 2021, according to one annual survey commissioned by sector organizations RAI Association and BOVAG. The purchase of bicycles over 2,700 euros increased from 4 percent in 2017 to 19 percent in 2021.
But the bicycle industry, like many other sectors, has suffered a lot in recent years from shortages of materials and high container prices. The supply could not keep up with the demand, which grew rapidly during the pandemic.
The production and assembly of VanMoof bicycles largely takes place in Taiwan. The material shortages sometimes resulted in months of delivery times for a new VanMoof or waiting times for a repair. Customers cannot go to other bicycle repair shops because the company uses its own parts.
Many of these supply problems have now been largely resolved. Container prices are back at pre-pandemic levels, factories close less often and the dollar exchange rate against the euro has fallen again, says ING sector economist Dirk Mulder. “But then the large stocks that sellers had bought came into the market. And then bicycle companies will give a discount.”
Reported last week The FDalready that another producer of electric bicycles, Stella Cycling, is going to reorganize considerably. The company is struggling with liquidity problems and a large stock of unsold bicycles after a slump in demand last year. By lowering the price, it was still able to sell a lot of bicycles in 2022, but now the company has to keep a tight rein.
Nevertheless, the outlook is positive. Mulder: “In many countries, the focus is on sustainable mobility, and the electric bicycle will play a major role in this. Previously this was something for the over 50s, now you see that it is considered an alternative throughout society. There is still a lot of growth potential, both in the Netherlands and abroad. By the way, you see all kinds of new bicycle brands emerging, so the competition for VanMoof may well increase.”