Detroit put the world on wheels and automakers continue to churn out innovation, especially with EVs. With its growing reputation in the electric space, it’s not too surprising the Motor City is also attracting more E-bike companies.
Vela Bikes, an E-bike maker started in Brazil 12 years ago that expanded into the U.S. during the COVID-19 E-bike boom, heard the industry buzz about Detroit and, after some due diligence, decided to move manufacturing and assembling of its bikes from China to Detroit — a process currently underway.
“After a couple of challenging years for the global supply chain, we are thrilled to take a significant step towards manufacturing our bikes in the United States,” said Justin Kosmides, co-founder and CEO of Vela Bikes.
Vela Bikes is partnering with Cardinal Cycling Group, a bicycle investment and management firm in Arkansas specializing in manufacturing e-bikes in the U.S. and Europe. CCG purchased Detroit Bikes earlier this year and it continues to manufacture that brand and others at the 50,000-square-foot factory on the city’s west side, which was part of the deal.
Vela is keeping its U.S. headquarters in Brooklyn N.Y, as its operations, logistics and manufacturing moves to Detroit. “We are growing and evaluating moving more of our team to Detroit,” Kosmides said. The company’s R&D and South American headquarters remain in São Paulo, Brazil.
“Detroit is one of only six facilities in the country that can build bikes at scale and cost,” said Kosmides, saying it was a great fit. “The city has manufacturing capability via labor (welders, machinery, etc). We’re also hoping to leverage our business into the growing electric car industry/technology in the future.”
He added, “For two years, electric bikes sales in the U.S. have been between 800,000 to one million (units) each year. There’s no reason the U.S. can’t take a bigger role in producing these bikes.”
Most E-bikes similar to Vela’s are made in China and Taiwan, Kosmides said.
Vela Bikes began moving operations in October and hopes to have it completed by spring of 2023. The company is making some bikes in Detroit to keep up with Christmas demand as it has set a 2023 goal of making 5,000 bikes.
Vela makes two styles of bikes, each priced around $1,800.
“We have found a wide range of riders, from young urban commuters to older baby boomers who want to get out and ride further with a bit of support,’” he said of Vela customers. “Vela is unique in that two-thirds of our customers are female which is contrary to the E-bike market in general, which tends to lean heavier toward male.”
Vela and Cardinal Cycle Group are connected in Detroit, as is Newlab, a private company and also an incubator in Brooklyn, N.Y. specializing in start-ups with over 100 companies so far. Newlab, which counts Vela Bikes among its members, sees potential in Detroit, too, and is opening a new 250,000-square-foot incubation space in the Michigan Central in early 2023, Kosmides said.
Michigan Central is a mobility hub coming to life at the glorious but shuttered Michigan Central Station that Bill Ford and Ford Motor Co. are leading the charge on as it is revamped. Google, the city of Detroit and state of Michigan are also involved.
Coincidentally, the factory owned by Cardinal Cycle Group where Vela Bikes, Detroit Bikes and other brands are being assembled is only a few miles from Ford’s Rouge plant — which gave rise to the auto industry.
Vela’s bike styles are similar to Detroit Bikes, which helps, too. “We were lucky enough to have a very similar frame and build style to what has been built in Detroit Bike’s facility,” said Kosmides.
The growing E-bike business is welcome news for Trevor Pawl, chief mobility officer for Michigan. He has been promoting the state for electric vehicles, battery makers and parts makers. The E-bike business has grown more organically as an offshoot.
“Really, this region is selling itself,” said Pawl. “Newlab and Detroit Bikes made the case to Vela about why investing and locating in Detroit would be strategic. Candidly, the state did not have to spend too much time convincing Vela that Michigan was the place to be, the company was already sold on the advantages.”
There’s no doubt the burgeoning electrified mobility sector will play a growing role in the region’s economic future.
“They are emission-free, easy to park, cheap to charge, affordable to use, take up less space than a car, and can still move residents in a timely way,” said Pawl. “Electric bikes can be a wonderful complement to an electric vehicle in any Michigan community.“
Kosmides talked about moving to Detroit and out of China.
“In general, we have and will have more resilience in our supply chain, better management of inventory (through significantly shorter production windows), quality control, reducing shipping woes, and countless difficulties of production in China since COVID (with lockdowns, travel restrictions),” he said. “Also a 25% duty on E-bikes in China, which while currently exempt, had a high likelihood of returning which was a consideration.”
Vela Bikes is building on the foundation started by entrepreneur Zak Pashak, who founded Detroit Bikes in 2011. “He started blazing a new path and Cardinal Cycle’s investment and commitment to Detroit are continuing to blaze the path,” Kosmides said. “And I hope we inspire more brands to take a serious evaluation of onshoring and in particular Detroit.”
Vela and Cardinal Cycling Group’s partnership is supporting the revitalization of Detroit’s manufacturing industry as it creates jobs.
“CCG is thrilled to partner with the team at Vela to move deeper into the electric bike market,” said Tony Karklins, CEO of Cardinal Cycling Group. “Part of what makes the fit so seamless is that Vela’s flagship model is made from the same chromoly steel that CCG’s Detroit Bikes has relied on for years.”
Kosmides said, “Our partnership with CCG represents our commitment to building a better product and improving the experience for our community of riders — and the opportunity to do so in the U.S. makes it all the more exciting.”
Kosmides said E-bike sales have grown 240% in the past year, a trend that will likely continue with fickle gas prices, concern about the environment and people wanting to live heathier lives.
“Electric bikes are expected to continue to be the top-selling electric vehicle over the next decade, and we want American workers to benefit from that growth,” he said.
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Contact Carol Cain: 248-355-7126 or clcain@cbs.com. She is senior producer/host of “Michigan Matters,” which airs 8 a.m. Sundays on CBS Detroit. See Bill Ford, Gov. Gretchen Whitmer, Detroit Mayor Mike Duggan and Google CFO Ruth Porat on this Sunday’s show.
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