Would monetary incentives encourage more people to buy e-bikes? 

Portland State University (PSU) researchers are examining how purchase incentive programs can expand the current e-bike market, and the latest product to come out of this research is a white paper released earlier this month: “Using E-Bike Purchase Incentive Programs to Expand the Market – North American Trends and Recommended Practices (PDF)”

The paper offers methods of identifying the most effective program structure for the incentive provider's priorities, and helpful information on how to administer and track the program. 

A great number of cities in the United States have cycling goals, and a great way to address those is by promoting e-bikes, because they provide for a much wider range of users than a traditional bike does," said Cameron Bennett, who is a master student in transportation engineering at PSU.

Bennett co-authored the paper with John MacArthur of PSU; Christopher Cherry of the University of Tennessee, Knoxville; and Luke Jones of Valdosta State University. The authors reviewed impacts and statistics from around 75 current, past, and proposed e-bike incentive programs in North America, and also interviewed industry leaders, academics and incentive program managers to identify key considerations. Streetsblog USA interviewed MacArthur on what the team found and the implications for program administrators.

Funded by the National Institute for Transportation and Communities (NITC) and PeopleForBikes, the multi-part research project has three stages:

1. Tracking current and proposed e-bike incentive programs in North America (for more on that, see our Jan 2022 story or see the live online tracker spreadsheet);
2. Evaluating practices, trends and case studies in those programs (download the white paper or watch the May 2022 webinar);
3. Learning more about potential e-bike buyers and how incentive programs could influence their decision-making.

Later this year the team will publish the results of a national stated preference survey (take the survey here), aimed at learning the potential effects of different rebate methods, cash amounts, demographics and other factors. This will yield even more insight into what affects people's decision-making, and which types of incentive programs may hit the sweet spot.

John MacArthur has a long track record in e-bike research, and he and Christopher Cherry collaborate on research for the Light Electric Vehicle Education and Research (LEVER) Institute.

Photo by Dongho Chang

The Transportation Research and Education Center (TREC) at Portland State University is home to the National Institute for Transportation and Communities (NITC), the Initiative for Bicycle and Pedestrian Innovation (IBPI), and other transportation programs. TREC produces research and tools for transportation decision makers, develops K-12 curriculum to expand the diversity and capacity of the workforce, and engages students and professionals through education.

For governments and clean energy advocates looking to encourage people to use e-bikes for transportation, a new online tool from Portland State University researchers offers an overview of the existing incentive programs in the United States and Canada.

The E-Bike Incentive Programs in North America table tracks e-bike purchase incentive programs and key details that can provide a point of reference for the development of future e-bike incentive programs and policies, or for further research on the topic. Read a recent article about the tool in BikePortland.

John MacArthur, researcher at PSU's Transportation Research and Education Center (TREC), led the development of the tool with the help of PSU transportation engineering masters student Cameron Bennett, a 2021 Dwight D. Eisenhower Transportation Fellow.

COMPARING TYPES OF E-BIKE INCENTIVE PROGRAMS

While the tracker shows a wide variety of approaches, Bennett identified Saanich, BC as demonstrating an especially promising model. Their "targeted universalism" approach uses econometric analysis to set appropriate incentive levels for various income brackets, helping those who need it most with the largest incentives.

One of the most surprising findings? Most programs seemed to set their incentive levels "fairly arbitrarily:"

"Many were based on a function of funding available and desired number of incentives, while many others were seemingly based on the $200 precedent set early on by Burlington Vermont. (Burlington's program was developed based on carbon tax savings over the lifetime of an e-bike.) Generally, it seems that little thought was given to the potential of the specific incentive value to induce new purchases that would not otherwise have happened for particular groups or income brackets," Bennett said.

PSU Student Cameron Bennett presents "How E-Bike Incentive Programs Are Used to Expand the Market (PDF)" in a TRB 2022 Eisenhower Poster Session (photo by Jennifer Dill)

One of the most challenging aspects of creating the tracker was that information on funding source, in most cases, was not readily available.

"There aren't enough programs with enough total participation to gain an understanding of the impact and effects of various sizes and delivery methods of incentives. John, Chris Cherry (UTK), Luke Jones (Valdosta State) and I will be conducting a stated preference survey in the coming months to address this gap in knowledge and help better inform future programs," Bennett said.

The tracker is one of several outputs of a larger e-bike project funded by the National Institute for Transportation and Communities with support from PeopleForBikes, and provides key details for each incentive program, including:

• Country, State, Location – Location that the program is available in.
• Administrator, Admin. Type – The program administrator and the administrator’s entity type.
• Status – Whether the program is currently active, closed, or otherwise.
• Incentive Style – How the incentive amount is determined.
• Discount Mechanism – How the incentive value is delivered to the recipient.
• Discount Rate – Incentive rate if the incentive is a percentage of e-bike purchase price.
• Minimum Purchase/Fee – Minimum required purchase price to qualify for the incentive, or the fee required to participate in loan-to-own programs.
• Maximum Incentive – Maximum incentive amount if the incentive is a percentage of e-bike purchase price. Incentive amount if the incentive is a flat rate.
• Total Earmark – Total program funding.
• Income-Qualified? – Is participation in the program restricted to a certain income level?
• Low-Income Option? – Are additional incentives available to people at certain income levels?
• Low-Income Threshold – Income limit to receive low-income benefits.
• Details/Links – Further details if required for program comprehension, links to program websites or news releases.
• Parent/Child Program – Indication of whether a program exists as a sub-program for a larger piece of legislation, or is a ‘parent’ of other sub-programs.

The tool was developed using web searches, google alerts, and an existing incentive program tracker provided by PeopleForBikes. The list is updated periodically (you can see when the most recent update was at the top of the spreadsheet) to reflect newly-implemented or proposed programs, current program status, or to include new programs as they emerge.

HOW E-BIKE INCENTIVE PROGRAMS CAN EXPAND THE MARKET

In 2019, MacArthur and fellow e-bike researcher Christopher Cherry of the University of Tennessee, Knoxville, together with then-PSU student Michael McQueen, wrote a white paper exploring techniques to develop and structure e-bike incentive programs to reduce one of the biggest barriers to e-bike use: the high cost. "How E-Bike Incentive Programs are Used to Expand the Market" was published in conjuction with a second white paper, "Estimating the Effect of E-bikes On Person Miles Travelled and Greenhouse Gas Emissions."

In Fall 2021, the Chair of the Monterey County Board of Supervisors successfully used these white papers to advocate for a brand new e-bike incentive program that will serve low income residents from 3 counties on the California Central Coast. Through their regional Air Resources Board they are offering a $1,000 incentive for the purchase of an e-bike. "Your work to establish the value of e-bikes was tremendously valuable as I fought to gain support for a local program," shared Board Chair Wendy Root Askew.

Learn more about those research efforts in The E-Bike Potential: How E-Bikes Can Improve Sustainable Transportation.

ELECTRIC VEHICLE INCENTIVE COST AND IMPACT TOOL

The incentive tracker can be useful in conjunction with another online tool, developed by the same research team in 2020: the Electric Vehicle Incentive Cost and Impact Tool. This tool enables policymakers, public stakeholders, and advocates to quickly visualize the potential outcomes of an electric vehicle incentive program made up of several vehicle types. The tool estimates the cost efficiency of a proposed program in terms of the cost per kg CO2 avoided by each mode over the course of one year. It also takes the proposed budget into consideration to calculate the potential number of incentives to be made available and the amount of total CO2 that would be avoided due to internal combustion engine automobile VMT displacement.

Photo by Halfpoint/iStock

The Transportation Research and Education Center (TREC) at Portland State University is home to the National Institute for Transportation and Communities (NITC), the Initiative for Bicycle and Pedestrian Innovation (IBPI), and other transportation programs. TREC produces research and tools for transportation decision makers, develops K-12 curriculum to expand the diversity and capacity of the workforce, and engages students and professionals through education.

Citing two TREC studies, Congressman Jimmy Panetta of the 20th District of California and Congressional Bike Caucus Chairman Earl Blumenauer of Oregon have introduced the Electric Bicycle Incentive Kickstart for the Environment (E-BIKE) Act to encourage the use of electric bicycles, or e-bikes.

The E-BIKE Act creates a consumer tax credit that:

• Covers 30% of the cost of the electric bicycle, up to a $1,500 credit
• Applies to new electric bicycles that cost less than $8,000
• Is fully refundable, allowing lower-income workers to claim the credit

The first TREC study referenced, The E-Bike Potential: How E-Bikes Can Improve Sustainable Transportation, found that if 15% of car trips were made by e-bike, carbon emissions would drop by 12%. This finding was based on a Portland, Oregon case study. The researchers also created an Electric Vehicle Incentive Cost and Impact Tool which enables policymakers, public stakeholders, and advocates to quickly visualize the potential outcomes of an electric vehicle incentive program in their own region.

The second TREC study cited, A North American Survey of Electric Bicycle Owners, surveyed people who owned e-bikes and found that 46% percent of e-bike commute trips replaced automobile commute trips.

The proposed legislation would make it easier for people to own e-bikes and contribute to cutting the nation's carbon output. By incentivizing the use of electric bicycles to replace car trips through a consumer tax credit, more Americans will be empowered to help fight the climate crisis by transitioning to more sustainable transportation modes.

Read more about our e-bike research studies from Portland State University.

Photo by Halfpoint/iStock

The Transportation Research and Education Center (TREC) at Portland State University is home to the National Institute for Transportation and Communities (NITC), the Initiative for Bicycle and Pedestrian Innovation (IBPI), and other transportation programs. TREC produces research and tools for transportation decision makers, develops K-12 curriculum to expand the diversity and capacity of the workforce, and engages students and professionals through education.

Authored by Mike McQueen and John MacArthur, Portland State University

• Read the 2020 research paper in Transportation Research Part D: Transport and Environment with updated model & findings.
• Use the online Electric Vehicle Incentive Cost and Impact Tool

Electric bikes (e-bikes) are quickly becoming common in U.S. cities and suburbs, but we still have a ways to go compared to our neighbors across the Atlantic.  In recent years, e-bike sales have steadily increased with unprecedented growth in Europe, especially in the Netherlands. Can the U.S. catch up? E-bikes offer a cheaper alternative to car travel and also provide physical activity. Riders with limited physical ability find that e-bikes extend their overall mobility. Beyond the practical, e-bikes are also just fun to ride. In fact, e-bikes encourage users to cycle farther and more often than conventional bicycles. More importantly to local and regional U.S. governments, e-bikes could be a useful tool to address our current climate crisis by reducing transportation greenhouse gas (GHG) emissions.

Related research: MacArthur and McQueen are also working with the National Science Foundation to collect e-bike user data via onboard technology. To learn more or participate in that study, visit the Mobility By E-Bike Project.

E-bike incentive programs in the U.S. remain relatively small in scale. Currently, California and Oregon offer statewide incentive programs that provide rebates towards the purchase of battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV), and fuel cell electric vehicles (FCEV). These programs are intended to reduce state GHG emissions from the transportation system. Could incentivizing e-bikes also be a cost-effective way for regions to reach their greenhouse gas emission reduction goals?

Today the Transportation Research and Education Center (TREC) at Portland State University launches a new Electric Vehicle Incentive Cost and Impact Tool. This online tool enables policymakers, public stakeholders, and advocates to quickly visualize the potential outcomes of an electric vehicle incentive program made up of several vehicle types. The tool estimates the cost efficiency of a proposed program in terms of the cost per kg CO2 avoided by each mode over the course of one year. It also takes the proposed budget into consideration to calculate the potential number of incentives to be made available and the amount of total CO2 that would be avoided due to internal combustion engine automobile (ICE) VMT displacement.

To show you how it works, we tried out the tool with Oregon as a case study. Currently, the state sets aside about $12M per year for its Oregon Clean Vehicle Rebate Program, with rebates usually offered at $2,500 each for BEV and PHEV vehicles with battery capacity of 10 kWh or more and $1,500 for vehicles with batteries with less than 10 kWh. How do BEVs, PHEVs, and e-bikes compare in terms of incentive program cost efficiency and greenhouse gas emissions avoided?

USING THE EV INCENTIVE COST AND IMPACT TOOL: AN OREGON CASE STUDY

Creating your EV Incentive Program

First, let’s get the tool set up with information for the state of Oregon. We’ve designed the tool with all of the data you need, and you simply choose the presets for your scenario. It’s also easy to use your own data by just entering it directly into the tool. Apply presets with information for the electricity generation emissions profile from the US EPA eGRID, average car travel information from the NHTS, and national ICE fuel efficiency information from the US Bureau of Transportation Statistics.

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Next, apply some information about the vehicles you’re looking to incentivize. Again, we’ll just use presets that we’ve created: 

• The E-Bike preset is an average of the fuel economies of several e-bike models studied in a recent paper by Efficiency Vermont. It may be unreasonable to expect most people to completely replace all of their automobile VMT with an e-bike. To account for this, we specify that the average user will only replace 15% of their VMT with their incentivized e-bike. 

• The BEV preset is a weighted average of fuel economies provided by the US EPA of the current BEV fleet in Oregon. 

• Similarly, the PHEV preset is a weighted average of fuel economies provided by the US EPA of the current PHEV fleet in Oregon. Fleet information was obtained from the Oregon Department of Transportation (ODOT) based on historical rebate distribution within the state.

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Lastly, we can set our incentive amounts and total budget. We can also choose how to distribute our budget among the vehicles we’re incentivizing. Let’s set the BEV and PHEV incentive to $2,500 and the total budget to $12M, similar to Oregon’s current program. We’ll try out an e-bike incentive of $350, and for this example we’ll split the budget evenly among each vehicle type.

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Once you’re all done creating your incentive program scenario, you can export a report for quick reference when discussing options with other stakeholders.

Review the Results: What did we find in Oregon?

First off, we get some information about incentive cost efficiency. It turns out that the e-bike incentive is more cost efficient, in terms of cost per kg CO2 saved, than both the BEV and PHEV incentives.

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Next, we can look at the total number of incentives our program is able to provide. Because the e-bike incentive is much lower in price, the program is able to impact almost 10 times as many people’s lives with a new e-vehicle compared to the BEV or PHEV incentives given our $12M budget.

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Lastly, let’s look at the GHG impacts of our program over the course of 1 year. The program is able to reduce the amount of CO2 emissions of one year by about 25M kg thanks to the incentive program we designed. Given how we’ve structured this incentive program, e-bikes make up the largest portion of this CO2 savings, about 40% of the entire impact.

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“What-if” Scenarios for E-bike Incentive Amounts

Let’s do a quick set of “what-if” scenarios to see how changing the e-bike incentive from $350 impacts the results.

What if the e-bike incentive was $150?

What we found for a $150 e-bike incentive (versus $350):

• The cost per kg of CO2 saved has decreased, from $0.40 to $0.17.
• The number of e-bike incentives we can offer has more than doubled, from 11,314 to 26,400.
• Similarly, the amount of CO2 avoided due to e-bikes has also more than doubled, from 10.2M kg to 23.9M kg. This accounts for 61% of the total CO2 savings in this case.

What if the e-bike incentive was $500?

What we found for a $500 e-bike incentive (versus $350):

• The cost per kg CO2 saved has gone up from our initial case study, from $0.40 to $0.55 per kg CO2 saved. However, this is on par with the cost efficiency of the PHEV incentive.
• The number of e-bike incentives that can be offered has decreased, from 11,314 to 7,920. However, we’re still able to offer more incentives than the BEV and PHEV incentives combined.
• Lastly, the total CO2 saved has also declined, from 10.2M kg to 7.2M kg, although it is still on par with the BEV and PHEV categories.

Final Thoughts

This case study has shown that e-bikes could be a strong player as part of a CO2 avoidance e-vehicle incentive program. In some cases, e-bikes could perform better than electric vehicles in terms of cost efficiency, number of incentives provided, and total CO2 saved.

The Electric Vehicle Incentive Cost and Impact Tool is available online, and is able to generate a downloadable report for sharing purposes.

Contact John MacArthur (macarthur[at]pdx.edu) with any questions or comments about the tool, and let us know how you used it!

ABOUT THE AUTHORS

John MacArthur

Sustainable Transportation Program Manager

John MacArthur is the Principal Investigator for TREC's electric bicycle research initiatives. His research also includes low-/no-emission vehicle infrastructure in Portland metro, as well as a climate change impact assessment for surface transportation in the Pacific Northwest and Alaska. Before joining the TREC staff, John was the Context Sensitive and Sustainable Solutions Program Manager for the Oregon Department of Transportation’s OTIA III State Bridge Delivery Program.

Mike McQueen

Graduate Research Assistant

Mike McQueen is a second year master's student working with John MacArthur of TREC and Dr. Kelly Clifton of the MCECS Department of Civil and Environmental Engineering. Currently, Mike is researching e-bike travel behavior and micromobility as an Eisenhower Fellow. In the past, he has studied e-bike purchase incentive programs, the potential positive environmental impact of e-bikes in Portland, BIKETOWN, and the demographics of zero car households.

The Transportation Research and Education Center (TREC) at Portland State University is home to the National Institute for Transportation and Communities (NITC), the Initiative for Bicycle and Pedestrian Innovation (IBPI), and other transportation programs. TREC produces research and tools for transportation decision makers, develops K-12 curriculum to expand the diversity and capacity of the workforce, and engages students and professionals through education.