Amid e-bikes’ rapid rise in popularity and adoption, cities and other groups like utility districts have stood up incentive programs to aid in their purchase, which is generally seen as more than a recreational device, but one having a practical transportation purpose. To help absorb the cost, more than 160 e-bike incentive programs have emerged in the United States and Canada as of February 2024, according to a new report looking at their effectiveness.
The incentives take a variety of shapes, ranging from tax credits to point-of-sale rebates, and are often structured to provide more assistance to lower-income applicants. But one author of the report, titled Consumer Purchase Response to E-Bike Incentives: Results From a Nationwide Stated Preference Study, told Government Technology that before cities or other organizations design an electric bike purchase incentive program, they should be clear about what they want the program to achieve.
“If cities are going to spend money incentivizing e-bikes, they should have a clear understanding of what they’re trying to get out of it, whether the aim is to enhance equity, reduce air pollution, alleviate congestion, lower GHG emissions or achieve other objectives,” said Luke Jones, a professor of economics at Valdosta State University in Georgia. Jones was one of four authors of the report, which looks at the effectiveness of incentive programs to assist in the purchase of e-bikes.
“Well-defined program goals will inform both the design and assessment of the incentives,” he said, via email.
One of the most watched incentive programs is the Denver E-Bike Rebate Program, launched in 2022. The program has aided in the purchase of 7,968 electric bikes and electric cargo bikes as of the end of 2023, according to city data. The program is funded by the voter-approved Climate Protection Fund, the destination of a 0.25 percent sales and use tax.
The Denver program provides rebate vouchers to be redeemed when users purchase an e-bike from a participating Denver bike shop. Low-income recipients can get up $1,200 for a conventional e-bike or $1,400 toward the purchase of an electric cargo bike. The standard rebate is $300 to $500. This year, the city introduced a new middle-income rebate tier for residents earning about $52,000 to $87,000 annually. The rebate for the middle-income tier is $700 to $900.
Some 71 percent of recipients of the Denver e-bike rebates reported reduced use of a gas-powered vehicle, and 67 percent of the funding goes to low-income residents, according to the new report in the journal Transportation Research.
Point-of-sale rebates like these are viewed as the preferred incentive for programs designed with equity in mind because they are not structured as a reimbursement, where the purchaser would have to initially fund the full cost of the bike. In fact, point-of-sale discounts are 30 percent more effective than a mail-in rebate, the report concluded.
Transportation equity advocates have argued that that incentive programs set up on a first-come, first-served basis put lower-income people — who cannot always quickly jump onto a signup portal — at a disadvantage, said Brett Wiley, senior program associate with Ava Community Energy, a nonprofit electric utility in the San Francisco Bay Area.
“Our e-bike incentive is going to be a lottery enrollment,” Wiley said, speaking on an e-bike panel at the Micromobility America conference in the Bay Area in October 2023.
However, if the point of the incentive program is to put the most bikes on the street, Jones said, then officials should structure the programs to give an equal incentive across the board.
“If the program limits the incentive to only people with lower incomes, for example those at 300 percent of the Federal Poverty Level or below, it enhances equity, because those who need it most get more money,” Jones said. “However, this makes the program less cost-effective: It results in fewer additional e-bikes introduced for the same amount of money.”
And if reducing greenhouse gas emissions is the No. 1 goal of the e-bike incentive program, then it would be worth exploring other options for reducing GHG emissions, given the cost of an e-bike incentive program versus other approaches to reduce emissions, the research found.
“In our study, we looked at the cost-effectiveness of incentive programs by comparing the total amount spent on incentives to the number of extra e-bikes people bought because of those incentives,” said Jones, adding it takes about $4,000 worth of incentives to induce that extra e-bike purchase.
This cost “far exceeds” benefits gained by carbon emissions the bike will displace, he said.
“Similar to incentives for electric vehicles, giving incentives for e-bike purchases ends up being a costly method for reducing GHG emissions. So, if the main goal is just to reduce CO2 emissions, there are probably better ways to use that money,” Jones said.
Organizations like the Rocky Mountain Institute (RMI) have also been studying the effects of e-bike incentive programs and the use of e-bikes as a transportation mode.
RMI is able to calculate how using e-bikes for short trips — shifting from using a car — can impact vehicle miles traveled statistics, greenhouse gas emissions, air quality and financial savings for those using the bikes, said Heather House, a manager with the Carbon-Free Transportation program at RMI, speaking at the Micromobility America conference in October. RMI, she added, can measure the impact of incentive programs.
“We’re hoping that this type of data will make the case a lot easier to be able to go justify things like spending on infrastructure, or spending on incentive programs,” said House. “We’re all here because we’re excited about micromobility and e-bikes. But I think it’s been hard to date to really quantify the benefits that it’s bringing to our communities.”