The e-bike industry, brimming with promise and innovation, has recently been marked by a series of unfortunate events that have sent ripples through the community. As advocates for sustainable mobility, we at ENVO Drive Systems are deeply saddened by the struggles faced by some of our industry peers. The receivership of FERMETCO Inc, a company known for wholesaling electric mobility brands such as "iGO" and "Quest" strikes particularly close to home.
Royal Bank of Canada had filed a motion in the Superior Court of Quebec to appoint Ernst & Young Inc. as receiver for Fermetco Inc., a wholesale electric mobility company. The company owes over $14.6 million CAD and has defaulted on multiple financial obligations, including repayment schedules and covenant requirements. Despite negotiations and attempts to restructure, no resolution was achieved, and shareholders declined further funding. RBC argued the move was necessary to protect its interests and manage Fermetco's deteriorating financial state. In addition to that Fermetco owed millions to suppliers in China, such as Zhejiang Xingyue Overfly Electric Vehicle.
Image 1: List of Secured and Unsecured Loans.
Source: https://documentcentre.ey.com/api/Document/download?docId=40743&language=EN
https://documentcentre.ey.com/api/Document/download?docId=40842&language=EN
Fermetco was more than just a competitor; it was a fellow trailblazer in Canada’s e-bike landscape, dedicated to empowering riders and advancing the cause of micro-mobility. Its sudden demise serves as a sobering reminder of the challenges that even established brands face in this rapidly evolving industry. In this piece, we reflect on the factors contributing to these struggles and the broader shifts shaping the e-bike market.
Not an isolated Case!
Fermetco's possible closure is not an isolated incident but part of a troubling trend that has gripped the e-bike industry in recent months. Juiced Bikes, once a prominent name in the market, had recently declared bankruptcy, signaling the growing difficulties faced by even well-known brands. Meanwhile, industry giants like Stromer and Yamaha E-Bikes have made the difficult decision to exit the North American market entirely, leaving a void that speaks to the challenges of sustaining operations in this region. These developments highlight the harsh realities of a competitive and unpredictable industry, where innovation and growth often struggle against the weight of economic pressures, operational hurdles, and shifting market dynamics.
What lead to Fermetco's Receivership?
While we can’t claim to know the full details of Fermetco's internal challenges, some speculations can be gleaned from the documents shared by the court-appointed receiver, Ernst & Young (EY). These documents paint a picture of the difficulties the company faced in managing its inventory and operations. One significant issue may have stemmed from Fermetco's partnership with Costco(selling IGO and Quest Ebikes). Due to Costco's famously generous return policy, company was left with 2,222 returned bikes in varying conditions at their warehouse. Selling used bikes is challenging in the best of times, but with over 2,000 units piling up, the task becomes nearly impossible.
Image 2: Costco Return bikes.
Overstock Inventory
| Warehouse Names | New-Dealer | New-Costco | Returns | Prototypes |
| SLD Warehouse | 236 | |||
| 18Wheels Burnaby | 1273 | 93 | 3 | |
| 18Wheels Missisauga | 954 | 720 | 3 | |
| Fermetco | 10 | 284 | 42 | |
| In transit (costco) | 138 | |||
| Lepine Whse-Dorval | 15 | 1696 | 5 | |
| VK-Remco-Pitt Meadows | 89 | |||
| Total | 2252 | 1040 | 2222 | 47 |
Source: EY.com
Adding to the strain was an inventory of 3,292 new bikes at a time when the season was coming to an end. This significant stockpile suggests either overly optimistic sales forecasts or a slowdown in performance. Notably, 2,252 of these were latest models launched under IGO brand, launched just this year, indicating that the overstock wasn’t a lingering issue from the pandemic boom but rather a current-season misstep.
Another challenge revealed through an analysis of spare parts inventory was the lack of standardization across their product lines. Many parts were not interchangeable between different bike models, complicating inventory management and increasing operational overhead. Such inefficiencies, combined with the broader challenges of a highly competitive market, may have created an unsustainable situation for the brand.
What Can Customers Do?
For customers who own an iGO/Quest e-bike, the company's possible closure raises concerns about servicing, repairs, and spare parts availability. While the situation may seem daunting, there are still steps you can take to ensure your bike remains functional and enjoyable for years to come.
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Reach Out to Your Dealer
If you purchased your e-bike through a dealer, they are often your best resource for technical support and spare parts. Many dealers have experience working with specific brands and can offer guidance on maintaining your bike or sourcing compatible components. They may also have leftover inventory of ebike parts or suggestions for suitable alternatives. Establishing a connection with your dealer is an important first step in keeping your e-bike running smoothly. -
Explore Compatible Parts on the Market
While finding a replacement battery or motor might be challenging due to their proprietary nature, there are other ways to maintain or even enhance your e-bike. Searching for compatible parts—such as brakes, tires, or controllers—within the broader e-bike market can help address some maintenance needs. For those seeking a more comprehensive solution, a conversion kit might be a viable option. These kits allow you to retrofit your existing e-bike with a new motor, battery, and controller system, essentially reclaiming and revitalizing your bike for future use.
While company's possible closure has undoubtedly created challenges, it also highlights the importance of adaptability and the value of a strong support network. By taking proactive steps and exploring creative solutions, customers can continue to enjoy the benefits of their e-bikes and contribute to the sustainable mobility movement.
What Can Dealers Do?
For dealers who previously carried iGO/Quest brand e-bikes, the company's possible closure presents both challenges and opportunities. Supporting customers during this transition can not only help maintain trust but also position dealers as reliable partners in the e-bike community. Here are some steps dealers can take to navigate this situation:
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Stock Up on Proprietary Parts
Dealers should consider sourcing and stocking proprietary components for iGO e-bikes while supplies last. Items like batteries, controllers, and display units are often the hardest for customers to replace due to their brand-specific designs. Having these parts on hand can help you provide better support to existing iGO owners and meet ongoing repair needs. -
Source Common Components from Trusted Distributors
While proprietary parts may be limited, components like brakes, tires, drivetrains, and other standard parts are typically available through distributors such as LTP or HLC. Stocking these readily available components ensures that you can continue to assist customers with regular maintenance and repairs, even for non-proprietary issues. -
Offer Expertise and Advice
As a dealer, your technical knowledge is a valuable resource for customers navigating the uncertainty of company's possible closure. Be prepared to guide them in finding compatible third-party parts or considering conversion kits to extend the life of their e-bikes. Proactively addressing customer concerns can strengthen your reputation and customer loyalty. -
Communicate Proactively with Customers
Reach out to customers who purchased iGO e-bikes to inform them of the situation and the support you can provide. Offering transparency and a willingness to assist can build trust and turn this challenging period into an opportunity to deepen customer relationships.
By taking these steps, dealers can not only help ease the transition for iGO/Quest e-bike owners but also solidify their role as key players in the e-bike industry, demonstrating reliability and adaptability in uncertain times.
