CITIC Securities: New national standard for electric bicycles implemented, industry competition optimization may highlight leading enterprises' advantages.

CITIC SEC released a research report stating that the final draft of the "Technical Specifications for the Safety of Electric Bicycles," also known as the "New National Standard," has been released. This revision of the new national standard will further enhance consumer confidence in two-wheeled vehicle products. In conjunction with the trade-in subsidy program, the industry is expected to see both quantity and price increases. The implementation of the new national standard will raise industry thresholds and benefit leading companies. Leading companies are expected to expand their market share through their superior response to policies and product innovation capabilities. CITIC SEC's main points are as follows: The implementation of the new national standard marks a new phase of competition standardization in the industry. According to the Ministry of Industry and Information Technology's official website, on January 13, 2025, the final draft of the "Technical Specifications for the Safety of Electric Bicycles" (GB 177612024), commonly known as the "New National Standard," was released. The national standard for two-wheeled vehicles was first published in 1999 (old national standard), with the first revision in 2018, which promoted the standardization of the two-wheeled vehicle industry and increased demand. This current revision marks the second revision. It is believed that this revision, building on the previous revision, will further strengthen industry standards, promote healthy competition among enterprises, and increase consumer trust and acceptance of two-wheeled vehicles. The policy direction and details are generally consistent with the consultation draft, with minor optimizations. In terms of direction, according to documents published on the Ministry of Industry and Information Technology's website, the main focus of the "New National Standard" remains on ensuring safe riding and improving product usability. Compared to the 2018 version, several major changes have been made: electric bicycles are required to have Beidou positioning, communication, and dynamic safety monitoring functions; to ensure riding safety, the testing methods for the rated power and maximum speed of the electric motor have been optimized, with a maximum design speed not exceeding 25km/h. In terms of weight, the new national standard this time has been relaxed to 63 kg compared to the consultation draft, no longer mandating all models to have foot pedals, but encouraging the installation of rearview mirrors to better meet consumer needs and protect product usability. In terms of timing, according to the documents, production of old version two-wheeled vehicles will cease on September 1, 2025, and sales will stop after December 1, 2025, fully transitioning to the new national standard era. Impact on the industry: Increase in product usability, standard features of intelligent configuration leading to price increases. Further increase in production thresholds leading to industry optimization. The new national standard, based on multiple surveys conducted before, fully considers the actual needs of consumers, with adjustments including removing pedals, increasing the weight of lead-acid vehicles again, and optimizing speed measurement methods, respecting consumer demands and improving product strength. The industry believes that the increased safety of two-wheeled vehicles, coupled with the improvements in consumer demand, will lead to an overall increase in demand for two-wheeled vehicle products. The emphasis on whole vehicle intelligence, with plastic parts accounting for less than 5.5% of the total weight, will increase product costs and is expected to raise the industry's average selling price. After the implementation of the national standard, the trade-in subsidy policy is expected to be further promoted, stimulating demand for two-wheeled vehicles and driving the replacement of existing two-wheeled vehicles. On the production side, according to the documents, production companies are required to have upstream cutting, bending, welding, and other supporting capabilities directly included in the national standard. This will result in stricter screening of manufacturers' production capabilities, potentially leading to the clearance of OEM factories and improving the industry landscape. The industry is expected to enter a new phase of high-quality competition, moving towards optimization, with leading companies benefiting. Risk factors: Overall consumer spending lower than expected; lower-than-expected enforcement of the formal issuance of the new national standard; lower-than-expected consumer acceptance of products that comply with the new national standard; slower-than-expected clearing of lesser-known brands.