-edit- > VanMoof bikes, however, offload many of their configuration functions to a smartphone app and are much easier to unlock with a phone than manually
ouch
VanMoof released the VanMoof S3 in 2020, which was €2000 (the predecessor was close to €3000). The S3 sold very well because of its low price and great design, but its build quality was really subpar. In fact, insiders say around 10% of all S3 bikes had defects that required repairs (note that 1 - 2% is standard for a typical bike model).
So in the end, VanMoof sold many cheap bikes which was great for their market share but not so great for their margins. Then, on top of this, they had to repair many of the bikes they sold which ate into their margins even more. Lastly, because of supply chain issues, they weren't able to offset the repair cost by fixing the S3 issues and quickly selling many proper units to new customers.
If as a result 10%-20% of bikes sold need repairs, while still in the warranty period, you're not going to make a lot of profit.
Possibly both but if you have significantly more customers than product you're going to run out of cash eventually.
Not bike related but I work with a UK retailer that has this problem with some high value products shipped from China/Vietnam. When they do get stock they start to discount it almost immediately, I assume they are either crazy or that their cash-flow is more critical than profit.
If demand exceeds capacity, as was the case with VanMoof apparently, cash flow should be positive so. Any capacity incrwases, assuming there is real demand, are also finacable through traditional means.
Unless of course, you screw up your supply chain, as a manufavturing / hardware company cash flow is to a huge extent driven by that. And yes, at 4k a bike, a company has an easier time staying cash positive that at, say, 200.
I don't get this. Why do you run out of cash simply because there's more demand than you have production capacity? I would think having open orders doesn't cost money.
Not being able to ship due to a missing critical piece (in this you could see a situation where they have everything ready and in storage but waiting on battery supply) is a real problem and can leave your business functionally bankrupt (zero liquid capital) while having lots of assets.