The Ghost of Bike Graveyards: China's Shared Bicycle Collapse and the Looming EV Reckoning

The Ghost of Bike Graveyards: China's Shared Bicycle Collapse and the Looming EV Reckoning

In the mid-2010s, China's urban streets buzzed with the frenetic energy of dockless shared bicycles, a symbol of the sharing economy's promise. Companies like Ofo and Mobike exploded onto the scene, raising billions in venture capital—Ofo alone secured over $2 billion, while Mobike pulled in $900 million—fueling a rapid deployment of millions of bikes across major cities. What began as an innovative solution to last-mile transportation quickly devolved into chaos. By 2018, the market had reached saturation, with an oversupply of bikes leading to widespread abandonment. Gigantic "bike graveyards"—vast piles of rusted, broken, and impounded bicycles—sprouted in cities like Shanghai and Hangzhou, a stark testament to unchecked growth. Theft and vandalism exacerbated the crisis; Mobike alone lost over 200,000 bikes in 2019 to such issues.

The reasons for this collapse were multifaceted. Intense competition among over 70 startups drove a "bike flood" strategy, where companies prioritized market dominance over profitability, often ignoring operational realities like maintenance and user deposits. Regulatory voids allowed this frenzy, but as complaints mounted over damaged bikes and unreturned deposits (totaling hundreds of millions of yuan), authorities cracked down with impoundments and caps on bike numbers. Financially, the model was unsustainable: Ofo, once valued at $4.5 billion, filed for bankruptcy in 2018 amid $1.9 billion in debts, leaving millions of users out of pocket. Mobike fared slightly better by merging with Meituan in 2018 but ultimately ceased independent operations by 2020. The fallout? Billions in investor losses, environmental waste from scrapped bikes, and a lesson in the perils of subsidy-fueled hype without demand validation.

Fast-forward to 2025, and echoes of this debacle resonate in China's electric vehicle (EV) sector, another darling of state-backed ambition. Subsidies and policies have propelled China to global EV dominance, with production capacity now vastly outstripping domestic demand—overcapacity estimated at 30-50% in some segments. Companies like BYD thrive, but a swarm of smaller players, buoyed by billions in government grants, low-interest loans, and tax breaks, are locked in a brutal price war that has slashed margins to razor-thin levels. The 14th Five-Year Plan signals an end to direct subsidies by 2026, exposing the fragility of this boom. Exports are booming, but tariffs abroad and softening global demand risk a domestic glut.

The parallels are uncanny: Both industries rode waves of capital influx and policy favoritism, leading to overinvestment without proportional consumer uptake. Shared bikes ignored urban space limits; EVs overlook charging infrastructure bottlenecks and battery recycling challenges. Just as bike graveyards symbolized excess, we may soon see "EV dumps"—warehouses of unsold vehicles gathering dust, compounded by subsidy clawbacks that could balloon losses into trillions of yuan.

This trajectory portends a harsh reckoning. Massive government subsidies, already exceeding 200 billion yuan annually in the EV space, will evaporate into write-offs, straining public coffers and eroding trust in state-directed growth. Meanwhile, the architects of this frenzy—shrewd entrepreneurs and executives—may evade the fallout. Reports of high-profile figures relocating to the UK and Europe with fortunes intact are not uncommon; think of Ofo's founder Dai Wei, who pivoted to new ventures abroad after the collapse, or similar EV moguls eyeing golden visas in London and Paris. They sip lattes in Mayfair while China's taxpayers foot the bill for scrapped dreams.

China's EV saga need not mimic the bicycle bust, but without swift consolidation and demand-focused reforms, it risks the same ignominious end: innovation's graveyard, littered with the husks of ambition.