I used to be a fairly dedicated road bike rider. Most of the people I rode with had bikes that cost in the $2,500 range, a few were around twice that. It's not at all inconceivable for me to imagine a $10K bike with custom parts, even from a bike manufacturer.
Of course the question of $10K in value is something all together different. My bike was off the rack and significantly less expensive than those around me. They kept telling me I needed a new bike and they'd help me build it. Rather than spend $2,500 or more to shave five pounds of weight off of my bike, I told them I'd just eat fewer donuts and get the same effect.
So what's so significant about $10K for a high-end bicycle? How far would $10K go if you were buying a motorcycle? A boat? A car? A piece of jewelry? These days, you can spend that kind of money on almost any item you can name. I agree -- Toyota didn't really contribute all that much. Shimano has been making high-end, nose-bleed componentry for a very long time, and electronic shifters have been available for a few years now. Just another sales gimmick.
The real headline should be: "Lexus Paints and Assembles Bike." There's no innovation here. All they've done is assembled the bike using standard off-the-shelf components. The BOM isn't surprising either given that the Di2 groupset retails for $3300 and the wheelset costs another $2800. Toss in $1000 in carbon fiber components and a $3000 frame, and there you are: a $10k bike.
I'd like to see a bill of materials for this bike, as on the one hand I am having trouble imagining how the price tag got so high, but then again if all of the components are hand machined the labor costs were likely through the roof. I wonder if they are doing anything interesting with the composites, as they're fairly well estabalished today in high end road bikes.
If you've ever been to a car show you've seen concept cars. These are cars that showcase future and futuristic technologies and manufacturing capabilities. Since they only build one or two they probably cost millions to build, if you include all the hand-labor involved. And they don't sell them.
Consider this as a concept bike--it shows off their technology and design capability. And they can actually sell them off after showing them off!
Compared to a concept car, this is incredibly low cost. Makes a lot of economic sense.
I live just north of San Francisco and I ride a bike I rebuilt on a 30-year-old steel frame for about $75. But I commute in the company of many, many riders who ride bikes that cost anywhere from $2,000 to $15,000. There is definitely a market beyond the professional racing circuit for bikes like that, but I don't know any cyclists who would buy a "Lexus" bike. Most high-end bikes are made by bike firms that compete hard against one another to make the perfect bike -- and they know what they're doing. A bike made by a car company sounds like just what it is: a publicity gimmick.
Don't believe me? Ask yourself: would we be talking about Lexus right now if they didn't make a bike?
Would like to take a ride on this bike. Understand what they are doing, but $10K for a bike?...don't understand why they are doing? They want to be in the next gen bike business or just creating a brand value for Lexux?
Lexus could launch this as a product and compete in that market (if their bike holds up)
Launch it as a product, certainly. Compete would be another matter. When you are someone like Lexus, size matters. A market has to be big, and you need to sell a lot of products in it, to make it worth doing.
On a similar line, I was in a discussion a while back about purpose built taxicabs. Decades ago, the Museum of Modern Art in NYC had a competition to design a cab, and the discussion revolved around that sort of specialized design. One participant was an automotive engineer who worked for GM at the time. He said GM needed to sell a minimum of 350,000 of a model per year to make it worth doing, They simply could not address a tiny market profitably, and the market for that sort of purpose built cab would be a fraction of that minimum.
A smaller, focused, niche-market company specializing in that sort of thing can make and sell a high-end racing bike retailing for that sort of money and make money doing it. Lexus couldn't. It's too big, with too much overhead, to get the ROI required.
As we unveil EE Times’ 2015 Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. Panelists Dan Armbrust (investment firm Silicon Catalyst), Andrew Kau (venture capital firm Walden International), and Stan Boland (successful serial entrepreneur, former CEO of Neul, Icera) join in the live debate.