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Cycling to the global market

Owner of Electric Cycle Co. hopes to make his electric bicycle business global after infusion of money from investors

Mail Tribune

ASHLAND - Tinkering with bicycles, motorcycles and other mechanical things has been Ely Schless' life.

Ever since the 47-year-old Ashland resident quit school to work at a motorcycle shop in Southern California, he has been out to build a better two-wheeler.

He built his first electric bike 15 years ago and earned his living by providing mechanical special effects for makers of commercials and films until moving to Oregon eight years ago.

In 1996, he launched Denali Cycles Inc. and began building electrical bikes in a somewhat arduous fashion. Even though Denalis were more efficient, powerful and visually appealing than other mo-ped-like bikes, the company had a hard time finding its niche.

"The problem is, there isn't much of an awareness of two-wheel vehicles being a significant part of the highway population," Schless says. "If you were in Taiwan, you would expect them to come flying around the corners."

Now, with a new name and firm financial and marketing support, Schless has extended his manufacturing dreams beyond a mom-and-pop affair to one that could one day compete globally.

The difference between the present utilitarian-sounding Electric Cycle Co. and the company's previous incarnation can be summed up in a word - money.

"The investors who are bankrolling us think we can get American buyers into this transportation," Schless says. "They're thinking we can penetrate the college student, security companies and police markets."

In its previous manifestation, Denali appealed to hard-core cyclists desiring a mountain bike-motorcycle hybrid for off-road riding. For the five years that Schless and former partners Duke and Jan Ostendorf bankrolled their own operation, they crafted 50 bikes priced from $3,900 to $5,200. They were sold to buyers in the United States, Canada, Costa Rica and Europe.

"We sold them all," says Schless, who handled the marketing, sales, manufacturing, crating, warranty work and Web site out of a 4,000-square-foot building he owns on East Main Street.

"It took us too long to sell all the bikes and the cost of operations overwhelmed us. Basically, we were a dysfunctional company," Schless says.

Ultimately, Jan Ostendorf hired Rick Citron, a Los Angeles lawyer who puts together investment teams and financial backers.

The company now has $1.25 million in backing - of which $250,000 will be available in the next six months - an eight-man board made up of bankers and executives, a certified public accountant, a marketing team and a lawyer.

"We've basically sold the company to venture capitalists," Schless says. "We've got a strong financial management team; now we have to build up the factory aspect."

Since the investors signed on March 15, Schless has built three prototypes with new designs, motors, frames, wheels, tires, forks, batteries and chargers - and seven more will be shipped to the marketing folks within two weeks, he says.

The bikes will be priced in the $2,000-to-$3,000 range, partly based on scale of production and partly because of targeted market.

"What you learn is that it's easier to build 10 than one, and it's easier to build 1,000 than 10," Schless says. "You have to resolve various manufacturing (tooling) obstacles if you make one, and fake it a little less if you make 10.

"If you're making dyes, punches, presses and things of that nature, what was labor-intensive is turned into a big hammer hit."

A bracket can be handcrafted in an hour or kicked out by a hydraulic press in a second.

"In either case," he says, "it's still a bracket."

He plans to triple his floor space to 12,000 square feet by adding two more buildings on the adjacent two acres.

He got started on electrical motors out of frustration, as much as anything, when the Honda Hawk he was racing kept blowing engines.

"I went by a golf cart shop, got batteries and a motor and made it work that way," Schless says.

He came to the conclusion that motorcycles were built to carry the machine's weight rather than transport the rider.

Because Schless came to electric bikes from a motorcycle background, he considers power a necessary ingredient. His bikes can go up to 30 mph (any faster, and they'd lose their mo-ped status). He is quick to say competitors with under-powered and under-ranged bikes are missing the mark.

"We've got a magnitude greater power - that's shifting the decimal point over one digit," he says. "E-bike thinking has been, 'let's take a bicycle and make it easier to pedal.' All the time, I've thought that was a little weird. A heavy bicycle or slow motorcycle, neither is a great product. All of ours have been pretty much light motorcycles."

He says one San Francisco maker raised $20 million through stock offerings, only to build under-powered bikes shipped with notes not to ride them up steep hills.

"They put all of their money into hype and not into the product," Schless says.

When it comes to range, he says Lee Iacocca-backed E-Bikes fade rapidly, requiring more pedaling. Electric Cycle's commuter bike will have a range of 50 miles with the ability to recharge at the rate of two minutes for every mile.

"It's not as fast as gassing up a the service station," he says. "But you don't have to leave home."

Reach reporter Greg Stiles at 776-4463 or e-mail

Cycling to the global market