Author : Subham Agarwal

In the grand tapestry of time, history stitches familiar patterns into its intricate design.

Let’s look at one such familiar pattern that is currently unravelling in front of us in the EV Industry. We’re in the midst of a seismic shift in the automobile landscape. EVs are the buzzword today with everyone rushing in to join the party.

What’s happening in Indian EV scene today has an eerie similarity to something that happened more than a century back in Britan. Let us unlock the vaults of financial history, to understand this euphoric dance of the markets!

The Bicycle Revolution

In 1815, the eruption of Mount Tambora in present-day Indonesia caused a massive ash cloud to disperse across, leading to a significant drop in global temperatures. This resulted in crop failures and widespread starvation among animals, including horses – leading to their death. Acting on scarcity of horses, in 1817, Baron Karl von Drais in France invented a 2-wheeled vehicle, the “Hobby” or “Dandy Horse”.

19th century marked a revolutionary era for British bicycles.

Imagine this – a young boy, Jacob, coming from a village far away has a job opportunity to work as writer. The only problem, the opportunity is in a town, 20kms away. The boy must make a choice whether to take up a job and shift away from his town or leave this exciting opportunity altogether. A tough choice for a young boy indeed!!… but what if, he had the means in place to be able to make the journey?

The invention of modern-day bicycle changed all this. It changed not just the life of many Jacobs of that era, but it also led to a phase of innovation through increased human collaboration. The importance of this invention can be gazed by the fact that, historically all major innovation be it the invention of the wheel, establishment of the Silk Route, Invention of Telephones or the advent of internet, every major leap had to do with humans communicating & travelling. Invention of bicycle in late 19th century was probably one such big leap.

During the 1800s, bicycles went through a series of groundbreaking iterations. From the “Dandy Horse” in 1818 – a bike without pedals to the “Penny-Farthing” design which had an oversized front-wheel that proved to be uncomfortable and a bit risky!

Safer, more comfortable and providing an affordable escape from the smoggy industrial towns to the glorious countryside. The bicycle revolution wasn’t just about greater mobility; it shook up everything – art, music, literature, fashion and even romance! Parish records of England show a marked spike in inter-village marriages during the 1890s bicycle craze. And guess what? Ladies loved it too! Bicycles became a fashion statement for women, adding that extra flair to the cultural revolution!

But what was a technological marvel, also led to a euphoria turned mania.

The bicycle boom triggered an explosion of companies mushrooming overnight, reminiscent of the current surge in the EV space in India. Birmingham, a hub of bicycle manufacturing, saw the number of companies and patents jump 2.5 x and 7x respectively over a brief period of 5 years in the late 1890s. The parallel with today’s electric vehicle landscape is hard to miss, underscoring the ‘cyclical’ nature of innovation and market enthusiasm.

Enter the spring of 1896, Mr. Ernest Terah Hooley, an opportunistic property dealer, saw massive potential in the burgeoning bicycle industry and made himself a fortune during the mania! With a clever knack of buying companies and reselling it back to the public for more than it was worth, Hooley pumped in £3 million to purchase the Dunlop Pneumatic Tyre Co. at over 10x the amount it was incorporated just 4 years back. A few months later, he flipped the company and sold it for £5 million to the public.

Hooley’s play sounds straight out of the venture capitalist handbook, orchestrating a financial symphony with “The Greater Fool Theory”, creating a fortune out of thin air by selling overvalued stock to the highest bidder – the usual unsuspecting retail investor! (More than half of the planned OFS in Ola Electric IPO is by none-other than Mr. promoter, wonder why he needs the money when the company is planning 1,600cr worth of R&D from fresh issue!!!)

This masterstroke encouraged numerous cycle firms to go public leading to a flood of stock market listings.

A staggering ~700 companies leaped onto the stock market bandwagon and listed themselves in just two years, propelled by a wave of optimism painted by the British financial newspapers. Starting April 1896, The Financial Times dedicated an entire page to the share prices of bicycle companies!

During this time, the Bank of England followed an extremely dovish monetary policy and reduced interest rates to 2% in February 1894, keeping it unchanged till August 1896 – The longest 2% level ever in the Bank’s 200-year history then. Capital flowed like a river causing a bubbling speculation in stocks, necessary for any financial mania.

With pockets flushed with cash, along with path-breaking technological transformations and lacklustre returns from traditional investments, the stage was set! In 1896, a diverse crowd of investors, spanning all socio-economic backgrounds, queued up for a piece of the cycling dream. In less than 6 months, the entire bicycle index embarked on a meteoric rise, soaring by an astonishing 258% from December 31, 1895, to May 20, 1896.

Source: Birmingham Daily Mail, Birmingham Daily Post, Financial Times

It also became very common to get large positive returns after a company was listed. In the middle of 1897, the 81 bicycle companies listed on the financial times were on an average trading at 44% above their subscription price. (IPO Pops, anyone? Yep, they were a thing back then as well just like the ones we see today, especially in the SME platform in India)

But then a torrent of mass-made American bikes seized the market and the mood soured. Enthusiasm and press hype sustained the mood a bit longer, fuelled by the belief that bicycles were the inevitable technology of the future. (Sounds familiar? try saying something against cryptos and EVs today!)

Eventually the tyre got too inflated, and the bubble popped. By the end of 1898, index of bicycle-stocks plunged by 71% and by the end of 1910 only 3 companies survived.


Throughout history, various industries have witnessed this transformation phenomenon. The current scenario feels strangely reminiscent of the bicycle bubble, with numerous Indian entities sensing an opportunity to likely deceive unsuspecting investors. Some are going to extreme lengths of even changing their company names to incorporate buzzwords linked to electric vehicles (EVs), all in a bid to attract capital.

New companies are popping up frequently with existing giants also announcing ventures into the EV space. While these initiatives are critical for the market to develop, the astronomical valuations these companies command, often without tangible products, seems hysterical.

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