When Henry Chong first dreamt of designing a made-in-Toronto electric bicycle, he had condo-dwelling commuters in mind.

“We need something well-suited for Toronto where small space living is becoming a much bigger constraint,” says Chong. “(Some sort of ) ultra light, portable bike that could handle going point to point from a condo in the living room right to your workplace.”

In May, his startup Revelo Bikes — a play on revolution and vélo, the French word for bicycle — launched its LE-1 (Lite Electric One), a 14 kilogram, chainless e-bike.

It’s a far cry from the rudimentary, Frankenstein of an e-bike he first welded together from pieces of his nephew’s bike in his sister’s garage in 2011 and an improvement on his LIFEbike, which won four design awards including the 2012 MaRS UpStart! Competition and $10,000 cash prize.

The LE-1 symbolizes the gamble he took when he walked away from a 20-year career in IT to study industrial design at OCAD University and lay the foundations for Revelo.

And now, after three years of trial and error the LE-1 is ready for the Toronto market, but Chong can’t help but wonder if the market is ready for it.

“From the concept we’ve sold 13 total, so it’s not gangbusters yet,” says the entrepreneur. “We’ve had over 500 riders test the bike and the feedback seems good but the only real sticky point is the price.”

The LE-1 retails for $1,699, a hefty price tag especially in Toronto where the market for e-bikes is relatively new.

“Personally we think that that’s a good price but consumers are asking for something in the $900 to $1,200 range,” he says adding that the price has stunted sales of the bike.

“The North American landscape is about price point a little bit more than it is about the body composition or design,” says Chong. “It’s not that they don’t see the quality — they don’t see the relationship to their needs to have something of that quality and then pay for it at that margin.”

This is in contrast to the mature e-bike markets in Europe and Asia where there’s more sophisticated demand for different types of e-bikes, he says.

“The Europeans are paying the most for electric bikes at this point,” says Chong. “They really see the value proposition and they’re dealing with a lot of higher quality products as well which is what we’re trying to create in this market.”

To bring the cost down, Revelo would need to chop manufacturing and production costs by 60 to 70 per cent.

At this point Chong says he’s convinced offshoring, manufacturing in a country with lower labour and component costs, is the best way to do so. But it comes at a price — losing that “Made in Canada” label.

“When we were raising our C Capital we were really talking about a particular story which was a very high-end hand-built vision of this bike with premium componentry,” says Chong. “There’s probably still a market for that but unfortunately that’s the later market.”

Shavin Malhotra, associate professor of global management studies at Ryerson University’s Ted Rogers School of Management, says that although offshoring comes with its own set of challenges, Revelo shouldn’t let losing the “Made in Canada” label get in the way.

“I think there’s definitely a premium (for products) with the ‘Made in Canada’ brand but I don’t know if bikes are those kind of products,” says Malhotra. “If you look at automobiles, they’re manufactured right across the globe and people don’t really mind that, so I’m assuming bikes would be even less of a concern.”

However, if Revelo is hoping to get the most value out of offshoring, they’re going to need to do some research into the logistics of getting the components manufactured from several sources and the rules or regulations for shipping and handling materials like the lithium batteries that power the bikes.

“It’s challenging because they’ve got to mange several different vendors, but in the long run it can (equal) a tremendous cost benefit,” adds Malhotra.

Offshoring will change the dynamics of the company, but Chong says he’s convinced there isn’t really any other way to cut production costs and hit the price point North American consumers want to see. “When I set out to do this, I thought to myself and echoed in all my pitches, that you can’t really make bikes in Canada, at least not for a reasonable price,” says Chong. “We’ve kind of lost out on a lot of that small to medium capability in the manufacturing sector.” As it stands, only 4.6 per cent of the 1.1 million small- to medium-sized firms in Canada operate in the manufacturing sphere, according to a 2013 study released by the Business Development Bank of Canada.

Even still, Chong hopes to reignite the conversation surrounding the “Made in Canada” label and its relevance.

“I’d like to hang onto that idea but I’m like a lot of other companies (in Canada) that have reached that point where production cost is a big challenge,” he says.

“We all tend to look toward the auto industry but I think it’s in the small to medium sector that we can really innovate and reclaim some of our lost potential.”