Peloton will no longer be manufacturing its own bikes
Peloton Interactive will no longer be manufacturing its own bikes. Instead, the company is expanding its current relationship with Taiwanese manufacturer Rexon Industrial Corp.
Peloton Interactive wants to simplify its supply chain and focus on technology and content, the company said in a press release. Peloton Interactive bought Taiwan-based fitness manufacturer, Tonic Fitness Technology, Inc. in 2019. However, the company will suspend operations there through the remainder of 2022.
Rexon, a leading Taiwanese manufacturer with over 50 years of experience, has partnered with Peloton Interactive for many years, Peloton Chief Supply Chain Officer Andy Rendich said in a statement. "We plan to maintain a significant corporate and manufacturing presence in Taiwan with over 100 Peloton Taiwan team members who continue to play a key role in our engineering and manufacturing strategy," he said.
Peloton Interactive's shares plunged earlier this year, after a report from CNBC, which cited internal company documents, said the company was suspending production of its home fitness equipment because of waning consumer demand.
The company became ultra-popular 2020, when gyms closed due to the pandemic, creating a shift to at-home workouts.
But as the pandemic ushered in a widespread popularity for Peloton, the company struggled to keep up with the unprecedented demand for its products, leading to months-long delivery estimates and missing shipping deadlines from its factories in Taiwan.
In 2021, the company invested $100 million to help try to appease thousands of frustrated customers who said they had been waiting months for their Pelotons.
Other incidents have also affected the company's image. In October 2020, the company recalled about 27,000 bikes sold nationwide to replace pedals that can break and cut riders' legs.
And in 2021, Peloton Interactive recalled both its Tread+ and Tread treadmills following more than 70 incidents, including the death of one child and 29 other instances where users sustained injuries such as broken bones and cuts, the company and the U.S. Consumer Product Safety Commission said.
Peloton Interactive apologized for initially refusing to recall its treadmills after the death and injuries were reported.
"We made a mistake in our response. We should have been more open to a productive dialogue from the outside, and for that I apologize," John Foley, CEO and co-founder of the company told an earnings call with Wall Street analysts on Thursday.
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