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Peloton to Stop In-House Bike Production as Part of Turnaround

The fitness company will rely solely on partners for manufacturing in bid to cut costs and simplify operations. 

Peloton bicycles on display at a New York showroom.

Peloton bicycles on display at a New York showroom.

Photographer: Jeenah Moon/Bloomberg
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Peloton Interactive Inc. rallied as much as 6.8% on Tuesday after announcing plans to cease in-house manufacturing and rely solely on partners for production, marking one of the most dramatic steps yet to simplify its operations and reduce costs.

The move is an about-face from Peloton’s strategy over the past three years, when it split manufacturing between its own facilities and partners. The company built a portion of its standard Bike models and the higher-end Bike+ using facilities it acquired in 2019 as part of buying Tonic Fitness Technology. It also relied on Taiwan-based manufacturing partner Rexon Industrial Corp. to build bikes and its Tread treadmill.