Absolutely agree this is silly and cities should be encouraging cycling.
> We want to encourage people to bike less and drive more
assuming you meant to flip this?
An e-bike that can even do 20mph comfortably is much closer to a moped than a bicycle, partly due to weight, and partly due to "ease of speed". Obviously a person can easily cycle 20mph, but it just isn't the kind of thing you do on in a crowded area. Very different when it is just a throttle. So grouping them in with bikes, rather than mopeds or similar, is just extremely silly