According to Harley-Davidson CEO Jochen Zeitz, the motor company will be 100% electric in years to come. Is this visionary, prophetic or delusional strategy that could undo the company…certainly in this emerging sector?
Harley-Davidson proudly released the LiveWire electric motorcycle some years ago it was acknowledged they were the first main motorcycle manufacturer to bring a high performance electric bike to market…but it also came with much confusion and criticism too.
Initially hard-core Harley Davidson fans were not impressed with the overall look and notion of an electric bike but on early roadshows, the bike itself really did impress with its performance, albeit the lack of sound was a huge stumbling block for most riders…but not as much as the price which was in excess of £30K…dollars or shekels!
As the program developed, albeit with minimal sales, the company decided to take the LiveWire brand name and form it into its own subsidiary company and proceeded to launch it on the NYSE with a SPAC…whatever that is? Essentially it was a different route to launch a company onto the stock market and it gained a lot of speculative investment prior to and on its launch…but then the big problems occurred.
LiveWire the company had made abysmal sales figures for 2022…of the LiveWire One motorcycle and whilst pre orders of the LiveWire S2 Del Mar had been taken, it was yet to be produced, let alone be delivered. Sensing a loss, investors starting to pull out of the project meaning the newly floated company almost went under before it had managed to stay afloat. This led to Harley-Davidson having to step in and support the new venture in the tune of hundreds of millions of dollars. The company is forecast to lose another c.$120million in 2023 too, so where does this leave LiveWire and the future of H-D electric dream?
The issue is three-fold: Price, Competition and Demand!
Performance electric motorcycles are expensive to buy with limited range and delayed charging cycles. Whilst the latter two are evolving all the time, there is still a huge gap in practicality for the motorcycle market especially away from urban riding. This leads to who will want an expensive motorcycle for mainly urban rides in an economy that is reducing, costs are rising and there are cheaper alternatives out there.
For the US market, the LiveWire One starts at $22,799 whilst the S2 Del Mar starts at $16,999. This severely limits the sales potential. The existing demand for EV bikes would be aiming at a lower price point or improved specifications for a similar price point. Also what has happened in the latter stages of 2022, is that the other main motorcycle manufacturers namely from Japan have announced their EV bike projects of the future, much more diverse, numerous and likely to be a lot cheaper too.
Harley Davidson and LiveWire were competing with start up EV motorcycle businesses that can only produce motorcycles at a higher economies of scale and their position in the market looked somewhat favourable. However some of those start up EV companies have started to make ground and pull away but the main manufacturers, whilst late to the party will be looking to dominate the market in the next couple of years.
There is one final aspect of demand which supersedes the influence of price and competition…and that it whether the brand is synonymous with this kind of forward thinking venture and whether Harley-Davidson and LiveWire can attract a high volume of riders who will take the quiet ride over the roaring thunder of a V-Twin which H-D has built its reputation and fanbase over many years.
This is likely to be the biggest hurdle for the company to overcome in the short term. Whilst in recent weeks there has been more chatter about the use of bio fuels and synthetic fuels for future internal combustion engines and some notable manufacturers such as Triumph and KTM professing that the EV solution is not the only game in town.
If the core audience for EV bikes are finding better and cheaper alternatives on the market and the future of two wheeled EV mobility is not yet certain, the company has a long way to convince riders, who are used to sounds and vibrations as part of their riding experience, they should share the CEO’s vision of an electric future and the near sighted option is an electric Harley…