Harley-Davidson Stands Behind Electric Motorcycle Bet Despite COVID-19 Headwinds

Harley-Davidson, the iconic American motorcycle manufacturer, reaffirmed its commitment to electric models this week in a first quarter earnings call overshadowed by COVID-19. The company launched its first $ 29,799 electric motorcycle, LiveWire, last August.

“We are going to expand our iconic and profitable heritage bikes to excite our existing customers,” CEO Jochen Zeitz told investors this week. “We also remain committed to … advancing our efforts in electricity,” he added, before the company revealed a 45% drop in quarterly earnings.

While it is unlikely to appeal to Harley-Davidson purists, LiveWire was drawing compliments even before its launch and raised eyebrows since thanks to acrobatics like hitting a Tesla Model 3 in a drag race and traveling 1,000 miles in 24 hours (thanks to fast charging).

Perhaps surprisingly, due to its classic heritage, Harley-Davidson is a pioneer in the electric motorcycle market, compared to other traditional manufacturers. Other industry leaders, such as Honda and Kawasaki, also have electric models, but, to a large extent, the emerging market for electronic motorcycles is occupied by startups that use only electricity, such as Energica and Zero.

Mopeds and scooters that lead the electric charge

Several factors are behind Harley-Davidson’s search for an electric dream.

One is that the company’s traditional products, sometimes stereotyped as an impulse purchase for men in a midlife crisis, are in danger of falling out of fashion for a new generation of motorcyclists. Harley-Davidson share price it had glided for years before COVID-19 delivered a fiery blow.

Another is that Zeitz, a committed environmentalist, probably wants to live up to a company’s promise last year to reduce Harley-Davidson’s environmental impact. May 2019, the company said it would improve the fuel efficiency of its internal combustion engine models and “would lead the electrification of motorcycling with a complete portfolio of electric vehicles, which will further reduce the environmental impact of our motorcycles during use”.

Breaking the nut on an electric motorcycle is not easy. Alta, a pioneer in electric motorcycles, “stopped operating in 2018”, according to Adrie Peene, director of the distributor Electric Life Store in the Netherlands.

Harley-Davidson itself had to stop initial LiveWire deliveries due to an unspecified upload failure.

The state of the electric motorcycle market contrasts with the trend seen in other two-wheeler segments, where electrification is expanding rapidly – mainly in Asia.

Bloomberg New Energy Finance says about 60% of two-wheeled vehicles in China used batteries in 2019. The global share is about 30%, but they are mostly mopeds and scooters, said Nick Albanese, head of new mobility research of the BNEF.

Electric motorcycles have only about 1% market penetration, said Albanian, “mainly as a result of the limited availability of models and cultural factors”.

Motorcycles delayed in electrification, but accelerating

Mopeds and scooters are hardly status symbols, and economic considerations are one of the main motivations for your purchase. Thanks to fuel economy, they make sense in urban environments, where homeowners are unlikely to experience range anxiety.

In China and India, electric wheels do not need to be registered, which helped boost acceptance in these countries. Some two-wheel vehicles powered by lead-acid batteries, and even some models based on lithium ions, are now cheaper than those of internal combustion engines, said Albanese.

There are now a wide variety of models of mopeds and electric scooters to choose from, said Albanese. In India, for example, there are now more than 80 two-wheeled electric vehicles on the market, many of them priced between $ 500 and $ 1,000.

Albanese estimates that there are now about 100 brands competing for electric leadership on two wheels in China and another 70 or more in the rest of the world.

But “if you look at the top eight two-wheeler manufacturers in sales revenue, in fact the vast majority of them are in the early stages of commitment to electrification,” he said. “Honda has a model available. Yamaha is a similar story. Most incumbents are in the early days. “

Almost all attention is still focused on low-performance models. But the Albanian predicts that this could change as battery performance improves, and there could be a big advantage for any company that does for motorcycles what Tesla has done for cars.

It is too early to say whether Harley-Davidson could be that company. The company did not respond to a request for comment from GTM and, in the call for analysts, Zeitz acknowledged that Harley-Davidson faces an existential threat because of COVID-19.

“It is clear that we are at a critical moment in our history that requires significant changes in the company,” he said. “But I know that we will prevail. I am confident that, with the right focus and the changes I intend to implement quickly and diligently, we will emerge stronger “.

Paula Fonseca