It’s been a typical market view in recent history that when a European oil major invests in renewable energy, like wind or solar, while ExxonMobil stays away, the decision is as much about being a European company as it is about being a fossil fuels one. But for the new European CEO of iconic American motorcycle maker Harley-Davidson, the push into electric bikes is simply an undeniable part of the motorcycle’s future.
“Electrification is a given,” Jochen Zeitz, Harley-Davidson CEO, said last week at the CNBC Evolve Global Summit. “The future will be electrified also in motorcycling.”
Electric bikes bring a focus on a new urban consumer, and also play into the bigger consumer idea that Zeitz — who took over as CEO last February — is pinning the motorcycle maker’s success to: “desirability.”
After having shored up the company’s financial situation — a strategic plan called Rewire that included cutting back on the company’s geographic focus to key global markets, and which the stock market has rewarded Harley for since Zeitz took over — its shares are up 20% this year alone and even more in the one-year period — the CEO and his team are selecting the categories where it can become one of the leaders, or in the least, forge a path to profitability.
Electric bikes are a big part of the plan.
“We want to lead in electric,” Zeitz said at the CNBC Evolve event.
The Harley-Davidson LiveWire electric motorcycle doesn’t have big sales yet, but CEO Jochen Zeitz recently remarked during an earnings call, “It’s also attracting new riders, new customers to the brand that might not have considered Harley-Davidson before.”
The company recently announced that its electric bike business will be a stand-alone brand, LiveWire, though manufactured at Harley’s existing facilities. The name is a reference to the first electric motorcycle Harley launched a few years back, which hasn’t been the biggest sales success, and is not cheap (at roughly $30,000), but was the first step in an urban market that Zeitz sees as part of Harley’s own energy transition plan.
The first new LiveWire-branded bike is scheduled to launch on July 8, at the International Motorcycle Show, and while details have not been provided, some are starting to leak out.
In the traditional Harley-Davidson segment, Zeitz said the technology is not there yet in terms of range and longevity of ride for EVs to be a hit with its classic touring bike customer. Zeitz sees the LiveWire business a “huge opportunity” to build a bridge for the company into a long-term electric future.
“All the values that made Harley great in terms of adventure, in terms of freedom, you know, freedom for the soul, as we say, are also values that very much translate into LiveWire, although, you know, translated towards a different, more urban customer,” he said.
The electric bike market is growing, both in the lightest weight classes including scooters and e-bikes, and bigger direct competitors to Harley like Zero. But EVs remain a long way from making or breaking Harley’s top or bottom line.
“EV cycles are a rounding error at the moment,” Citi analyst Shawn Collins told CNBC earlier this year.
Analysts are divided on the EV plan, at least in the short-term, and whether Harley’s stock price has shot up too much as a result of belief it can succeed.
“Harley is an iconic brand but that means certain things to certain people and those things are hard to change, so if you want to give the electric bike room to breathe on its own, separating it from the legacy, from Harley, can be a good thing,” said Craig Kennison, senior research analyst of consumer and automotive at Robert W. Baird & Company, who remains positive on the company with a $50 price target (shares had hit a peak in the Zeitz era of $50 earlier this year, a doubling in the stock, and are trading at $43 currently).
The structure of the channel, from how electric bikes are sold to the servicing, will get harder to change down the road, and given the potential in the EV market, Kennison said getting it right for corporate and franchise dealerships should be a goal. But he said it is unreasonable to expect much from any new bike introduced this year since the team running the stand-alone EV business is still so new and the product development cycle barely begun.
“Ultimately, in the next 100 years, it will really matter to get this right,” Kennison…
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