The Harley-Davidson motorcycle, with its unmistakable growl and rumbling engine, is without a doubt an iconic symbol of the American outlaw.
But Harley’s most recent announcement might come as a shock to those who love the loud roar of the traditional hog engine.
Simply put, America’s favorite motorcycle is getting a complete electronic makeover.
On January 30th, the Milwaukee-based Harley-Davidson, Inc. (NYSE: HOG) announced increased its investment in electric motorcycle technology and a ramped up launch schedule for its first production electric ride.
There’s no word on the new electric motorcycle’s name, style, battery size, or driving range per charge, but the new motorcycle is targeted to launch within 18 months.
And even though the specific details of the promised electric ride are still being kept under wraps, we can look to Harley’s widely successful 2014 LiveWire prototype for possible hints.
It’s likely when Harley launches the real deal electric motorcycle in mid-2019 that some of LiveWire’s components and overall style will carry over.
The LiveWire concept tour in 2014 had what appeared to be an aluminum frame, adjustable rear monoshock suspension, and reversed front forks. The riding position and appearance were similar to current sports bikes.
With a reported 50-mile range per charge and estimates of 74 foot-pounds of torque and 74 horsepower from a 10 kilowatt-hour (kWh) battery with a longitudinally-oriented motor, the LiveWire could be suitable for bar runs and short commutes but would be quite inconvenient for those long soul-searching rides across the country.
Although no inside information about the new electric model has been released, the 2019 production will likely have more than a 100-mile range per charge.
Maybe a base model will have a short range and add-on optional battery modules for increased distance, which is how privately held competitor Zero Motorcycles offers its electric motorcycle lineup.
Harley’s latest decision comes at a time when the electric motorcycle market is small but growing.
In a 2016 report, market research firm TechNavio projected a 45% growth in the electric motorcycle industry by 2020.
This stands in stark contrast to the deepening decline in U.S. traditional combustion engine-motorcycle demand, with industry retail sales down 6.5 % in fourth-quarter 2017.
Harley’s sales fell 11% in fourth-quarter 2017 and 8.5% for the entire 2017 year.
However, the company’s chief financial officer John Olin said the company will spend anywhere between $25 million to $50 million per year over the next several years on electric motorcycle technology.
The company’s goal is to be the world leader in the electric motorcycle market.
Alan Stulberg, the founder of Revival Cycles and a well-respected authority within the motorcycle community, is cautiously optimistic of Harley’s new endeavor:
My feeling is that it will be well-received by the public and new buyers, which Harley direly needs, but not by people who normally ride a Harley. It’s awesome. It’s necessary. The more people who enter the market, the better.
This will only increase the respect the brand gets. At least finally, they can say that Harley does low-tech heritage and it does cutting-edge technology. If Harley can do that, it’ll save the company.
Harley executives will market the production version of the electric bike to a broad spectrum of buyers, basing their plan on research from the 12,000 people who rode LiveWire during the 2014 trial.
The overall motorcycle market will be facing some tough headwinds in the coming years. Sales have slowly started to recover in the U.S., but they are still less than half of what they were for peak bike sales in 2016 with 1.6 million units sold.
The industry as a whole is struggling to attract new riders, despite the onslaught of smaller, less-intimidating machines from Ducati, Honda, and even Harley, which for decades has been king of the road with its loud, hulking cruisers.
But electric motorcycles are a promising option because they hold futuristic appeal and aren’t as big of a challenge to learn for new riders because they don’t require transmissions — unlike traditional bikes with their tricky clutches and loud, heavy motors.
Best of all, electric bikes are pretty fast, too.
There could be something else on the way for Harley, as well. Fourth-quarter 2017 earnings weren’t great, and they sent the stock into a swoon last Tuesday.
The markets haven’t been kind to HOG. Over the past 12 months, shares are down over 12%, lagging the broader exchanges.
However, Harley’s challenges are well-understood, so some futuristic position is certainly called for from management.
It seems to work for Tesla, and it’s definitely begun to work more recently for GM, which outlined a big electrification push just last year.
To be clear: Harley is still making money and returned a net income of roughly $520 million on almost $5 billion in sales last year. Stock dividends even went up a degree from 2016.
But sales are down and an electric motorcycle is a proactive move to increase business.
Harley isn’t alone in seeing its business fading while millennials and other riders, who are younger than its traditional customer mix, show little interest in motorcycles.
But Harley is the leader among all motorcycles and is reaching out to younger markets to build its slowly diminishing consumer base.
Electric motorcycles aren’t a guaranteed solution to sliding sales. But combined with other tech developments, increased safety, and a smaller carbon footprint, it’s a step in the right direction for attracting a new crowd.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today