Why Harley-Davidson has to bet big on Electric Motorcycles
Updated: Aug 8, 2021
Harley have had a turbulent decade. Stumbling annual sales volumes since a peak in 2006, an ageing customer base, insufficient appeal to younger riders and lots of changes to top management in the company to break the downward spiral. One of Harley’s big bets to regain the growth rates they enjoyed in the early 2000s has been electric powertrains. Harley is betting big on electric bridging the gap for them and bringing in a new audience to keep the brand going for the next 50 years.
This strategy is slightly at odds with the traditional image of the company - loud, shiny, big engine bikes with lots of after-sales and service add-ons. Harley’s image originated from being the muscle behind the USA’s military motorcycle fleet in World Wars I and II. As the next disillusioned generation rebelled against the man, they looked at the open road as an expression of freedom - eternally encapsulated with Denis Hopper in 1969’s Easy Rider. Harley perfectly captured what motorcycles meant to Americans - freedom, liberty and excitement. The perfect investment for your savings - don’t give it to the man and the bank.
That brand image worked well (mostly) for half a century - perhaps too well, with infamous motorcycle gangs involved in illegal pursuits opting for Harley as their bike of choice.
With the financial crisis of 2008 came the end of a sustained period of growth and prosperity for Harley. As disposable income dropped globally, public sentiment towards the unjustly wealthy and the Financial Industry as a whole soured - a consciousness emerged. Although the impact was not immediate - it’s legacy is clear to see today. What is the most valuable car company in the world - Tesla. Who is the richest man in the world - Elon Musk (Well it flicks between Jeff Bezos and him dependant on Amazon and Tesla share prices). Where have the fastest financial investment gains in the last 5 years come from - decentralised crypto currencies. A new generation scarred by austerity policies inflicted on their parents now form the largest segment of the working/spending population and dictate the success/failure of companies. A traditional Harley-Davidson does not appeal to this generation on many fronts. Big, loud, inefficient engines are a turn off for the climate change conscious. The social irresponsibility of the motorcycle gangs that affiliate themselves with Harley is no longer ‘cool’, desirable or mainstream. And Harley’s have never been a practical choice of motorcycle - but the further division of motorcycles into increasingly more specialist functions (Adventure bikes, Trail bikes, Scramblers, Track bikes) has meant Harley’s core audience has become more segmented and smaller.
Off-road and Adventure segments of the motorcycle market (including BMW's GS1250 above) have seen consistent annual sales growth of over 10% per year over the last 5 years.
So it makes perfect sense for Harley-Davidson to try to establish a completely new line of evolution. Taking notes from the success of the likes of Tesla and Apple with their unique, dedicated retail customer experience. This is what the new generation that Harley needs to appeal to, demand and they vote with their wallets. From a practical perspective - it also makes sense to specialise the approach. Traditional Harley dealerships make as much or more money from parts, accessories, apparel and servicing than selling motorcycles. At least half of those channels are much lower revenue generating for low-maintenance electric motorcycles and bikes. So trying to sell electric motorcycles through traditional motorcycle dealerships is unlikely to work just as selling Tesla’s in a joint dealership with Chrysler, Ford and GM wouldn’t work.
In early 2021 Harley-Davidson announced it was launching a spin-off electric bicycle company Serial 1. Later in the year - after much speculation about the LiveWire being cut from the 2022 Harley product range - they announced the electric motorcycle division would also be spun off into it’s own company too, with a line-up of electric motorcycles that appeal to multiple market segments. The first of those motorcycles in the range is the modified LiveWire One with a more affordable price of $30,000 AUD. That brings the bike in line with Zero and Energica motorcycles with similar performance levels (their middle of the range bikes).
At GRID we think this is a good move for the old man of the motorcycle world. Brands like Ducati and Triumph have successfully appealed to new generations. Bikes like the T100 and the Ducati Scrambler have attracted a new, younger audience with design, practicality, pricing and marketing that captured that market segment - the Ducati Scrambler X Fasthouse collaboration being a perfect example (video below). Something Harley has struggled with over the last 10 years. Simply replicating those brand’s approach wouldn’t work for a company that produces motorcycles in USA - an expensive place for manufacturing. So developing a standalone electric motorcycle brand for the continued success of Harley makes a lot of sense. To us anyway!