Harley-Davidson to Receive $89m IRA Grant to Expand LiveWire Production Capacity
As reported by AMD in June, Harley-Davidson has shuttered its Silicon Valley facility (Mountain View, California), relocating those corporate employees that it wanted to keep, and who wanted to relocate, to the pretty much empty Juneau Avenue Headquarters in Milwaukee, with product development centered again at Wauwatosa, Wisconsin, and production at York, Pennsylvania,
Mid-July saw The Milwaukee Journal Sentinel (and other media outlets) report that The White House had announced $89m in federal funding for Harley to expand its production facility at York, Pennsylvania (Springettsbury Township in York County) - specifically for enhanced LiveWire electric motorcycle manufacturing capabilities.
The funding is part of nearly $2bn in grants aimed at boosting electric vehicle manufacturing in Pennsylvania, Michigan, Georgia, Ohio, Illinois, Indiana, Maryland and Virginia - several of which are going to be key 'battleground' swing states in the upcoming U.S. general election.
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Most of the grants are aimed at the automotive and truck industries, including parts and batteries for electric SUVs and school buses. General Motors, Fiat Chrysler, Volvo and other carmakers are among the largest recipients of the grants so far announced.
"Harley will use its grant funding to upgrade the York plant to develop further and build electric motorcycles," said U.S. Sen. Bob Casey (D-Pa.), who championed the award. The funding comes from the Domestic Manufacturing Conversion (DMC) grant program, an Inflation Reduction Act (IRA) provision operated by the U.S. Department of Energy (DOE), which is intended to support domestic production of zero-emissions vehicles (ZEVs).
“In a world where demand for electric vehicles is only growing stronger, we have an obligation to ensure American manufacturers can compete on the international stage,” said Casey. “Harley-Davidson is one of America’s iconic manufacturers, and this funding from the Inflation Reduction Act will ensure it will be able to continue leading the global market in the years and decades to come. I will always fight for investments that support a strong, clean economy and continue South Central Pennsylvania’s legacy as a manufacturing powerhouse.”
The Inflation Reduction Act included a Casey-led provision to provide a “domestic content” bonus credit for companies that use American steel, iron and manufactured goods. In theory, LiveWire uses an all-American supply chain - though supply chain problems have been cited as being among the difficulties that have plagued the LiveWire project to date.
But then again, much about 'the LiveWire project' has been theoretical so far. Most egregiously, the electric motorcycle sales forecasts used by Harley in the prospectus issued to woo investors when they announced that it was seeking to separate the LiveWire brand into a Special Acquisitions Company (SPAC) in late 2021.
That prospectus proudly trumpeted that LiveWire would become the first publicly traded EV motorcycle company in the U.S. and cited what turned out to be predictably hypothetical production forecasts of over 7,000 units in 2023, some 15,700 this year (worth $385m in 2024, some $247m of that being motorcycle revenue, with $137m "Other Revenue"), over 53,000 next year and 100,961 units by the end of 2026.
Furthermore, Harley was projecting that it would be making around 190,000 LiveWire units a year by 2025, worth some $5bn total revenue a year. The gross margin on the project was forecast to be 18.6% by 2026 at a 6.1% EBITDA margin, with a long-term gross margin target of 25-30% at 15-20% EBITDA margin.
Having posted a massive "miss" in its 2023 Full Year filing, as of Q1 2024, LiveWire was reporting $5m in revenue (down 36%) from Q1 2023, for an operating loss of $30.6m (up 22%) on 117 units shipped - itself an 86% increase on the 63 units shipped in Q1 2023.
As recently as its April 24 Q1 filing, LiveWire was still forecasting unit sales of 1,000 to 1,500 units for FY 2024 at an "improving" operating loss of $105 to $115m.
At the time of writing (July 19, 2024 - just days before the LiveWire Q2 filing) - shares in the company were trading at $8.15, having launched at $7.18 at the end of September 2022. They hit a low of $4.85 at the end of 2022 and a high of $12.04 in July 2023. The SPAC 'flotation' had been slated to leave Harley owning some 72% LiveWire equity, but at present that figure is around 92%.
At the time of writing, neither Harley nor LiveWire have made any comments about the long-term plans for the future iterations of the modular 'Arrow' platform that will see LiveWire models increase in power and range and be developed in partnership with KYMCO in Taiwan. KYMCO remains an investor in LiveWire, having tipped $400m into the SPAC deal in 2021.
