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Monday 15 April 2019

Comment by Editor-in-Chief, Robin Bradley

Is the Future a Hybrid of Mixed Platforms?

The rumors surrounding Harley's MY2020 announcement later this year are mixed, but mostly suggesting a 'holding pattern' of paint, accessory and possible tech changes.
With 2020 production validation due to have been underway by now, I'm hearing that an extension of traction control may be on the cards, with the inevitable resulting reconfiguring of some components.
With LiveWire set to debut before the end of the year, it would appear (and it is logical) that at this stage Harley is already looking way beyond the impact that the MY2020 announcement will have on stakeholders (all stakeholders) for their salvation, in the hope that they are doing enough to keep the sharks from circling any closer.
There's no question that Harley needs a good spring and summer selling season though, because with 4Q 2018 showing them barely breaking even, budget for the dividends and buy-backs that have been the primary shareholder value tools has to be running dangerously low - especially at a time when they are looking to self-finance the 'More Roads' objectives from house-keeping.
The evolution of the new model strategy outlined in 'More Roads' will still have three to five years to play out before it can realistically be expected to have positive balance sheet trickle down. Harley is still facing a huge timing deficit.
The recent announcement of the StaCyc children's mini E-Bike acquisition is an ostensibly logical and 'righteous' step, one that plugs an entry level gap that allows the Bar 'n Shield to be indelibly associated with E-Bike opportunities for new generations as they age with the brand.
However, it also shows just how deeply Harley is leveraging its interim future, its ability to traverse its timing deficit gap, on a market that everyone from Scott Wine, CEO of Polaris, on down sees, at this stage, as one that is all cost with no proven long-term benefit as yet.

“huge timing deficit”

In this regard, the European experience is not helpful. The new model registration statistics from EU markets for 2018 are chilling in terms of placing Harley's LiveWire ambitions in a real world context - less than 8,000 units were registered in a market of some 350m riding age consumers that is, theoretically, at least a decade ahead of the United States in terms of its acceptance of the E-Bike message.
It is to be hoped that there isn't some kind of 'Darkside' Force that dooms everything that Harley touches in E-Bike terms to be problematic. Having partnered with two now defunct E-Bike businesses in the shape of Mission Motorcycles (the original LiveWire prototype) and Alta Motors, let's hope that a perfectly promising project such as StaCyc doesn't go the same way.
With Polaris having chosen to not capitalize, yet, on the investment it made into certain Brammo assets some five or six years ago, and with news that BRP, who are known to still be lusting after a position in the motorcycle industry, recently reported to have acquired certain remnants of Alta Motors, it would appear to be a space worth watching regardless of the realistic possibilities for returns on investment.
Much of the rest of the Brammo E-Bike assets were acquired a couple of years ago by diesel engine manufacture Cummins. Personally, I still find it of interest that Cummins CEO and Chairman Tom Linebarger, who would have signed-off on that acquisition, is a non-executive director on the board of Harley-Davidson. Also, that former Harley CEO Keith Wandell is currently serving as Chairman of the Board at a rejuvenated Exide Technologies. Is Matt Levatich cultivating his own personal E-Nostra?
Maybe the lens through which I am eying the glorious sunlit uplands of mankind's brave new electric world are tainted by cynicism - either way I can't help thinking that viewing the 'Rush-to-E' through rose tinted glasses is premature.
I had the pleasure of a conversation with one of the industry's genuinely 'smart guys' 18 months ago - Stefan Pierer, the majority owner and CEO of KTM Motorcycles. KTM is embracing E-Bikes, and that of itself is a sign of sorts, as pretty much everything that KTM touches currently turns to gold.
His company made and sold over 260,000 KTM and Husqvarna motorcycles in 2018 and is on course for a self-imposed target of 400,000 by 2022. His view is that yes, society needs to address the issues arising from emissions, but that the future is hybrid, not pure electric.
Maybe the future is one of mixed portfolios of platforms, each specified for the task, replicating the way that a dizzying array of internal combustion engine solutions have themselves been refined for their tasks.
This is a sentiment echoed by Hugh Charvat, the recently ensconced new CEO of MAG, when I interviewed him in Texas in January. His is a largely automotive and motorsport background, and he too sees a mixed portfolio future in which gasoline still has a role to play.
If the colossal investments that both Bosch and Audi are making in bringing 'clean and green' synthetic gasoline trial production plants on stream in Europe this year work out, then maybe those who are saying that the story of our transition from gasoline dependency is still at an early stage, we think are right.
Then there is the issue of charging infrastructure and capacity for an entirely electric road transport fleet, and the need to meet its power needs from renewables if the objective is to be met.
Perhaps, with the benefit of hindsight, 100 years from now the times in which we are living will be seen as being more like the way the era of transition from horsepower at the end of the 19th century to the fledgling automotive culture of the early 20th looks to us now.
Those who think they have all the answers invariably do not. In fact, they generally haven't even understood the questions.
It may be that history will judge Harley's rush to 'E' to have been an act of perfectly timed genius. Maybe, by the end of this century, Harley-Davidson will be the global god of future-facing transport commerce - an all-encompassing future status the kind that Asimov created for his fictional global superpower 'U.S Robots and Mechanical Men Inc.' A future in which Black and Orange is the color of all future transport solutions? On the other hand, maybe not.