Electrification Loses Spark with Motor Company
Tricky position enables advancement, while promoting change.
Clear Drive
'Caught between a rock and a hard place,' goes a long way to illustrate Harley-Davidson's relationship with electric bikes. Acknowledging the Motor Company's unavoidable trajectory, CEO Jochen Zeitz stated, “Electrification is a given,” at the CNBC Evolve Global Summit in July 2021. The conclusion might be clear, but the drive to get there has lost its spark as of late.
Growth Disruption
Zeitz' full statement was, “Electrification is a given. The future will be electrified also in motorcycling. We want to lead in electric.” Under the banner of Transforming Companies for the Future, CNBC's virtual summit had little to do with riding Harley-Davidsons, but everything to do with achieving success and growth in an era of disruption while embracing new technology.
Sales Slump
Sustained growth has been a critical Motor Company focus for quite some time. At the core of the issue is 'secular decline,' the term used to define Harley-Davidson's aging demographic and the overall slump in global motorcycle sales. It is a common market problem, shared by all other manufacturers, but one especially poignant for the Milwaukee headquarters.
Decline Answer
Quick to dismiss the 'aging-out argument, Zeitz elaborated in the follow-up CNBC interview, Electrification is a given...but HOG's success in EVs is less certain. He explained, “Every business you're in has a consumer, you need to constantly innovate and excite your consumer about your brand, about your product, and I don't take it as an answer that, you know, you are on a secular decline.”
Reassuring Share
Zeitz continued, “Of course your existing customer gets older, but you have to make sure as a brand that you're bringing new people into the sport, into riding, into the experience.” For those concerned that their beloved Ultra Glide will soon reassemble a cordless appliance, Zeitz had some reassuring words. He stated, “It's all about desirability. It's not about market share”
Morphed Subsidiary
The path to electrification might already be a given, but it's on the sidelines at Harley-Davidson. Released in 2019, the LiveWire was a radical departure for the Motor Company. Met with mixed reactions, more so about the pricing than the performance, the LiveWire has since morphed into its own entity as the LiveWire One, an arms-length EV subsidiary of Harley-Davidson.
Cycle Error
As a benchmark achievement or 'halo' product, the Live Wire represents what Zeitz called a “huge opportunity, a way to build a bridge...into a long-term electric future.” At present, electric bikes are far from affecting Harley-Davidson's bottom line. Citi Financial's Shawn Collins summed it up well, by stating, “EV cycles are a rounding error at the moment.”
Fueled Change
José Muñoz, CEO of Hyundai Motor North America, addressed EVs in a recent Fortune magazine article, insisting that alternative fuels, not just electrification, be part of the future equation. Harley-Davidson's focus on core consumers makes sense. It enables short-term gain, critical to advancement while preserving desirability. It is a tricky position, but one that will enable change—however that will be fueled.
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