LiveWire Burning Through Cash As EV Pivot Proves Costly

Problems Arise

Shortly after launching the LiveWire - its first-ever all-electric production motorcycle - Harley-Davidson decided to spin that name off into its own brand, which is slated to eventually offer a full lineup of electrified two-wheelers. Aside from helping it establish its own identity, Harley also wanted to raise funds for the brand, which it did by merging with a special purpose acquisition company (SPAC) to go public. However, things haven't gone quite as planned in the weeks since.

Photos: Harley-Davidson

Falling Short

According to Ride Apart, LiveWire has burned through a whopping $370 million in just a month after going public. Following its merger in late September, the company raked in $400 million from investors but has just a small sliver of that left now. It also fell quite short of the $545 million analysts expected LiveWire to net in its public debut.

Photos: Harley-Davidson

Bigger Stake

After raking in just $294 million from investors by selling shares, Harley-Davidson added $100 million of its own money to help prop LiveWire up, and now, it owns a whopping 90 percent of the company it created - quite a bit higher than the 74 percent it owned when LiveWire went public.

Photos: Harley-Davidson

Hypotheticals

This raises an important, question - should Harley have simply left LiveWire as part of its lineup, rather than spinning it off to generate some quick cash? After all, the very first bike that wore that name has been a slow seller by anyone's measure with its premium price tag and lack of traditional Harley sound.

Photos: Harley-Davidson

Common Practice

Of course, it's easy to say that this was the wrong decision in retrospect, but Harley still has a ton of faith in the future of LiveWire, as is clear from its massive investment in the company. It's also worth pointing out that such cash in-out flows are pretty common with SPACs.

Photos: Harley-Davidson

Increasing Scrutiny

SPACs have been under increasing scrutiny from the U.S. Securities and Exchange Commission (SEC) recently, which has stiffened its regulations on that particular practice after several high-profile failures in recent years, some of them related to EVs. Regardless, H-D brass doesn't seem to regret its decision one bit.

Photos: Harley-Davidson

Taking the Lead?

“If you look at other motorcycle manufacturers they’re sort of dancing around the discussion, like a lot of autos danced around that discussion when Tesla was winning,” said Harley-Davidson CEO Jochen Zeitz. “I’d rather take the lead and I think we have a unique opportunity, which is always [riskier] if you’re the first.”

Photos: Harley-Davidson

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