The One Overlooked Detail on the Harley-Davidson Livewire

06/20/2014 @ 10:44 am, by Jensen Beeler38 COMMENTS

The One Overlooked Detail on the Harley Davidson Livewire harley davidson stock price june 19th HOG 635x499

At the time this article will be posted, it will make the sixth article relating to Harley-Davdison’s Project Livewire that is on the Asphalt & Rubber homepage. The Motor Company’s first foray into electric motorcycles made its way into not only every motorcycle publication around the world, but it also hit mainstream media like wildfire.

A topic more heavily saturated at this point than Kentucky Fried Chicken, and yet everyone of the publications carrying the story, including A&R, overlooked one critical thing about Project Livewire’s launch. The attached graphic is the five-day stock price of Harley-Davidson (NYSE:HOG), and that large spike is the Livewire’s unveiling time.

We forget that Harley-Davidson is a publicly traded company, and thus its first duty is to create long-term value for its shareholders. Going public is the holy grail for businesses out here in Silicon Valley, but an IPO can also be a curse as well — one that binds the hands, steers a ship from darker waters, and other metaphors for risk-aversion.

While Harley-Davidson has an endemic culture of conservatism, one has to at least levy some blame for the company’s resistance to change on the duty that exists for Harley-Davidson’s shareholders — and it’s easy to forget that.

Just like the number of commenters that tl;dr’d their way to the bottom of many Livewire comment threads, quickly judging and bench-racing the machine’s pre-production demo-only form before them, we too the media rolled out our mats, and jumped to our conclusions about what this all means, without recognizing the facts that were in front of us.

The collective consciousness is of the romantic opinion that Harley-Davidson has shown its ability to break free from the chains of its sacred cows, and once again become a true innovator. We were quick to compliment Harley-Davidson’s brave move to embrace a younger demographic, and possibly alienate its core stakeholders.

We also generally forget that while Harley-Davidson accounts for roughly half of the US motorcycle market, the Bar & Shield brand is entirely an outlier in the motorcycle industry.

This is a company that is lifestyle-focused, not product-driven. While we sit around our keyboards debating 50 miles of range, 74 peak horsepower figues, and so forth, we are missing the point that Harley-Davidson riders have never much minded these facts and figures, and never much cared for the latest technology in their two-wheeled life.

As long as the motorcycle had The Motor Company’s logo on its tank, and came with admission to “the club” that Harley-Davidson was selling, then all was good in the world.

We need to rapidly come to the truth of the matter, which is that Harley-Davidson isn’t going to compete with any of the established brands that release an electric motorcycle in the future, and the Milwaukee company certainly isn’t going to go head-to-head with the niche EV players in this space. That simply to-date has not been Harley-Davidson’s game.

So the question I leave you with is a simple one: Has Harley-Davidson really changed? The product is different, and the secret handshake to get past the doorman may have just changed, but are we really expecting the most iconic motorcycle brand in the world all of a sudden to change its stripes and order of operations?

If that was the case, then the stock price chart above would surely have plummeted yesterday morning, because no Wall Street investor is going to show confidence in that radical of a change to a company’s business model.

Now that the media hype is winding down, and we begin to turn our attention elsewhere this weekend, let’s think about what Project Livewire really means for Harley-Davidson, and the motorcycle industry as a whole.

It’s still exciting. It’s still news worthy of all the press and publicity it received. But, it’s also still the same…and that’s not necessarily a bad thing. I, for one, am curious to see how Harley-Davidson creates an electric lifestyle. Three years ago, I would have called this a farce to prove shareholders wrong. Today I’m not so sure, but let’s be sure to still call a spade a spade.

Source: Google Finance

Comment:

  1. Dan says:

    Beeler, didn’t you once mention that you were a shareholder or worked for HD at one point? Not throwing barbs here, just asking.

  2. With the way motorcycle journalism is going, those are fair questions to ask Dan. I have never worked for Harley-Davidson. I have never been paid by Harley-Davidson. And, I have never owned stock in Harley-Davidson.

  3. Chris Brandow says:

    I would think that this is primarily a reflection that electric powered transport is steadily becoming a mandatory component of any major consumer vehicle manufacturer’s product line today.

  4. Chaz Michael Michaels says:

    Judging from Jensen’s response–Jensen works for HD, gets paid by HD, owns HD stock, and his middle name is Harley. This is based on Lance Armstrong questioned on steroids, Bill Clinton questioned on M. Lewinski, Pete Rose questioned on gambling on baseball, and O.J. questioned on the not so mysterious death of Nicole Simpson and Ronald Goldman. He’ll deny any connection to HD until spy photos surface.

    All nutty accusations aside–Harley’s electric bike is a master stroke. It is pure genius and it will work. Japanese manufactures are tripping over each other trying to get their electric bikes ready for market.

    It’s a sign of the times and it’s sad for me. I love the internal combustion engine.

  5. Andrey says:

    “We forget that Harley-Davidson is a publicly traded company, and thus its first duty is to create long-term value for its shareholders.”

    Exactly the problem with most companies these days and the reason for many modern economic woes.
    As a business owner and consumer i look at both sides of the equation.
    When the product is the sole focus of the company, it’s success in the marketplace will bring the returns to the shareholders.
    The preoccupation with profit and shareholders returns diverts energy from the sole purpose of the company: TO SATISFY A CUSTOMERS NEEDS in a profitable manner.

    Pretty simple but a concept lost on many corporate managers.

  6. smiler says:

    A&R is a great blog but 6 articles on a new bike. Alright Hog are trying the 21st century for the first time but even so…….

    They would do well to drop one of their 19th century engines into that bike, it looks quite good as well.

  7. Dan says:

    it’s all armchair quarterbacking until vaporware goes on sale. Few EV concepts have gotten that far, and only a handful with any degree of sucess.

  8. protomech says:

    “So the question I leave you with is a simple one: Has Harley-Davidson really changed? The product is different, and the secret handshake to get past the doorman may have just changed, but are we really expecting the most iconic motorcycle brand in the world all of a sudden to change its stripes and order of operations?”

    Uh, no.

    There is no product. Yet. This is a concept.

    Changing stripes? Harley will continue to sell 50 year old technology to old men that want to feel 50 years younger. As long as their money is good, Harley will produce product for them.

    But eventually – perhaps by 2016, perhaps later – Harley will add electrified vehicles to the mix, not replace existing bikes. This is a feeler to see what that will look like.

    There’s an investor relations video where Harley is quick to assure investors that the status quo is not changing and that they will continue to produce bikes as they have been.

    http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-livewire

    Is it a marketing exercise? Sure, that’s one component. And given the amount of digital ink spilled over the bike, they’ve been successful beyond their wildest dreams.

  9. dan k says:

    Not to be a wet blanket, but that graph doesn’t show a “spike” in anything. HD’s average price in the days leading up to the announcement looks to be around 69. The high point after the announcement is 71, and it quickly returns to ~70. A gain of a point or two on a stock that trades at 69 is an increase of 1.5-2.8%

  10. Seth says:

    I was really impressed and excited to see this bike. Then June 19th actually came around, it was not a new motorcycle by an old American company but a “project”. After hearing the Harley representatives in the released video carefully make sure to say “when and if” we move forward with this “project”. All this “project” was was a hand full of bikes going around the country to see how people felt about it? When had HD ever care what people who ride motorcycles had to say about motorcycles? Other than maybe people who ride Harleys but you know no harley rider will want anything to do with “Project Livewire”. That’s when I heard the other shoe dropping and realized…This bike will never see production. This is a PR campaign pure and simple. HD wants this hype to bring in new and young(er, and by young I mean under 40) riders in to showrooms not to buy a cutting edge electric bikes but to show them ICE bikes using 50 year old technology or smaller more user friendly bikes built in India. And the motorcycle press is falling for it hook, line and sinker. I hope I’m wrong, I really would love to see the first mainstream motorcycle company to take on electric bikes to be American, but Hardly Davidson never fails to disappoint and take the safe fiscally safe way out.

  11. Jorge says:

    As Dan K said, it was roughly a 1%-2% “spike” depending on how you group it. Stocks can move 20% in a day if something interesting happens so this isn’t worthwhile news to anyone, even those who trade for a living. This is a motorcycle blog, stick to what you know.

  12. kww says:

    Ha ha, Harley Davidson Electric Motor Company…
    I think Harley is searching for ways to expand their consumer base, so stupidly, since they dropped Buell from their catalog.

    Harley sells most of their bikes to caucasian men >35 years old
    http://investor.harley-davidson.com/phoenix.zhtml?c=87981&p=irol-demographics
    There’s icing on that statement, as I think the median age is MUCH MUCH older.

    And those old white men are going to stop buying paperweights in 10 years, and Harley will be left in the cold with a product line sold around a singular lifestyle that most demographics just won’t buy into.

  13. Mustafa Ibrahim says:

    Some research says that Zero sold 2,400 units last year. I figure Harley can do at least that, and with a larger corporation you can bring costs down. Also, you guys are all forgetting that the EU will soon be imposing “carbon limits” on motorcycles. Though I am an Indian and Victory guy, this is a brilliant move by H-D to perhaps reduce their “corporate” carbon emissions. If those limits are spread over the product line, having an electric motorcycle in the lineup can only help. This bike might not sell in great numbers here (but who knows?) but I bet it will really be popular in the EU. And you can bet that when the EU imposes carbon limits, the California Air Resources Board won’t be far behind. But the range will surely have to be greater than 50 miles/80 kilometers.

  14. irksome says:

    Best be developing an entirely separate dealer network.

  15. aaron says:

    the one overlooked detail is that harley does not, and will not sell EVs in the near future. this is a gimmick to bait and switch folks that show up for a testride onto the street 750, the bike that HD really markets to the crowd it hopes the livewire will attract during the tour. I like the bike, but am severely disappointed in the media for hyping it so heavily. the amount of new engineering involved is likely negligible, with motors and battery packs being readily available. that blip in share price is the real purpose of this bike. I’d love to know just how many will be produced for the livewire tour. 10? 25? the GM Ev1 might be considered an automotive equivalent, except gm made 1100 of those. according to the hype at the time, general motors was the most forward thinking company out there, and there would be one in every driveway by now…

  16. Jw says:

    This is all positive

  17. Jw says:

    I have been critical of the brand for many years, but this has humbled me..

  18. DownTick says:

    Perfect short sale opportunity. Sell the rip. Where does it go after the news fades into summer sell off doldrums? Back down a few percent, I’d gather. Collect it and move on to the next thing.

  19. paulus says:

    Any news is likely to improve visibility and interest in the stock.
    It is interesting that the hype came at the end of the second quarter…. a few extra share dividends for management?
    It is after all a business.

  20. Brad snyder says:

    if it looked like the sportster ….maybe …but this is to sporty for the leather chaps crowd…no chrome, cant put ape hangers on it…Livewire will go the way of the XR1200 and Buell

  21. FranktheTank says:

    All of this talk about oh, its not a real Harley and, the real Harley owners won’t buy it makes me smile. I think thats the point. I honestly think HD ditching Buell really sucked, just as Buell was making some proper kick-ass bikes in the end. But HD did the same thing Ford did when the recession hit. Ditch pretty much everything but the core brand to keep themselves afloat. I get that. This is also only the second Harley that I even thought about wanting. (XR1200 obviously) But honestly all of that is pointless. I think this could work out very well for HD because everyone knows they need a new younger crowd just like BMW did a few years ago. Look how successful the S1000RR was for that company. Speaking of the zie Germans, Harley could use the same strategy that Porsche is using. When you think Porsche you think 911 Carrera right? Well they are basically a sedan and SUV maker that just so happens to sell nice sports cars as well. The overwhelmingly majority of cars they sell are the Cayenne SUV and with the new smaller SUV and smaller Panamera coming out soon. They just keep giving people what they want, very profitably, while still maintaining their heritage. The bar and shield can do that too, as long as they keep their same three frames split into like 20 different bikes to keep the “real” customers happy.

  22. JoeD says:

    Take away the mindless adoration of the brand and what is left? Archaic internal combustion engines and an electric scooter with no market. Those folks are laughing all the way to the bank.

  23. Muahahaaaa says:

    TLDR

  24. Jw says:

    I have followed this wire on A&R closely. I find it amazing that for a long periods of time We all took shots at the brand, then HD comes out with:
    Liquid cooling
    Street 500 and 750
    Livewire
    All in a short amount of time. Credit must be given for these accomplishments. Does anyone else see this? HD is no longer just focusing on the guy who has some money, ego and is north of 50 years old like me. Truth be told they now understand the old way will not work in the future when my generation is gone. We will see more of this in the years ahead. This begs the question: name another motorcycle company that has made similar steps with new products in the last few years?

  25. Craig says:

    I am a stockholder and own 2 Buells, and 2 Harleys. Personally I have been waiting for Harley to show that they are looking towards the future and now I see that they are. I have been very interested in a Zero but the dealerships are too few and far between but Harley dealerships are everywhere. If they can position quick charging stations for these electric bikes at every dealership and fill in the gaps at strategic gas stations then they will sell these bikes like crazy and I’ll buy one for sure. Electric vehicles would take over if electricity fillup stations were everywhere just like gas stations and why not at every gas station. Way to go Harley. I would love to be able to travel with on an electric bike and if it is a Harley then all the better.

  26. irksome says:

    @Jw: Every other brand expanded their lines to include cruisers, sportbikes, nakeds et al 20-30yrs ago.

    I haven’t owned an air-cooled bike since I cafe’d out an SR 500 Yammie in the mid-’80s.

    I’ll give them credit for an e-bike when I see it for sale and getting dealer play in the showroom, unlike Buell, the V-Rod and XR1200. And I’ll be surprised if they don’t set up a separate dealer network for this, if it goes into production. They do know their market and what they’ll tolerate.

  27. Hayabrusa says:

    I think Beeler must have had too much time on his hands, and needed to drum up a story! It makes ‘some’ sense, but is really a yawner. As far as the Object of the story – if the range were doubled (at least), and the price reasonable, I would seriously consider buying one. It’s a good-looking bike, and I wouldn’t be caught dead on any V-twin Cruiser – – this is different enough to suit me.

  28. Faust says:

    Jw, name another company that has diversified their lineup and marketed to new segments? How about Triumph with the Daytona 675R and Tiger Explorer? BMW with the S1000RR and S1000R, or adding liquid cooling to their big bikes. Kawi with the Ninja 300 and Ninja 1000, Honda with the CBR 250 and 500, as well as the new 700 range. Even Ducati with the Diavel, MTS1200, and new liquid cooled Hyper and Monsters. Every manufacturer has made major moves in their lineup (even Suzuki with the new Vstrom). What Harley is trying to do is admirable, but hardly better than everyone else. Everytime Harley has come out with a bike that appeals to customers outside their traditional base, the dealers haven’t supported it. Harley guys don’t seem to care for change very much, and the dealers treated the Buells like a nuisance that distracted them from their real bikes.

  29. a tom says:

    Yes, as has been pointed out, this was a ~1-2% blip in HD’s stock price.

    From another perspective, though, that means that just the announcement of this experiment generated an additional perceived value of $150-300m by market cap, even with the market’s view on the uncertainty of HD’s dedication to this project built in…

    Hopefully, this at least spurs the other manufacturers into much higher levels of investment into electrics.

  30. asvxfsdfv says:

    no matter what you say, a bike that can only go 35 miles (i drive an electric car and i know this – if they say 50, its 35) is a NO GO regardless of any and all other considerations.

    full freaking stop.

  31. Jw says:

    Great comments.

    Would this manufacture show off a bike like this and then abandon the project all together in order to bring in some kind of alterior motive?

    HD surely knows that “screwing the pooch” in light of Buell wounds still healing would not be in anyone’s best interest.

    I bet the final version will have better range and price under 15k

  32. Faust says:

    JW

    I agree. I don’t think there’s anyway they would make this much noise over an electric and then not bring it to market. I just wonder if this will be a successful endeavor. I mean it’s always nice to get new customers riding your products, but there’s not much tie in with other models in their lineup or the lifestyle/image they have projected for so long. What I mean by that is, the while point of getting people on your bikes ( like the new street 500 and 750 that you mentioned), is to make them a lifelong customer of the brand. I can totally see a street 750 rider eventually moving on to a bigger Harley, as well as being accepted at Harley events, group rides etc.

    Can you honestly tell me that the type of person attracted to an electric would then decide to upgrade to a big V-Twin that shakes like crazy and makes a ton of noise? I wonder. Also, would these bikes be embraced by the current Harley community/customer base? Like can you imagine one of these bikes showing up to a Harley rally, and then having to leave to charge up? Seems weird.

    It’s always crazy when manufacturers start trying new stuff. It’s way more crazy when it’s an iconic brand with that lifestyle element. For example, I ride a Ducati 899, and “Ducati people” tend to react very strongly one way or the other. They either love it or they say it’s not a real Duc since it doesn’t have a trellis frame, SSSA and a dry clutch. Iconic brands evoke strong responses. It will be interesting to see how this plays out.

  33. LeeB says:

    “We forget that Harley-Davidson is a publicly traded company, and thus its first duty is to create long-term value for its shareholders.”

    A look back at HOG and you will see Harley has created long-term value. At least for me it has. I bought in 2009 @9.93/share. Show me another powersports stock with HD’s return over that time period and current PE and Yield. Never buy/sell stock on headlines and most times a long approach pays off. Of course you first have to define what “long term” is.

    As far as EV for Harley. All two wheel manufacturers are in some sort of EV development. As much as many don’t like the idea of E-bikes, there WILL be a solid market segment for them at some point at some price point. Any major manufacturer who has not or is not developing will be left behind.

  34. Lewis Dawson says:

    How smug, and dismissive, and frankly arrogant…

    “… while Harley-Davidson accounts for roughly half of the US motorcycle market, the Bar & Shield brand is entirely an outlier in the motorcycle industry. This is a company that is lifestyle-focused, not product-driven… As long as the motorcycle had The Motor Company’s logo on its tank, and came with admission to “the club” that Harley-Davidson was selling, then all was good in the world.”

    Exactly what makes H-D an “outlier” as it holds over 50% market share? And with each of the Japanese Big Four devoting substantial resources to the sincerest form of flattery… trying to imitate H-D products?

    What is this lifestyle being sold? Do you actually know any long-time Harley riders? I’m not a Harley guy, but I have known many, and done (non-motorcycle) business with many, and their lifestyles are as varied and normal as anyone else, on average. Any consumer company would prefer to be important to its customers, right? Even some lawnmowers are successfully branded products. Not to mention BMW, KTM, Triumph, Ducati, Guzzi, MV Agusta…

    Motorcycles, like ice cream and sex, come in many different flavors. I just don’t understand the Harleyphobic attitude. Are we really so fragile in our self esteem that we have some inner need to denigrate bikers who choose a different flavor from us?

    How did we decide that spec sheet peak horsepower and single-sided swingarms are the true secret handshake, and if you don’t get that you are unworthy and inferior?

  35. Campisi says:

    “How did we decide that spec sheet peak horsepower and single-sided swingarms are the true secret handshake, and if you don’t get that you are unworthy and inferior?”

    By realising that those things made motorcycles better at being motorcycles.

  36. Lewis Dawson says:

    LOL… I rest my case!

    Campisi, is there a mathematical formula for the relationship between peak hp, swingarm configuration, and penis size?

  37. crshnbrn says:

    You don’t need to have enough peak horsepower or a swingarm configuration to please anyone but yourself.

  38. JW says:

    Will the traditional Harley owners accept this bike into the group? Well…

    Considering the fact that most buy all manner of Chinese made accessories with the HD trademark logo and have no problem at all. I see this bike as long as it is a “Harley” being welcomed into various groups and events.

    I mean you could show up with an Italian made 1972 Sprint 350 and be welcomed because it is a part of the brand, it’s says Harley Davidson.