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Since its founding in 1903, Harley has become synonymous with American road culture, and its "chivalry" has influenced generations and made it a symbol of the motorcycle brand.
But as the wave of electrification draws nearer, Harley's smoky exhaust pipes seem out of place. Launching electric motorcycles, establishing independent brands and then splitting up to seek listing are all things that go with the flow and have to do.
But without the roar of the engine, the fans did not buy it, and even accused Harley of "deviance".
Sprinting to the "first share of electric motorcycles", can it save Harley?
Sprint "Electric Motorcycle First Stock"
Harley-Davidson, a veteran U.S. motorcycle maker, announced Monday that it would spin off its electric vehicle business, LiveWire, through a merger with the Special Purpose Acquisition Company (SPAC).
It is understood that LiveWire was split from Harley in July 2021 and named after Harley's first electric motorcycle, LiveWire One. The LiveWire One has a range of about 146 miles when riding in the city and can be quickly charged in 60 minutes.
According to the announcement, the "shell" that LiveWire will borrow is AEA-Bridges Impact (IMPX), and the value of the company after completing the merger is estimated at $1.77 billion, and LiveWire can receive $545 million in cash.
After trading closes in the first half of next year, LiveWire's shares will be listed on the New York Stock Exchange under the ticker symbol LVW. Harley-Davidson will continue to own about 74 percent of the new company, and SPAC shareholders will own about 17 percent.
Once listed, LiveWire will become the "first share of electric motorcycles" in the US stock market. Harley-Davidson said it expects LiveWire to raise about $545 million net from its listing and plans to use that money to invest in product development and improve its manufacturing and distribution capabilities.
Fueled by the news, Harley-Davidson shares surged nearly 20 percent at one point after opening on Monday, closing up 4.7 percent at $38.54 and a market capitalization of $5.93 billion.
An unprecedented crisis
Since its birth in 1903, with its V-shaped twin-cylinder motorcycle and the classic orange strip shield logo, Harley motorcycles have become the aspiration of countless people and have become synonymous with American road culture. However, after entering the new century, with the increasing approaching wave of electrification, this century-old well-known motorcycle brand that once had unlimited scenery has encountered an unprecedented crisis.
In 2019, Harley Motorcycles experienced a 16-year trough in sales in the United States, and 12 consecutive quarters of declining sales forced the company to limit motorcycle production to avoid price discount pressures and protect profits. In terms of sales, Harley motorcycle shipments in the United States fell to at least a 20-year low that year, and global shipments were the lowest since 2010.
It was also in that year that Harley launched the first electric motorcycle, the LiveWire One. Matt Levatich, then President and CEO of Harley-Davidson, expressed his interest in electrification, "As part of our ten-year strategy, we reaffirm our commitment to building the next generation of Harley-Davidson motorcycles, which includes active investment in electric vehicle technology, which we firmly believe is the dominant form of the future of motor vehicles."
However, the final result did not go as expected, because the price of $29799 was too high, resulting in this high-performance electric motorcycle not to be sold. Compared with the traditional Harley model, Harley's loyal fans do not buy electric motorcycles, and even think that Harley's move is deviant.
After the outbreak of the new crown epidemic in 2020, Harley has not escaped the impact of the global economic downturn. In the first quarter of 2020, Harley suffered a serious decline in production and sales, and its profit fell by 45% year-on-year.
At the same time, John Olin, the CFO who had served Harley for 17 years, resigned, followed by the departure of CEO Matt Levati, and the change in senior personnel made the company's market value almost cut.
In August 2020, Harley-Davidson, mired in operational and financial mire, had to take a series of restructuring steps: replacing the CFO and planning to lay off 700 employees worldwide.
However, a series of restructuring measures seem to be ineffective, and Harley-Davidson is still in trouble. According to the financial report, in 2020, the company's revenue was $4.1 billion and net profit was only $1.3 million, a sharp contraction from last year's 424 million. At the same time, motorcycle shipments for the whole year also fell by more than 30%.
The vent is also the crater
In order to reverse the downturn in sales, Levati focused on a number of new products, including pure electric motorcycles. After Levati's resignation, the board hired former Puma's chief brand officer, Johan Zetz, to take over as CEO, and after taking office, the fierce Zetz decided to adjust his strategy.
Zetz decided to focus on markets and products that drive performance growth in terms of profitability and growth, and optimized the parts supply chain in terms of organizational structure, adjusting the cost structure and operating model.
At the same time, he simplified the complex hierarchy of management and increased efficiency. In addition, Zetz also plans to acquire a children's electric bicycle company, open up a product branch for young consumer groups, and make more attempts for the company's transformation.
Earlier this year, Harley unveiled LiveWire's first electric bike, priced at $22,000, for younger, greener cyclists. According to data from an investor report, cited by CNBC, LiveWire expects e-bike sales to reach 100961 by 2026.
Although many changes have been made, in the eyes of many people in the industry, the current Harley-Davidson is still facing a multi-faceted crisis, such as the grasp of new trends, the company is at least three years behind.
For the split electric motorcycle business listing and future plans, the Beijing Business Daily reporter contacted Harley, but as of press time has not received a reply. In the view of Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, Halley has its brand advantages, but the price is not acceptable to most ordinary people, and the maintenance and replacement parts are also expensive and more prohibitive.
Yan Jinghui further analyzed that the era of electric vehicles has been the trend of the times, motorcycles in addition to very few multi-purpose vehicles containing off-highway nature, short and medium distance accounted for the majority, coupled with the tram has a huge acceleration advantage, expensive large-displacement cars will be less and less. In a way, Harley is about to enter a very crowded market. For example, BMW is producing electric bicycles and motorcycles, and companies such as Audi, Mercedes-Benz, and Ford are also involved.
Of course, there are also people who believe that Harley will become a beneficiary in the case of rising valuations in the electric vehicle industry. For example, Rivian, an Amazon-owned electric vehicle maker, was valued at $100 billion on its first day of listing. Earlier this year, Rivian completed one of the world's largest initial public offerings, surpassing Ford and General Motors at valuations, and even volkswagen at one point.
According to Craig Irwin, an analyst at Roth Capital, "many traditional OEMs (original equipment manufacturers) with emerging eviction businesses could clearly enter into similar spin-off deals."
Reporter 丨Tao Feng Zhao Tianshu
Image source 丨Visual China, OneTu.com, Harley Motorcycle official website screenshot, etc
Editor 丨 Zhang Yajing