Harley struggles to fire up new generation of riders with electric bike debut

CHICAGO - Harley-Davidson Inc is betting on electric motorcycles to attract the next generation of younger and more environmentally conscious riders to reverse declining US sales.

But as Harley ships its first "LiveWire" bikes - priced at $29,799 - to dealers, there is little evidence the 116-year-old brand is catching on with new young customers.

The problem lies mostly with this "super-premium" product's price. The bike costs nearly as much as a Tesla Model 3, and aims for a market that does not really exist: young, "green" and affluent first-time motorcyclists.

The sleek sportbike has been available for preorder in the United States since January. However, the bulk of the orders are coming in from existing and old riders, according to interviews with 40 of the 150 dealerships nationwide that are carrying the bike this year.

The dealers Reuters spoke with account for little over a quarter of LiveWire dealerships and are spread across Wisconsin, Illinois, Indiana, Ohio, Michigan, California, Nevada, New Jersey and New York.

Harley has for years failed to increase sales in the United States, its top market accounting for more than half of its motorcycles sold. As its tattooed, baby-boomer base ages, the Milwaukee-based company is finding it challenging to woo new customers.

In 2018, Harley posted the steepest sales decline in four years in the United States. US sales are tipped to fall again this year.

The heavyweight motorcycle maker's stock price has declined by 42 percent in the past five years. By comparison, the S&P 500 Index has gained 47 percent.

PRICE BARRIER

When Chief Executive Officer Matt Levatich announced LiveWire's launch last year, his hope was the ease of riding motorcycles with no gears or clutch would help attract young and environmentally conscious urban riders.

In an interview with Reuters in February 2018, Levatich said the bike would help address Harley's demographic problem.

"It is more about the next century than the last century," he said at the time.

The preorders, thus far, have belied those hopes, according to the dealers.

"It is appealing to a demographic that is already riding," said Gennaro Sepe, a sales manager at a Harley dealership in Chicago. His store has received four preorders for the bike. All of them are from existing riders.

Harley declined to comment on LiveWire preorders.

The motorcycle maker is not the only company investing in battery-powered transportation.

Tougher emissions rules in Europe, China and the United States are forcing auto companies to switch to electrified models. A survey of US millennial motorcyclists, published in February by the Motorcycle Industry Council, found 69 percent of the riders interested in electric motorcycles.

Harley's dealers said they are getting inquiries from young customers, but are struggling to translate them into sales. A key reason: LiveWire's retail price.

"Interest is very high," said a sales manager at a New Jersey-based dealership, who declined to be named because he was not authorized to speak to media. "But once you get to pricing, interest is thrown out of the window."

Over half of young college graduates in America, whom Harley is courting with battery-powered bikes, are saddled with student loans that entail average repayment of $200 to $300 per month.

Harley is not offering any discount or incentives to push the sales, either, the dealers said.

In an interview with CNBC television in May, Levatich called LiveWire "one of the best engineered products on the market" and said it was worth its price.

Gary Jon Prough, general sales manager at a dealership in Countryside, Illinois, said the vast majority of millennials cannot afford the bike as LiveWire is targeted at young and affluent customers with incomes above $100,000 a year.

TESLA'S WAY

To drive up sales, Prough and other dealers expect Harley to go Tesla Inc's way: launch more affordable battery-powered vehicles after creating a buzz with the premium model.

Tesla's first electric car cost over $100,000, but prices came down with subsequent models. Its Model 3 now comes with a base price of $35,000 and was instrumental in lifting its vehicle deliveries to a record level in the latest quarter.

Traditional Harley Davidson entry-level bikes cost about $6,900.

The motorcycle maker has plans to bring out four more electrified models in the mid-power, low-power, e-bicycles and kids' two-wheeler segments by 2022.

But unlike Tesla, Harley does not enjoy the true first mover's advantage.

California-based Zero Motorcycles is already selling electric bikes in the United States with retail prices ranging from $8,500 to $21,000. Its top-end bike - SR/F - is similar to LiveWire, but costs nearly $9,000 less.

Still, Bob Clark, a dealer for Zero's bikes in Chicago, says he has not yet sold one SR/F to riders under the age of 35. All three electric bikes he sold to young riders this year were in the $10,000 price range.

"Young riders are environmentally conscious, but are also very price-sensitive," Clark said.

It is not just pricing. LiveWire's limited range is also hampering its sales.

The bike can travel 146 miles (235 km) in the city or 95 miles in combined city and highway riding per charge. An ordinary household outlet can provide an overnight charge, while Level 3 direct current fast chargers stationed at Harley dealers will fully charge the bike in 60 minutes.

This renders LiveWire less effective for longer-distance rides, limiting its appeal among rural riders who prefer touring bikes.

Seven Harley dealerships told Reuters they have not even bothered ordering the bike, which would require investing in a Level 3 charging station and training staff.

An Ohio-based dealer, who had initially signed up for LiveWire, said he pulled out at the last minute as he was not sure of the bike's demand in his area.

DELAYED ARRIVAL

A delay in LiveWire's arrival in stores has left the dealers in the Midwest and the East Coast with hardly a month to aggressively push the bike before the snow season sets in. Winter generally means a lull for motorcycle sales.

When dealers began taking preorders, the delivery was expected in August, but was later shifted to September. On Sept. 30, the dealers Reuters spoke with were still waiting for the first bike.

In a Twitter post on Oct. 2, Harley said the bikes are starting to arrive at authorized dealers. The tweet also carried a picture of the first LiveWire that was "rolled off the line" at its York, Pennsylvania, facility in late September.

With the demand rather limited, the dealers said, Harley has decided to keep the supplies tight in order to protect the bike's brand value and prevent any price-discounting pressure. The dealers said they are all expecting to receive less than 10 LiveWires this year.

James Hardiman, an analyst at Wedbush Securities, reckons Harley would sell between 400 and 1,600 LiveWires in the first year. That is not even 1 percent of the 228,051 bikes it sold worldwide last year.

"This is going to be largely a rounding error certainly this year and even next," Hardiman said.

(Reporting by Rajesh Kumar Singh in Chicago Editing by Caroline Stauffer and Matthew Lewis)

source: news.abs-cbn.com

Elon Musk's Tesla adds 'Model Y' SUV to line-up

HAWTHORNE, California -- Tesla introduced a new electric sports utility vehicle slightly bigger and more expensive than its Model 3, pitched as an electric car for the masses.

Tesla chief executive Elon Musk showed off the "Model Y" late Thursday at the company's design studio in the southern California city of Hawthorne, and the company began taking orders online.

The all-electric Model Y has a starting price of $39,000 for a version with a 230-mile (370-kilometer) range. A long-range version of the SUV capable of traveling 300 miles (483 kilometers) on a single charge was priced at $47,000.

Deliveries were expected to begin late next year for the higher-priced Model Y vehicles, with the standard-range version likely get to buyers by spring of 2021, according to Tesla.

Musk said the Model Y has "the functionality of an SUV but it will ride like a sports car" accelerating from stand-still to 60 mph in 3.5 seconds.

Model Y featured a "panoramic glass roof" and could seat seven people, according to Musk.

Entry-level SUVs are a hot segment of the vehicle market.

"Even though the Model Y will debut with promises of grandeur, if there are any chinks in Tesla’s brand armor, this vehicle will expose them," said Edmunds executive director of industry analysis Jessica Caldwell.

"Tesla is about to learn exactly what it means to go head-to-head with the German automakers."

While Tesla has a devoted fan base, with people at the Thursday event shouting enthusiastically for Musk, the Model Y will be competing with attractive SUVs that titans such as BMW, Mercedes and Audi are bringing to market, according to Caldwell.

POSSIBLE TURNING POINT

The latest addition to the Tesla line-up comes shortly after the California-based company rolled out its lowest-priced Model 3, an electric car designed for the masses, at a base price of $35,000, with deliveries promised in one month.

At that price, the Model 3 is less than half the cost of most Tesla on the road and may be eligible for tax incentives which could further lower ownership costs.

"If Tesla truly wants to be a mainstream brand, it's going to have to figure out how to sell cars to people besides young men in California," Caldwell said.

Tesla has a sound foundation for the Model Y to be a "turning point," since it has an enviably young base of buyers for a luxury brand and the Model X has had strong appeal to women, according to Caldwell.

The new vehicles suggest Tesla has been able to overcome production bottlenecks to ramp up production to meet demand, and moving toward Musk's goal of making electric vehicles widely available.

Tesla this week reversed course on its decision to move most of its sales online, saying it will keep many of its showrooms open -- but will need to hike prices to do so.

Tesla made the announcement on Feb. 28 that it would begin selling its mass-market Model 3 at the promised $35,000 price, and close most of its retail locations to cut costs.

But the company said that after review, it had decided to keep some of its showrooms, although the specifics were not disclosed.

Tesla said the price hikes would start on March 18 for "the more expensive variants of Model 3, as well as Model S and X."

"To be clear, all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes," the statement added.

source: news.abs-cbn.com

How these energy geeks are reimagining an old school utility

Orange County, Ca. - Welcome to the utility industry's future - or at least that's what Southern California Edison is hoping.

Here in a non-descript, 53,500-square-foot building, the $12 billion utility's research team is testing everything from charging electronic vehicles via cell phone to devices that smooth out the power created by rooftop solar panels.

Those are some of the roughly 60 projects in the works at Edison's Advanced Technology division. It has a small $19 million annual budget, but its influence far exceeds that.

The engineers from California's largest utility are hatching plans to insure its survival - and maybe even the survival of the nation's other big utilities, which are watching the project closely.

The lab was formed by Southern California Edison in 2009 after California passed a landmark law to lower its greenhouse gas emissions to 1990 levels - and source one third of its electricity from renewable sources by 2020.

The result has been more electric vehicles here in the Golden State. And more solar and wind power, which has got the state's utilities, and those nationwide, scrambling to adapt. Unlike traditional electricity, power from solar and wind sources fluctuates depending on the weather, making it tricky to manage on the grid.

Also the cost of solar power has come down so much that more homeowners are producing their own power and paying less to their utility.

Simply put: long term, utilities will need new sources of revenue.

In 2013, California's three largest utilities sourced nearly 23 percent of their power from renewable sources, and Gov. Jerry Brown has called for a target of 50 percent by 2030. Twenty nine states have laws requiring more renewables, according to North Carolina State University's Database of State Incentives for Renewables & Efficiency.

With so much "distributed" energy on the grid now, mainly from solar panels, says Accenture, the utility industry could see revenues fall by between $18 billion and $48 billion a year by 2025. That's why some call it the utility "death spiral."

INDUSTRY MODEL

There's a reason why the lab's work is getting a lot of attention: It is producing results and they share the work with utility officials and researchers from as far away as China. For instance, Edison's work designing cyber security systems and developing uses for advanced energy meters have received high marks from other utilities, said Mark McGranaghan, a vice president at the Electric Power Research Institute.

Edison's lab has emerged as a model for others, too. In 2013 The National Renewable Energy Laboratory opened its $135 million Energy Systems Integration Facility, which complements Edison's research. The New York Power Authority is also working to establish a similar lab.

"The concept is really built off of learnings from Southern California Edison," McGranaghan said. "They have taken so many people through their labs, it's amazing."

THE WILD WEST

Edison is focused on energy storage, automation and digital communications that will improve the efficiency and reliability of the grid. That, the utility hopes, will result in new revenue as power demand flattens (more energy-efficient homes) and rooftop solar ramps up.

"There is only one provider of the wires, which is us," said Ted Craver, CEO of Edison International, the utility's parent company. "These new technologies are going to become much more prevalent and we, maybe immodestly, feel we are on the cutting edge."

Many of those technologies have yet to be commercialized, but the market is booming. Smart grid spending will grow to $70.2 billion in 2023 from $44.1 billion in 2014, according to Navigant Research.

That's why Edison built nine labs here.

In one room Edison researchers replicate a complete power grid. That was used to troubleshoot when Edison was working on a new transmission line to connect its grid with California's other behemoth utility, Pacific Gas & Electric. In another lab, "smart" inverters are being tested that are capable of smoothing out the voltage sent to the grid by solar panels. These devices are common in Europe, but have yet to be rolled out widely in the United States.

"It's a bit of the Wild West right now," Doug Kim, director of the utility's advanced technology group, said of the proliferation of new energy technologies.

Every year The Advanced Technology group solicits project proposals from the rest of the utility. Among them: a project that studied how large amounts of wind and solar power affect power restoration during blackouts; another tested different kinds of batteries to see how they perform when storing energy along the grid.

ELECTRIC GUINEA PIGS

Many of the new technologies are taken for a test drive at University of California, Irvine, faculty housing. "The Irvine Smart Grid Demonstration," a $79 million project launched in 2010 and funded in part by the U.S. Department of Energy, will wrap up later this year.

SCE's take: If you can figure out ways to generate electricity at home, and use it more efficiently, you can cut costs related to new generation and transmission equipment.

"We threw everything in there that we could think of, thinking that maybe someday it was going to be real," SCE's Kim said. "Sure enough just about everything we are testing here is now real."

Crista Lopes, a computer science professor, said the project cut her electric bill to zero in the summer. The utility outfitted her house with solar panels, about 50 LED light bulbs and new appliances like a "smart" refrigerator whose power usage she can track.

THE ENDGAME

The stakes for the Irvine project are high. At the conclusion, Edison will make recommendations on smart grid technologies to the industry. The utility will then take the testing to a larger area - perhaps thousands of homes.

Of course, the industry will hear about the mishaps too. For example, Crista Lopes has a device that controls energy consumption when demand is high. That was great until she was without air conditioning for three hours during a heat wave; Edison planned the outage for just 15 minutes, but a system that worked in the lab failed to send the correct command.

But those stumbles are why the project is valuable, said Bob Yinger, the chief engineer. "We learn about what the issues are," he said, "and manufacturers learn about how their products behave in the real world."

source: www.abs-cbnnews.com