Thursday, June 26, 2014

Harley-Davidson's EV announcement shocked the faithful. Here's why the company's announcement strategy is actually brilliant


Earlier this week, I was flown in to see and (however briefly) ride the Harley-Davidson LiveWire. It was shown to the public for the first time at Harley-Davidson of New York's trendy new TriBeCa flagship store. 

Harley-Davidson president Matt Levatich, and the company's CMO, Mark-Hans Richter were in New York for the event. Both of them, along with the other execs I spoke with, cleaved to the official story: there are no official plans to produce or market the LiveWire. 

If Harley-Davidson is to be believed, the upcoming 30-city 'Project LiveWire'—10,000 public test rides on hand-made prototypes costing well over $250,000 each—is all an elaborate market research project. The Motor Company is only conducting the tour to get a general sense of the interest in electric motorcycles.

None of the experienced motojournalists at the 'reveal' believes that. The bikes we saw—Harley built a total of 39—are far too well finished, and too resolved in their design. Andy Downes, the editor of MCN, bets there will be a production announcement within 18 months.

When really pressed, Harley execs' fallback position is, "Maybe when battery technology makes the next jump." Say, when energy densities are 50% better than they are now. But no one in the battery business expects an increase like that in the next year or two, so that's not it.


Before I saw the bike in the metal, and rode it, I thought the whole "market test" story had been concocted to avoid comparison with existing e-bikes of generally comparable specification, say the Zero S and SR, or Brammo Enertia or Empulse. But even after my ten-minutes-in-Manhattan-traffic first ride, I realized that Harley has nothing to fear from bikes like those. The LiveWire (its limited, 53-mile range notwithstanding) is fucking cool.

So, what gives? Why would Harley spend tens of millions to build a fleet of LiveWires, then deny plans to put an EV into production?

The short answer is, because Harley's existing customer base, the Live-to-Ride-Ride-to-Live-Helmet-laws-suck-Support-the-troops-Drill-baby-drill-If-you-can-read-this-the-bitch-fell-off-Show-me-the-birth-certificate-No-new-taxes-Theres-no-replacement-for-displacement, dyed-in-the-leather Harley purists hate the idea.

I buttonholed one Harley exec and made him admit that, out on the interwebs—on Harley forums—Duck Dynasty-reject Harley riders don't just not want an e-bike, they actively resent the whole idea. The exec angrily told me, "Those guys hate us [Harley management] anyway! They already say that the panhead was the last real Harley. And besides, they don't buy new motorcycles."

I've gotta' give him that; they don't. But what about the 35 year old welder, who's making good money in North Dakota thanks to the fracking boom? Or the 45 year old dentist in the Chicago suburbs, or the 55 year old grocery store manager in Albuquerque?

True story: After the launch, I rode my corroded Triumph Bonneville home from the Kansas City airport. As I trundled along, I was slowly passed by a guy riding a new-ish Harley-Davidson 'bagger'. He was in his sixties, portly, with a neatly trimmed white beard. An absolutely typical suburban grandpa, of the type you'd find at the Rotary, or Elks Lodge, or maybe in a small-town Chamber of Commerce. Except, he was wearing a shiny black leather jacket, with an elaborate, embroidered grim reaper across the back. And there was a little chrome skull on his rear fender.

My point in telling you this is, the guys who do buy new Harleys aren't buying them because they love the engineering; they're buying them because the Harley brand is wrapped up in the rebellious, badass 'authenticity' of those grizzled panhead riders. That is what allows the welder, the dentist, the store manager, and grandpa to tell themselves, if it ain't Harley, it ain't shit.

Then it hit me: the grandmaster-level-chess-player strategic genius of Harley's 'LiveWire tour' story—the genius of claiming that they have no specific plans to produce it.

I mean, the bike I saw was proof they do have plans to produce it. And if you need more evidence, Harley's openly recruiting engineers with EV experience on their web site. The Project LiveWire bikes are finished; if there are no plans to put it into production, why recruit high-dollar EV specialists? Because, LiveWire, or LiveWire 2.0 is, definitely going to be mass produced. Which makes the whole "It's just a market test" story an elaborate subterfuge. Why lie to your best customers? Bear with me another minute while I set up the strategic context...

Given: Harley-Davidson is the only motorcycle manufacturer that shows up on lists of the world's most valuable brands. The thing is, it's completely wrapped up in both small- and big-C conservative values. Take away the motorcycles, and Sturgis would be a Tea Party rally. These are people who resented having compact fluorescent light bulbs rammed down their throats.

Given: Harley's existing customers don't just not want an electric Harley; they view EVs as a tree-hugging liberal boondoggle. EVs, in their view, are actually unAmerican.

Given: As strong a brand as Harley-Davidson is, its customer base is very old. They say, Fifty is the new thirty; they say, 60's the new 40. Seventy may even be the new 50. But 85 is still 85. Harley needs a long-term strategy to attract younger customers.

Given: Harley's attempts a making smaller, lighter, sportier gas-powered motorcycles—bikes that could appeal to younger riders—have always failed. (And, by the way, Harley-Davidson's dealer network hated it the last time Harley tried to compete with those rice rockets. Harley created the Buell sport bike brand in an effort to compete with the Japanese manufacturers. Dealers felt that Buell was pushed on them by management; they never supported the brand, and it ultimately failed.) 

There are some things that, when you hear an executive say them, you know  are not true. For example, if the CEO of your company calls you all into the auditorium and says, "Let me make one thing clear: There will not be layoffs," it's time to run out and print 1,000 copies of your resume. I was reminded of that when Mark-Hans Richter, Harley's Chief Marketing Officer, emphatically said, "This is authentic. This is on-brand."
Someone at Harley-Davidson—and it had to be someone right at the top—came up with a daring plan to leapfrog right over more tech-savvy manufacturers like Honda and BMW, by going all the way to an EV. Honda doesn't have an e-bike yet, BMW doesn't (not a proper motorcycle, anyway). The only e-bikes on the market have been cobbled together by startups with no dealer networks and, frankly, not much style or marketing savvy.

By producing an EV, Harley-Davidson would attract a young, liberal, urban market that until now has been inaccessible to America's oldest and most conservative motorcycle company. Harley-Davidson executives in Milwaukee secretly contacted Mission Motors, in San Francisco, and contracted them to engineer an electric drivetrain. By tapping Mission—the most advanced motorcycle EV research & development company—Harley ensured that the LiveWire would be state-of-the-art.

But Harley still had one insurmountable problem: No one thinks EVs will be more than 10% of the market any time soon, and announcing an EV was bound to freak out its existing customer base.

That's why calling Project LiveWire a market test was a communications-strategy masterstroke.

Harley's going to take its LiveWire prototypes on a 30-city tour across the U.S. It's not even bringing the machines to Sturgis, or Daytona, or any of the places where old-school Harley riders gather. But you can be sure Portland will see the LiveWire. And because the bike is fucking cool—and it's just a twist-and-go (no clutch or gears) and very easy to ride—it's going to appeal to young hipsters, tech nerds, chicks... people who've never thought of themselves as 'the Harley type'—or even motorcycle riders. 

Mark my words: within a year or two, Matt Levatich will stand up in front of a crowd of Harley faithful and say, "We weren't even going to make the LiveWire, but the free market has spoken. Customers are demanding a LiveWire of their own."

Between the lines, Harley-Davidson will tell millions of Duck Dynasty rejects, "Hey, we're a for-profit company, and the market has spoken, bro'. That was democracy in action." 

Harley-Davidson's current customers resent EVs and the liberals who drive them (or soon, ride them.) But such petty resentments are trumped by a knee jerk belief in the sanctity of a free market. After all, there's nothin' more 'Murican than the profit motive. 

So after the LiveWire tour, Harley-Davidson will address its existing customers, and actually use their deeply held conservative values to justify the decision to put the LiveWire into production.

Genius.

5 comments:

  1. Great article. Something I have mentioned several times to people in discussions. The aging Harley line is a little, aging. They sell more motorcycles to youths, women, and minorities than any other manufacturer. The LiveWire is great and I hope it succeeds. I consider myself a conservative and yet EV's ill have a place in my mind. The media makes the divide between real conservatives and real liberals much bigger than it truly is.

    ReplyDelete
  2. Interested that NPR's Sat. All things Considered had a spot on this:
    http://www.npr.org/2014/06/28/326434594/harley-hopes-an-electric-hog-will-appeal-to-young-urban-riders

    ReplyDelete
  3. I don't think Harley will sell enough E bikes to make a profit . I think the marketing they have done over the last thirty years will work against them to effectively . I think long before they can get over thier own branding Honda will come along and take most of the Ev market share . It will take a lot for them to appeal to motorcyclists again . I mean a really excellent motorcycle to over come the Harley stigma. I think they where on the right track with Buell .They gave up to soon . It will be interesting to see if they can do it before all thier customers die .

    ReplyDelete
  4. Nicely written-Great information.Thanks for sharing it with us.Please also visit my RTCA-Do160 page and let me know what you think.

    ReplyDelete
  5. Nicely written-Great information.Thanks for sharing it with us.Please also visit my RTCA-Do160 page and let me know what you think.

    ReplyDelete