Harley-Davidson’s progressive new CEO Jochen Zeitz made two big announcements last week: A separate new division was opening inside the firm to focus purely on electrical bikes, and This fall 2020 noticed a dramatic drop in income.

The latter is definitely an issue, however the former is the answer.

There’s little question about it; Harley-Davidson is dealing with a demographic downside. A big chunk of its goal market is ageing out of bikes.

Positive, there are nonetheless dudes of their 30s shopping for Harley-Davidson bikes. I do know a number of. However their numbers aren’t inspiring.

It’s not a full-blown disaster for H-D but, nevertheless it’s an actual downside.

The traditional knowledge amongst Harley’s goal market has been that the answer is straightforward: construct extra heavy cruiser bikes.

However there’s a motive that Harley’s present riders don’t make the enterprise choices. That previous mind-set simply isn’t slicing it anymore. And now the corporate realizes it.

Harley-Davidson made its title and its picture constructing loud, heavyweight bikes that packed as a lot bravado as they did cubic inches. However because the variety of riders searching for these cubic inches drops off, so have Harley’s income figures.

As a substitute, a brand new wave of youthful riders is embracing a brand new sort of bike: electrical bikes. The brand new breed of electrical bikes packs as a lot energy and efficiency because the previous gas-powered bikes (and sometimes extra), but provide decrease upkeep, decrease working prices and aren’t a contributing issue to this planet going to hell in a handbasket. All good issues!

Gross sales numbers for e-motorcycles aren’t even near fuel bikes but; I received’t declare they’re. Gasoline bikes nonetheless outsell electrical bikes within the US by a big margin. However a have a look at the pattern strains reveals the margin is shrinking, and it’s shrinking even sooner for Harley-Davidson’s ageing goal market.

And thus the reply is straightforward. If we quick ahead a couple of years and Harley-Davidson doesn’t have any electrical bikes to supply new riders, it received’t promote bikes. Interval.

That’s not me being hyperbolic. It’s a easy assertion of truth. The problem isn’t simply that fuel bike gross sales are declining. Many nations and even US states are outlawing the sale of gas-powered vehicles entirely within the close to future – a pattern that’s all however assured to develop. Whereas a few of these bans solely cowl four-wheeled autos, bikes and scooters are sure to finally be included as properly.

Combining legislative hurdles and the overall downturn in income, H-D’s fuel bike gross sales should not going to get well to ranges seen within the glory days of the early 2000’s. However with regards to electrical motorbike gross sales, however, the one technique to go is up.

And thus Harley-Davidson made two good strikes final week with the announcement of the company’s new 5-year strategic plan, The Hardwire. The corporate is doubling down on its core cruiser motorbike designs and is opening a brand new separate division inside the firm to give attention to electrical motorbike improvement.

The primary a part of the plan is smart, even when I’m not a fuel bike fan. Harley’s fuel bike gross sales are nonetheless dominating, even when they’re trending downwards. Earlier than the remainder of Harley’s old skool market dies off, the corporate must squeeze out as a lot money from them as they’ll. Harley-Davidson merely received’t have sufficient electrical bikes in its lineup within the subsequent few years to depend on electrons over hydrocarbons.

Financially talking, Harley’s fuel bikes are a delaying motion. They’ll purchase the corporate time whereas extra assets are directed at growing new electrical bikes.

The LiveWire was a fantastic first entry and it did precisely what Harley-Davidson meant: it proved that H-D can construct a world-class electrical motorbike. That’s the entire level of a halo product – to not promote in big numbers however slightly to reveal an organization’s experience within the space. In a stunning flip of occasions, the LiveWire truly ended up promoting higher than simply about anybody had predicted, becoming the #1 selling electric motorcycle in the US.

Even so, only a few millennials can discover $30k of their wallets for the LiveWire. However now that H-D is doubling down on electrical bikes, the LiveWire can lastly obtain its child brothers within the type of lower-cost follow-on electric motorcycles from H-D.

The corporate already has very attractive light electric motorcycle designs on paper. With the introduction of a brand new electrical motorbike division inside the firm, H-D can now give attention to bringing these designs to life.

Not everybody will help Harley’s rising electrical motorbike ambitions. We’ll nonetheless hear the anti-electric grumblings of some life-long Harley riders returning to select up an H-D Tri Glide, figuring {that a} Harley tricycle nonetheless beats a mobility scooter. But when Harley is to succeed, then it received’t be with the assistance of its current ageing market – not in the long term. It will likely be as a result of the corporate made the daring resolution to develop into new markets with new bikes that new riders will truly need to purchase.

That’s the route that H-D’s progressive new CEO is now taking the corporate.

And it’s not merely the fitting route. Franky, it’s the one route.

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