The premium segment for electric sport motorcycles sure is tough.
It's traditionally been dominated by Italian brand Energica, Harley Davidson spinoff Livewire and US stalwart, Zero. I'm also going to throw in Stark because they build a very high end and powerful bike too, albeit an off-road machine.
All four brands have developed and launched a range of highly advanced motorcycles around the world, have decades of experience, dealer networks in place and combined, have raised Billions of dollars in investment.
And yet, they're all struggling with revenue, profit and volume. To make matters worse, Energica - 75% controlled by the American fund Ideanomics Inc. - declared itself bankrupt this week after failing to find new backers.
"It has become clear in the last few hours that these alternative options are no more viable, thus leaving the company with no other choice than resolving for the opening of a bankruptcy judicial liquidation," it said in a statement.
As a long-term owner, I can attest to how all these motorcycle brands have developed highly advanced, high-performance bikes and they are robust and reliable. I also know a bunch of other owners who love their bikes as much as me and the global community is alive and well.
So, what's the problem?
Detailed information on the behind-the-scenes machinations of the companies is scarce but a recent investor call by Ideanomics points to the lacklustre performance of the EV segment over the last few years as a major contributor.
Despite Energica producing one of the best electric sports motorcycles in the world, a reported peak of 13 M Euro in sales in calendar year 2022 clearly isn't sufficient for a high-cost tech startup.
A story appearing the Pack News recently further described the dire position of the company in rather ominous terms. It appears that Ideanomics delayed its financial support in 2022, eventually cutting it off completely in 2023.
CEO Livia Cevolini as quoted as saying "Now, we need help. We have developed technology, know-how, and jobs in our region. Over the past 18 months, we have engaged with various investors and industrial groups, but it seems nearly impossible to find investors willing to commit, particularly in the EV industry during this period and especially in Italy."
It seems pretty obvious that the huge R&D & marketing costs associated with the development of cutting-edge products simply isn't being recouped fast enough because sales are (and I hate to admit it) woeful.
Livewire is one of the few companies in the segment that does report sales quantities and revenues. Despite that fact that its investors seem more secure and they have seen some growth, Q2 2024 results report 158 motorcycle sales and a mere US $2.4M in related revenues. For the full year 2023, they reported 660 motorcycle sales and US$11.5M in revenues.
Zero motorcycles sales data is less clear with the latest reports suggesting around 3,500 motorcycle sales in 2020 and an expectation of around 4,500 units in 2022. Assuming Zero were also impacted by the same lacklustre market conditions they are likely the leader in volume but their lower priced machines means their revenues may not be far above Energica or Livewire.
Stark on the other hand, recently reported their first month of positive EBITDA and notably 10M Euro per month of sales, roughly equal to around 1000 bikes per month. That's more bikes than Zero, Livewire and Energica combined - and positions them really well to start leveraging some scale benefits.
Having been around early-stage technology and services for most of my working life, I'm neither surprised nor predicting this as the end of the premium motorcycle world. The product is simply too good for that to be the case and Stark's success after only four years is proof of it being tantalisingly close.
Heavy losses in the early years are a necessary evil while scale is created in new segments. The key is calm, patient investors with realistic expectations and of course developing product market fit.
While the power and performance are really good, we aren't there yet of the full value proposition and some blood will undoubtedly be spilled along the way. Tere's no doubting the quality of machines or (apparently) the willingness of the off-road segment particularly to buy at very respectable scale.
As an owner and rider, I am typically dreaming of bigger lighter batteries that deliver more range and this has been the key to several buddies switching to Energica, who led the class with 22kWh of capacity.
But in the real-world money talks and it seems bikes with smaller batteries like the Stark Varg's 6.5kWh pack simply allow more riders to take the plunge with less risk and all the benefits? Certainly, the scooter segment seems to bear that out too where millions of electric two wheelers are sold each year.
It's clearly tough times for some in the segment, lets hope that our investment community can ride through the storms and keep this amazing technology alive.