Last updated on February 14th, 2022 at 11:57 am
As Harley-Davidson works towards the spinoff and merger of its LiveWire brand into a separate, publicly-traded company, new securities filings show a significant portion of revenue related to the new entity has come from the sale of electric balance bicycles for kids, not the electric motorcycles Harley has invested millions in developing.
Harley launched LiveWire, its first electric motorcycle, in 2019 after nearly a decade of development work. The same year, the company bought StaCyc, a maker of electric bikes for kids. Harley paid $7 million in cash for StaCyc and the total consideration for the company was almost $12 million. The deal includes more than $6.5 million in potential earn outs based on sales volumes through May of this year.
In December, Harley announced plans to spinoff LiveWire and merge it with AEA-Bridges Impact Corp., a special purpose acquisition corporation that held talks with 17 other companies before zeroing in on LiveWire. Harley will still own around 74% of LiveWire after the deal.
According to securities filings, financial advisors for Harley first contact ABIC in late April 2021. The SPAC did not exclusively focus on LiveWire until after a series of meetings that took place between June 18 and July 13.
Beyond providing background on the deal, the securities filings also offer a more detailed look at how LiveWire has performed since Harley launched it as a production line in 2019.
For the 33 months covering 2019, 2020 and the first nine months of 2021, Harley recognized a total of $73.9 million in revenue related to the LiveWire brand it plans to spin out, according to securities filings.
Much of that revenue, $41.3 million, came from sales of the StaCyc electric balance bikes. Another $29.9 million came from sales of electric motorcycles while the reminder was from parts, accessories and general merchandise.
However, saying that the majority of revenue came from kids bikes is complicated by Harley’s accounting of its efforts to help dealers prepare to sell electric motorcycles. In the fourth quarter of 2020, Harley offered its independent dealers a $15.3 million sales concession in recognition of EV related investments made by dealers.
Taking out the concession, electric motorcycle revenue from 2019 to September 2021 was $45.2 million compared to $41.3 million.
The comparison is also complicated by Harley’s decision to drop the Harley-Davidson branded LiveWire model and establish the electric motorcycle as its own brand. The plan to establish the LiveWire brand was announced in May, just after Harley’s financial advisors made contact with ABIC.
Electric motorcycle revenues in the first nine months of 2021 dropped to $5.4 million, down from $25 million in 2020 as the company decreased shipments and increased sales promotions to clear the dealer network of H-D branded LiveWires.
Across the 33-month period covered in the securities filings, Harley’s wholesale shipments of Livewire total 1,942 units, with 62% of those shipping within the U.S.
Harley reported retail sales of 1,648 units with 1,057 of those selling in the U.S.
The figures help highlight just how far LiveWire has to go to meet the forecasts set out when the spinoff was announced. Harley forecasts LiveWire will reach 7,236 units in 2023 with vehicle revenue of $118 million. By 2026, the company estimate sales will reach 100,961 units and almost $1.5 billion in revenue.
As it happens, 2026 is also the first year Harley forecasts LiveWire will have a net profit, estimating it at $64 million. Net losses from 2021 to 2025 are estimated at a combined $509 million. The company reported a net loss for LiveWire of $56.5 million in 2019 and $77.6 million in 2020, a combined total of $134.1 million.
The company’s filings for LiveWire note it is an early stage company and investors should expect it to incur significant expenses and losses for several years. The company reported $58.1 million in engineering expenses and $96.1 million in selling, general and administrative expenses in the 33-month period covered in the filings.
“We do not expect to be profitable for the foreseeable future as we invest in our business, build capacity and ramp-up operations, and we cannot assure you that we will ever achieve or be able to maintain profitability in the future,” the filing says. “Even if we are able to successfully develop our electric vehicles and attract customers, there can be no assurance that we will be financially successful.”
Introducing new models is a key part of the company reaching its ambitious longer-term goals. The original LiveWire was unveiled with a nearly $30,000 price tag, but the one unveiled in 2021 came in priced at $22,000.
Later this year, LiveWire will launch the Del Mar, a lighter, nimbler motorcycle at an even lower price. Future plans call for other lighter-weight, highway-capable electric motorcycles at lower price points as well, and the company plans to greatly expand distribution to international markets.