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Electric Hogs

Harley's electric hog targets selfie-taking green hipsters

SOUTHFIELD, Michigan – Tyler Dean has the jeans, jacket and beard that place him squarely in the target market for Harley-Davidson. Another draw for the motorcycle maker: Dean has a social media account, and he knows how to use it.

Harley, the manufacturer of road hogs famous for roaring throttles, said in June it’s considering selling a relatively quiet, electric motorcycle. It’s now showcasing the bikes on a 30-city tour to seek feedback and drum up interest among people like Dean, who cares about the environment and can spread the word about his likes on social media like Twitter and Instagram.

“Businesswise, this is smart,” said Dean, 31, who stopped riding after he got married three years ago and is starting to feel the itch again. “I’m going to take my photo of me sitting on this and post it to everyone I know. I’m not going to post me sitting in a Toyota.” While the idea of an e-hog has risks, he said “if Harley is doing it, that means it’s a viable thing.”

The tour is part of a push by Chief Executive Officer Keith Wandell to make the once-insular company more open and ensure its perch atop a U.S. motorcycle market that researcher IBISWorld pegs at $6.9 billion, with Harley getting about half. The company views electric power as a way to reduce emissions and prepare for a time when petroleum-based fuel may be more scarce. It’s also a way to appeal to younger, affluent consumers who want a clean way to get around in style without dropping $100,000 or more on a Tesla Model S.

Harley, based in Milwaukee, wants “to make sure we’re not missing something” as the tour continues in more U.S. cities and Europe and Canada next year, Wandell said in an interview. “We don’t want to come to market with something that falls short of somebody’s expectation.”

Like Dean, 25-year-old Ben Myburgh isn’t in Harley’s current core market, which skews older and wealthier. He is, however, the type of customer the company wants to win.

Myburgh races electric bikes in his spare time and signed up in June to be in the first group of five riders at the start of the tour’s stop in Nashville, at Boswell’s Harley-Davidson dealership. The Nissan quality engineer came prepared: With his padded riding jacket and pants, he was the only member of the quintet not clad in blue jeans and black shirtsleeves. He wore a Google Glass headset, which he used to film his test run.

Social media has been a big part of Harley’s marketing effort. Project Livewire, as the bike is called, garnered 340 million media impressions as of mid-July. To help fuel that, test riders are encouraged to work their networks.

“Email and social media gave HOGs a louder voice and more access,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, said in an interview, referring to the motorcycle maker’s enthusiasts. “To Harley’s credit, they see that as an asset, not a threat.”

After a 10-minute test ride on surface streets, riders park the bikes. Before they get off, a Harley photographer takes a picture and hands them an access code so they can download the picture and post it on Facebook or Twitter or Instagram. Next, they’re shuttled to a video camera to record instant impressions and then are asked to fill out a 10-minute survey on an iPad.

Sample questions include “What words come to mind when you first rolled the throttle?” and “How would you describe the bike’s look, sound and feel?” The survey also asks how much a buyer would expect to pay, starting from “below $15,000” to as high as “$35,000 and above.”

For all the “awesomes” and “wows” collected on the commentaries, there also are criticisms: a desire for more battery range, for example, or on-board charging ports and storage. Several riders said the price would need to be near or below $15,000.

Myburgh, who rides a 2011 Brammo electric bike, said he likes the bike’s sound, which he likens to the TIE fighter Darth Vader flies in the “Star Wars” movies. Myburgh said he appreciates the innovation and the risk Harley is taking by developing a bike so counter to its snarley-Harley roots.

“You’re going to get guys saying it’s not a true Harley- Davidson — it’s not air-cooled, it doesn’t make a lot of noise and it doesn’t fall apart,” Myburgh said. “But you have to embrace the future at some point.”

While motorcycles are already quite efficient — most Harleys go 30 to 60 miles on a gallon of gasoline — Myburgh said he won’t own a Harley unless they make one that doesn’t require gas.

The electric bike’s battery range is about 53 miles and the engine can be operated in three modes: sport, power and range. There are no gears to shift through, so the prototype rides as easily as a moped, albeit one that’s frighteningly quick. Acceleration goes from zero to 60 miles (97 kilometers) per hour in under four seconds. It has foot and hand brakes and also slows quickly when the throttle is released.

If Harley does go green, it’ll compete against a handful of companies, including Brammo, based in Talent, Ore., and Zero Motorcycles, based in Scotts Valley, Calif. Global sales of electric motorcycles are expected to grow slightly, according to a report from Navigant Research, to 1.4 million annually in 2023 from 1.2 million this year.

For much of its 111-year history, Harley sold choppers as fast as it could to riders it knew well: wealthy, middle-aged American white men. The recession shook that up.

Revenue in 2009 fell almost a quarter from a year earlier. Wandell, hired from auto-parts maker Johnson Controls, cut costs and pushed Harley to try to expand its customer base to women, younger drivers, non-whites and non-Americans.

The company is projected to increase sales 7 percent to $5.6 billion this year, based on analysts’ estimates compiled by Bloomberg. After receiving 25 percent of its revenue from outside the U.S. in 2006, the company forecasts 40 percent of sales this year will be in foreign markets, which is where more than half of its dealerships are located.

Harley’s stock, which dropped each of two years before Wandell arrived, has risen annually since. So far this year the stock has declined 9.6 percent to $62.56.

The electric bike program is an extension of how Harley also has changed the way it develops motorcycles, using focus groups and clinics and opening test-runs to a wide circle of consumers and dealers. Earlier results hit the market last year with a new Touring line, equipped with voice-activated and touch-screen GPS systems, and Street bikes, Harley’s first lightweight motorcycles in decades.

The electric version “is going to appeal to a whole new set of customers,” Wandell said. “It’s getting folks thinking about our products that maybe typically wouldn’t have.”

David Hood, a 46-year-old from Old Hickory, Tenn., came to Boswell’s dealership not to scout a potential purchase, but to have a peek into what may be the future. He’s old-school Harley, riding a 2008 Street Bob and loving the potato-potato rumble of its V-twin engine.

“It’s cool,” Smith said. “Today’s world is the world of innovation. Everything’s changing.”

© 2014, Bloomberg News

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