The electric motorcycle is dead! Some say it was destined to fail, being nothing more than an illusion that scammed investors out of millions. Electric motorcycle advocates pin hopes on promised models from mainstream brands. For most industry insiders it’s increasingly obvious as the years progress and electric motorcycle startups fail : amateur hour is over.
Like all revolutions it began optimistically. Back in 2009 the media and industry alike were gripped by electric vehicle fever. The inaugural all-electric TTX GP race at the Isle of Man set the motorcycle industry buzzing, while breakthroughs such as the Tesla electric car plus the millions of low-speed electric scooters being sold in Asia spurred venture capital to pour billions into electric vehicle technology. Studies were published saying that hundreds of millions of electric vehicles would be on the road within five years.
That was the time that Brammo and Mission Motors first appeared. Along with dozens of tiny startups, these two American companies presented all-electric motorcycles that promised to start the plug-in motorcycle revolution. Unlike the typical home-built conversions of most starups, Brammo and Mission launched Silicon Valley style, professionally executed media events with beautiful websites and good-looking, full function prototypes.
Brammo took the mass market approach with the Enertia, a handsome commuter bike sold through electronics retailer Best Buy. On the premium end, Mission unveiled what the company called the world’s first electric superbike – capable of 150 mph (240 km/h) and a range per charge of 150 miles (240km). Both were labelled “the Tesla of two wheels”.
Fast forward to today, and the media are writing obituaries for Mission Motorcycles, which filed for bankruptcy, while also posting cover features of the “new” Victory Empulse R, a rebadged Brammo Empulse. Brammo, absorbed into the Polaris Industries empire last year, joins Mission as just another corpse in the heap of motorcycle brands that died attempting to kickstart the electric revolution.
The Silicon Valley problem
The high-profile failures of Brammo and Mission, two well-funded companies led by professional business people with serious credentials, were only the latest in a long string of electric motorcycle casualties. Other brands like Roehr, Vectrix, New Vectrix, Quantya, Voxan, Muench, Mavizen and dozens of others quietly vanished when sales didn’t materialize, or in most cases they weren’t able to actually produce what they promised.
A few startups from that early fertile period, Lightning Motors, Energica, and ALTA Motors (née BRD Redshift) live on, the first two actually delivering road legal motorcycles to customers as promised, if a little late; the latter gaining new rounds of funding and promising deliveries of series production models this year.
All of which leaves one company standing tall.
Zero Motorcycles from Scotts Valley, California. It not only survived through the hell of the great recession, passing the road legal certification process, recalls, outgrowing its founder, and overcoming the challenge of building a working factory, it came out the other end a stronger, scaled up and fully fledged motorcycle manufacturer. Zero, and Zero alone can claim to be an electric motorcycle company, one that is readily available via a solid dealer network, with after-sales care, and one presenting a bright future of robust growth.
Like everyone, Zero Motorcycles suffered with the same fundamental limitations of battery technology and cost, but unlike key rival Brammo and Mission, Zero has a laser focus. Instead of wasting resources on extravagances like international racing and lavish trade show presentations (actions for which Brammo and Mission were both guilty), Zero operated frugally, accepted often harsh criticisms to steadily improve its products while reducing costs.
In other words, they did business.
It seems obvious that being a motorcycle company is about manufacturing motorcycles, but startup culture in 21st century America has been built around internet business, where physical products aren’t the core focus. The Silicon Valley template is to go from prototype to high volume delivery as fast as possible, to secure later venture funding. This, in the vernacular of venture capital, is called scaling, the end goal of which is either the sale of the fledgling company to a larger one, or to float stock on the market in an IPO (independent public offering).
It’s a formula that’s made tens of billions in the dot-com and app universe, but unfortunately translates very poorly into businesses that actually make things. Physical devices in the tech world, if required, are outsourced to contract manufacturers because they form only a tiny part of the consumer experience. But with motor vehicles, the physical product is the experience.
Both Brammo and Mission were founded and led by captains of the west coast tech industry who believed that the road to success in electric motorcycling followed this pattern. Build and present flashy prototypes, and use the pre-orders to secure funding for developing the production bikes.
It could have worked, and in fact that is precisely what Tesla did to great effect. The key difference between Tesla and the tech world was that Tesla spent all its capital building its own factory and focusing on delivering one expertly finished product into customer hands, even if it meant sacrificing short-term growth.
Lack of focus
Just after Brammo’s first bike, the Enertia, began to ship to customers in 2009, the company changed direction. An ambitious line up of new models, headlined by the Empulse sport bike, but also including the Engage and Excite motocross models and an upgraded Enertia Plus, were announced with imminent delivery dates. Up to that point Brammo has promoted itself as practical and stylish mass market bike for everyone. The image makeover recast the company as an aggressive enthusiast brand.
As is typical in manufacturing, production and distribution issues popped up. Selling through Best Buy didn’t work, so dealers were hastily signed up. Brammo moved production of the Enertia to Hungary, delaying deliveries while it concentrated on the Empulse, a complex and expensive design with a proprietary gearbox and three times the battery and performance of the Enertia. Marketing of the production Enertia dropped off to almost nothing, while Empulse development bogged down.
Over at Mission Motors they soon realized that their target audience didn’t like the boxy look of the Mission One by celebrity designer Yves Behar, so they went back to the drawing board hiring established motorcycle professionals like renowned engineer James Parker (Yamaha GTS) and designer Tim Prentice (Honda NAS).
The new Mission R was an amazing design with range, beauty, speed and handling unlike anything before. Again, delivery dates were announced, and deposits were being taken on the superbike, albeit at the eye watering price of $68,000.
While this was going on Mission spun off a separate company to market its electric vehicle drive train technology to major car companies. This pivot in business strategy made sense based on the explosive forecasts in electric vehicles predicted in 2009. However the demand never showed up, and what little did saw car companies going to established suppliers in the traditional automotive supply chain.
By 2012, both Brammo and Mission were burning through cash while taking in little revenue. Enertia sales remained weak while Mission had not delivered a single customer motorcycle despite the stellar performance of their racing team and high-profile media exposure on Jay Leno’s Garage. The board decided to sell off the motorcycle unit, which was re-established in 2013 as Mission Motorcycles, to concentrate on the powertrain business.
Finally in 2013, three years after it was announced and two years after expected delivery, the Brammo Empulse was ready. Tests were positive and, together with a continuing string of racing successes, the brand looked strong.
Unfortunately for Brammo, 2013 was also a breakthrough year for Zero, whose lineup and capability had grown dramatically. At the time of the Empulse launch, the rival Zero S packed in 30% more range, a more powerful motor and cost less. The Brammo was considered the better bike, with Brembo brakes and Marchesini wheels, but it was too expensive and invisible thanks to a thin distribution network.
By late 2014 signs appeared suggesting that the business was failing. There was a debt refinancing deal just seven months after a $9.5 million funding round, and the company appeared on a website normally reserved for struggling startups. By this point Brammo had raised over $60 million from serious venture firms and blue chip industrial companies like Polaris Industries, but as one image from the funding website revealed, Brammo was still selling ideas instead of motorcycles. Yet another model, a cruiser, was promised in the near future.
Mission’s power train company, now called Mission Electric, was getting some work done for Mugen and reportedly Harley-Davidson, but the newly independent Mission Motorcycles was fading fast. The co-founders were locked in a bitter and public series of law suits and counter-suits over equity, while the CEO continued to make outrageous claims from the company’s trendy offices about a production lineup with delivery and specifications that bordered on science fiction.
The Cold, Hard Truth Hits Home
Brammo was clearly dead as a manufacturing enterprise when at the end of September 2014 the company announced a sale on its website, where unsold stock from 2013 and 2014 could be ordered for as much as 40% off their regular price. A few months later Polaris Industries, a major Brammo stock holder, acquired the floundering electric motorcycle business and shifted production of the Empluse under the Victory label.
A quick look at the dates of the announcements and financing disclosures reveals that the fire sale was in advance of the debt deal, meaning that for all intents and purposes, Brammo was out of cash by the fall of 2014, and went hat in hand to investors for help.
The Empulse, nice as it was, could not compete with Zero in the marketplace. Zero had roughly doubled sales each year since 2010, improved the product quality by an order of magnitude, lowered costs and won tremendous market share. According to information readily available in the public domain, Brammo burned through at least $66 million in cash plus an unknown amount of debt to sell perhaps as little as 4,000 motorcycles, equivalent to Zero’s annual production just this year.
“to date, we have not earned any cash/revenue of any kind” – Mission CEO
Mission is closed for good as of last week, for lack of sales. The company did not have the talent or the resources to develop, manufacture, market and distribute a legal production motorcycle. According to a letter submitted to the bankruptcy court, Mission did not earn one thin dime against $12 million in investment.
You can shout about being the revolutionary “Tesla of motorcycles” all you want, but it’s not the same as making and selling actual motorcycles. In the end, Mission and Brammo contained some excellent ideas and technology but simply didn’t meet the goal of shipping out reliable, competitive products and generating revenue.
The sum of the parts is Zero
Some pretty hard and inscrutable facts have forged the consensus that there is no business case for electric motorcycles:
Fact number one, front and center for all critics of electric motorcycles, is the range limitation of battery technology. No one wants to buy an expensive street bike only to be tethered to a one hour travel radius from their garage.
Fact number two concerns money. Those same said batteries are colossally expensive to manufacturer in volumes that make electric vehicles usable, so that they alone end up costing as much as an entire assembled 600 cc sport bike.
When you combine these two salient points, you end up with a losing formula that makes electric motorcycles extremely expensive while simultaneously limiting performance compared to traditional gasoline powered bikes. Objectively, this scenario suggests the technology for highway capable electric motorcycles is immature, which for the most part, it is.
But there is factual, data driven evidence that says highway capable electric motorcycles are not only viable, but that the economic fundamentals of the business point to growth. Right now as you read this, Zero is building and shipping about 20 new electric motorcycles every day, making Zero roughly identical in size to MV Agusta when Harley-Davidson acquired it in 2008 for $100 million. Zero raised about the same amount of venture capital as Brammo, but has consistently delivered improved models on time. The company stated that they are on course for another 50% growth this year, while the costs of batteries have fallen by half since 2010.
With the Brammo and Mission failures, lots of investors are understandably negative, but it is critical to note that all of the high-profile electric vehicle companies that died over the past four years did so because of operational weakness. Most of these startups were run by people with no motorcycle industry knowledge and yet held the arrogant belief that this was actually an asset.
Tesla, so often cited as an example of outsider success in an entrenched industry, is filled with executives and technical staff hired directly from establishment brands. Mission experienced most of its success with the Mission R, a design created by established motorcycle industry experts.
This is why the high performance, electric motorcycle revolution is stalled.
As usual, revolutions begin with radical thinkers operating on the fringe, but get carried on by established players. Case in point is Neal Saiki, the founder of Zero, an ex-Nasa engineer and mountain bike enthusiast who used outside logic to break new ground. But once his company got traction he had to move over and let more experienced people carry the company into mainstream growth.
Major OEMs will begin introducing electric motorcycles with the polish and performance the public expects within a couple of years, and it’s also probable that Zero will grow into a respected niche manufacturer with volumes similar to Aprilia or Moto Guzzi. They will have done this the old-fashioned way, building and selling bikes, reinvesting and growing organically. No outrageous statements, no flashy pyramid scheme of escalating product promises.
The electric motorcycle revolution is coming, but it will be a slow-burn transformation instead of an explosive one. Given the volatility of the motorcycle market, that is a good thing.