Polaris Industries Inc. (NYSE:PII) resurrected the iconic Indian motorcycle nameplate just in time to offset the stumbling big-engine Victory platform.
While no one seriously thinks Polaris will eat into Harley-Davidson Inc's (NYSE:HOG) industry-dominating 50% share of the market with its reinvigorated Indians, the success it has achieved with the Chieftain, Scout, and now the Dark Horse line ensures it will at least be able to do more than just nibble away around the margins.
Yet there's one area where Polaris Industries can do more than just match what its rival is doing. It can actually beat Harley and grab the lion's share of the market in the electric motorcycle category.
Sparking interest in e-bikes
Harley-Davidson got a lot of mileage from its LiveWire Project, a work-in-progress electric motorcycle that it took on a roadshow across the U.S. to gauge customer interest. That's now expanded to Europe where the e-bike is on tour.
But Polaris is doing more than just putting its finger up to gauge which way the wind is blowing: it's going to start manufacturing electric motorcycles later this year, in large part because it acquired e-bike maker Brammo in January, one of the two bigger manufacturers around (the other is Zero Motorcycles).
Although the powersports vehicle maker hasn't said specifically whether the Brammo line of bikes will live on, it's clear the e-bike maker's electric vehicle powertrains are what Polaris really had its eye on.
Jumpstarting the industry
In the press release announcing the purchase, the global powersports vehicle maker highlighted several times Brammo's electric drivetrain technology, describing it alternatively as "award-winning," "innovative," and "industry-leading."
With Brammo officially brought into the fold, Polaris is ready to jump into production, announcing it will utilize the e-bike maker's assets to start making electric motorcycles in the back half of the year at its Spirit Lake, Iowa facility where it currently manufacturers Indian and Victory bikes. And though an electric Indian motorcycle is always a possibility, the likely beneficiary is going to be the motorcycles under its Victory banner.
At the end of January following the Brammo purchase, the auto website Jalopnik noted Polaris trademarked the name "Victory Charger," and indicated its intended use was for "electric motorcycles and structural parts therefor."
Plugging into growth
Polaris has shown a keen interest in the EV segment for awhile, having produced in 2009 the small vehicle Breeze -- which its says was useful for getting around planned communities in the Sun Belt -- as well as an electric version of its Ranger side-by-side off-road vehicle. In 2011, the year it purchased Global Electric Motorcars from Chrysler, it also made a $28 million investment in Brammo.
So don't expect this purchase to end with just a Victory e-bike, but look for Brammo's technology to end up in the full range of Polaris small vehicles and ORVs, and maybe even in its revolutionary trike, the Slingshot.
Still, the real money to be made, if there is any, will likely be in a mainstream electric motorcycle because the market is ripe for the taking. Harley, for example, says response to its LiveWire has been overwhelmingly positive, though I'm not convinced that it's the right niche for the big-bike maker.
A full-throttle opportunity
Although Zero is one of the leading manufacturers, it sold just 1,300 e-bikes in 2014 and anticipates selling 1,800 this year. That's a 38% year over year increase, but as the Los Angeles Times notes, that's about how many gas-powered bikes Harley sells in two days.
Zero, however, says it welcomes the competition. It noted that when Harley went live with LiveWire, traffic to its website doubled. Still, it suggests the market is wide open and with Polaris's financial backing, a Victory e-bike could quickly leap forward.
There still remain some technological challenges, mostly centering around the limited range e-bikes offer. The fully loaded Zero SR, for example, has a maximum range of 185 miles, depending on factors like how the bike is ridden and the weight of the rider. Harley's LiveWire, on the other hand, has just a 50 mile range. Of course it's still in development and a production bike would be required to go further, but it shows the limitations they still have.
Another is how long it takes e-bikes to recharge. The SR can take more than 10 hours to charge, though piggybacking it with additional (and more costly) quick-charge units, reduces total charge time to under three hours. Still not ideal for cruisers, which is why e-bikes have more often than not been marketed toward urban riders.
Still, with Polaris Industries' EV experience and now an advanced powertrain manufacturer on board, it has the potential to produce an electric motorcycle that more than meets the needs of riders interested in this niche segment of the market. An e-bike from Polaris could be where the rubber meets the road and where the motorcycle maker beats out Harley-Davidson.
Follow Rich Duprey's coverage of all the motorcycle industry's most important news and developments. He has no position in any stocks mentioned. The Motley Fool recommends Polaris Industries. The Motley Fool owns shares of Polaris Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.