ElectricMotorcycleForum.com
General Category => Industry - Electric Powered Two Wheelers => Topic started by: MostlyBonkers on October 12, 2015, 12:53:49 PM
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It seems that the big motorcycle manufacturers are just waiting for the variables to improve a bit more before entering the market. When they decide to take the plunge, will one of them buy Zero? Or will they just release far superior products and let Zero wither and die?
I'm betting on 2020 being a big year for changes in the electric motorcycle industry. I don't know if Zero is a privately owned company still, but if it is then providing they can build their reputation within the next few years (and dealer support), then they may just stand a chance of hitting the big time without being taken over.
Any thoughts?
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Not sure but wouldn't any take over bid raise Zero's investability status and any existing equity value and , at least in part, provide more access to debt funding or raising private equity and/or venture capitital to help them go it alone?
Existing investors (think I read venture capitalists are in) would have to decide are we in it long term? Or is this outside buy out deal just too good for that?
If it is the former, they think that isn't enough of a bid.
If it is the latter, they think they have been paid more than the going price.
The biggest danger I see from our P.O.V. is the buyout is just the means to stop competition before mass market sales kick in and whilst the buy out is consequently still cheap and that could be Mr Honda or H.D. who may or may not be able and willing to provide a better product for the price.
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This is part of a discussion I've been having for a while now, but my focus has been more about "how long before the big manufacturers get into the market" rather than a buyout of Zero. For my money, what with Polaris' moves, I'm predicting 2016. The timing of my book was due, in a big part, to that belief. That said, I'm thinking one major mfr, not a bunch of them.
Harley? Fuggetaboutit. ;)
Really, though, the thing anyone has to understand about the big boys is that they're looking for astronomical sales numbers, by electric motorcycle standards. Energica's Livia Cevolini has told me she's looking for 500 units sold for their first model year. I'm not entirely sure, but I'm under the impression that Honda is looking for a couple of more zeros on that number before they consider it.
Speaking of Honda, every time Mugen races we get back into that discussion. Honda clearly is toying with R&D, and Zero is doing them a huge bit of free market research, but buying them out? They don't need to, I doubt they want to, and consolidating the market at this stage isn't going to do anyone any favors in terms of selling 50,000 units a year.
I also think it's important to understand that Polaris bought out Brammo at fire-sale prices, basically due to very low delivery of sales predictions. In a lot of ways, it can be seen as cutting their losses rather than trying to enter the market in any real way.
I think I need more coffee - did that make sense? :D
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As far as I can acertain by an internet search, no EV manufacturer has ever been gobbled up unless it is been preceded by lots of smoke attached to a slow burning fire sale.
So history suggests for Zero to be "gobbled up" at any time it will need to be deemed a binary dead cert success or failure by the buyer.
In the former case that possibility could be to protect loss of future sales from a legacy ICE manufacturer who thinks it might lose sales to Zeros' offerings, dunno who though. There is no guarantee that building electric bikes would be their motivation ;).
However the timing of either of those outcomes will undoubtedly be very different IMO.
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I think government emission regulations (rather than the marketplace) will ultimately result in more electric motorcycle sales and perhaps the requirement that large motorcycle manufacturers will be required to market EV's if they still want to sell gas-powered vehicles. (Kind of what is going on in CA right now.) If that happens and the requirements stick, I think you will see more market activity and interest in electric motorcycles. I agree with Ted that Honda and Yamaha (and probably Kawasaki) would want to design electric vehicles in-house. BMW is no doubt already designing their own electric motorcycle line, KTM won't be far behind and who knows what Ducati and Triumph are thinking about right now.
If anyone was going to buy out Zero so that they could jump into the marketplace without doing it the hard way, I would put my money on Suzuki or Triumph. H-D might be forced into the market (kicking and screaming) and they could also be a suitor for Zero if they thought the LiveWire (or its production prototype) was just going to be too much trouble to manufacture.
All this changes, of course, if there is a shooting war in the Middle East that stops the flow and transportation of oil from that location. If that should happen and oil prices go through the roof, or oil becomes scarce, then EV sales would skyrocket, the industry would finally get rich and mature - and battery prices would finally go down due to their mass production (assuming enough raw materials to make them can be discovered).
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Nobody is going to jump into the market and immediately undercut Zero. They have done a lot of hard work to get to their price point. Even with the benefits of being a current manufacturer, the batteries still cost a lot of cash.
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Good point, but the big guys can afford to sell at a lower margin, or even at a loss to get market share, right? 8)
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Nobody is going to jump into the market and immediately undercut Zero. They have done a lot of hard work to get to their price point. Even with the benefits of being a current manufacturer, the batteries still cost a lot of cash.
I'm not so sure. If Honda were to decide they wanted to get into the EM market, even a small-volume model would probably get a lot better pricing than Zero can. Honda has far more horsepower than Zero even for a niche product....a lot of battery manufacturers would do just about anything to get their foot in the door at Honda.
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If Honda EV cars are anything to go by they, like Toyota, believe in Fool Sells and Hydrogen being the future which IMO it always will be, a fake disruptive technology to undermine EV sales whilst being promoted by liquid fuel sellers with big political lobbying clout to keep the oil flowing and save the ICE :'(
10,000 psi Hydrogen bomb motorcycle anyone? ;D
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Good point, but the big guys can afford to sell at a lower margin, or even at a loss to get market share, right? 8)
Right, they could sell at a loss.
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Good point, but the big guys can afford to sell at a lower margin, or even at a loss to get market share, right? 8)
Right, they could sell at a loss.
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And that is something that Zero can not do. They have no other product to subsidize a loss-leader.
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...BMW is no doubt already designing their own electric motorcycle line, KTM won't be far behind and who knows what Ducati and Triumph are thinking about right now...
KTM are selling electric dirt bikes(including street legal) already, they said they wanted to keep initial sales in Europe to see how things go, then sell globally. I'd love to own one; I think it'd be much better suited to dirt than my Zero(but so it should, 'cause KTM have a lot more experience at building dirtbikes than Zero), but it only has about a 2.6kw battery, and I'm guessing it'll be pricey when/if released here in Oz.
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Good point, but the big guys can afford to sell at a lower margin, or even at a loss to get market share, right? 8)
I think Polaris has shown, that so far, no one is trying to do that. Probably since market share is very low as it is anyway. Polaris is repurposing a Brammo and making it more expensive... Goes to show (me) that they are charging for the badging. They think you should pay THEM for the Victory name to on your electric bike.
To add for the thread:
I highly doubt Zero would get "gobbled" up, just like Tesla won't. Zero are really the only ones pioneering here, and their experience will give them the edge when it comes to price. They can continuously refine their battery and everything using that experience to cut costs. Any new Electrics, even by the "old timers" are going to be subject to "starting anew" because they can't take their ICE experience and directly correlate it to Electric. Polaris at least has an advantage since they bought that experience in Brammo. But they chose to increase price and not try to dethrone Zero.
Zero are the ones to beat. Honda, Suzuki, Kawasaki etc... are NOT going to automatically destroy Zero, by putting out an electric bike, just because they are household names.
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Zero will never ever be able to compete on price with the big manufacturers until they are pushing 10k units a year at least. If Honda decided to mass market an electric motorcycle they could comfortably spend more just on advertising than Zero's entire annual revenue.
If a big player decides to get involved within the next few years, before Zero has established significant market share, we all better hope that one of the big names buys Zero because otherwise they just won't be able to compete. Zero's business plan almost certainly revolves around either selling up or licensing to a large company.
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I keep thinking that Victory/Polaris is just selling the Empulse TT to stick it to H-D. Right now I am not sure if they are going to stay in the EV market if sales do not increase and become profitable for their retail dealers. They may get a lot of pressure from their dealers to drop the bikes if the market doesn't pick up quickly. ???
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Are there any tax credits or something that would make a Mfg want to buy Zero?
If several motorcycle companies drop ebikes Zero might be dead.
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If a stated wants a compliance motor perhaps.
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Are there any tax credits or something that would make a Mfg want to buy Zero?
No, but they've got a metric assload of very important Intellectual Property in patents, their battery/BMS/motor tech, trade secrets, and experience in what NOT to do making an e-bike. That stuff's important and expensive.
For example, you don't see any diagrams or cutaways of the new motor with the new cooling tech, do you? Or anything beyond vague handwaving explanations.
That's the sort of thing an established ICE company like Honda or Kawasaki would want.
Honda can replicate it all (like they're apparently doing now) or... just buy it by purchasing Zero.
However, then you need to integrate the e-bike technology into a company that's done ICE literally since WW-II and deal with the corporate mentality and way of doing things. Polaris seems to be finding this to be difficult. It looks like Brammo is an indigestible lump so far, seeing as how the new bike is pretty much unchanged.
So there's serious downsides as well as advantages.
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Tesla should buy them and integrate their product into their supercharger network. Game, Set, Match!
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For example, you don't see any diagrams or cutaways of the new motor with the new cooling tech, do you? Or anything beyond vague handwaving explanations.
That's the sort of thing an established ICE company like Honda or Kawasaki would want.
They're probably eagerly awaiting the first 2016 Zero's at their chops so they can dissect them.
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Tesla should buy them and integrate their product into their supercharger network. Game, Set, Match!
Tesla are not interested in motorbikes, can't hold an atmosphere, no use on Mars... ;)
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Or behind a VW ;D
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I keep thinking that Zero "carbon credits" might be worth something to somebody that wants to keep polluting. ???
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Tesla should buy them and integrate their product into their supercharger network. Game, Set, Match!
Tesla is still in start-up mode themselves. Considering their $290M loss last year I'd say they're out of the buying market.
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For me the issue is not so much about the product or about making a loss, than about the service delivery. Uber invested billions and is still losing money. You can be independently funded and have an agressive market approach.
Where big companies really have a competitive advantage, it is about service - see BMW. They did 10x what Zero did with their new (and expensive) scooter. First because they targeted the highest volume 125 cc market (which Zero XU did when it was still proposed). Second because you know that if you have issues, you'll find a large network of BMW dealer. This is also where Polaris' acquisition of Brammo could make sense.
Tesla has a specific network and a "zero concern" policy. Zero should either do the same, or let other do it but ensure that both delivery (ie training or skype-supporting remote dealers, which they do) and experience (ensuring that anybody with an issue get a replacement or a compensation) are great. Sure that's a little more expensive, but in the long term the company's survival entirely depends on this.
V
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Tesla should buy them and integrate their product into their supercharger network. Game, Set, Match!
Tesla is still in start-up mode themselves. Considering their $290M loss last year I'd say they're out of the buying market.
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Oh Tesla are in right in the middle of a buying market, just not for other companies.
Think about what Tesla are buying right now, Tesla's "losses" are investments, mostly the giga-factory, and buying and rolling out some of the more powerful chargers, and charging infrastructure, in and across the world.
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Tesla should buy them and integrate their product into their supercharger network. Game, Set, Match!
Tesla is still in start-up mode themselves. Considering their $290M loss last year I'd say they're out of the buying market.
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Oh Tesla are in right in the middle of a buying market, just not for other companies.
Think about what Tesla are buying right now, Tesla's "losses" are investments, mostly the giga-factory, and buying and rolling out some of the more powerful chargers, and charging infrastructure, in and across the world.
Tesla is definitely investing in the future. I am not sure that is true of some other companies in the EV field. ::)
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Did anyone hear about Zero's 1 million round of funding in December?
Not allot of money (in the scope compared to previous rounds).
Should this be a concern?
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Did anyone hear about Zero's 1 million round of funding in December?
Not allot of money (in the scope compared to previous rounds).
Should this be a concern?
That was a grant match from their (sole) investors for R&D, which is probably why it shows up in reports as $1M Venture. The state of California gave them a grant for $1M, which their investor matched.
http://recorderjournal.com/2015/12/12/zero-motorcycles-gets-1m-in-funding-from-california/ (http://recorderjournal.com/2015/12/12/zero-motorcycles-gets-1m-in-funding-from-california/)
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Did anyone hear about Zero's 1 million round of funding in December?
Not allot of money (in the scope compared to previous rounds).
Should this be a concern?
I think that could also be seen as a case of "not turning down free money"
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“We thrive at the intersection of transportation, technology and energy efficiency,†said Zero Motorcycles CEO Richard Walker. Recorder Journal http://recorderjournal.com/2015/12/12/zero-motorcycles-gets-1m-in-funding-from-california/
I think the use of the word 'thrive' is intended to ameliorate concerns. It could be complete BS but I suppose that depends partly on Richard Walker's character. Anybody know him? I'd imagine he's a good person at heart. Why else would you attempt to build and run such a risky business in such a niche market? You've got to love bikes, have balls and lots of hope.
It sounds to me like a lot of effort would have gone into getting the extra financing. Not just the government grant, but also persuading existing investors to cough up more cash.
The extra money will help retain the right people, bring more in and no doubt develop the product.
I hope Zero has another couple of years or so to improve reliability, reduce prices and get some good sales going before the big boys jump in.
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Did anyone hear about Zero's 1 million round of funding in December?
Not allot of money (in the scope compared to previous rounds).
Should this be a concern?
I think that could also be seen as a case of "not turning down free money"
Good point.
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I have met Richard Walker. He seems like a really nice guy, more like a politician than a "whip cracker" like some Silicon Valley executives. I get the impressions that all of the big decisions at Zero are made (or at least approved and closely followed) by the company board (investors) and the company management implements their policies. I suspect not much happens at Zero without the board's approval and that upper management doesn't make the big decisions, at least with regard to things that will affect company finances and profitability. ???
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Thanks for that insight Richard. I came across Richard's profile on their website and it's rather impressive!
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Hello, fellas. I am fairly new here, so...be gentle. I don't see Zero being bought up. There are two historic reasons for a company to be bought out. One is that they are in an emerging industry and the smaller company has key patents and name recognition that it would take the larger company time and money to replicate (ie, Harley developed the Livewire "in house", instead of just partnering with Zero to make a Zero cruiser).
The second reason would be that the smaller company was temporarily under-valued and could be bought at a significant discount. The American system has a tax structure where if a company invests its profits into "business expenses", then it pays no tax because it "broke even". For instance, Exxon makes billions, but...it spends so much money on acquisitions and business expenses, that it pay almost no taxes. This is a perverse incentive, but... it exists.
So...is Zero undervalued, or...are their products difficult to replicate (due to patents)? By that I mean...can they be bought, and then their products marked up in price enough to justify the costs of the buy-out?
The Zero name definitely has some value right now, but...there is no "secret sauce" that can be acquired by a buyout. With enough money, anyone can design an electric motorcycle. As far as undervalued? It has been a hard grind to slowly reduce the price of the models that are available to below "early adopter" prices. There is no "low hanging fruit" for "hostile take-overs" here.
Zero has no competition right now. Alta is doing well, but their bread-and-butter is off-road. Zero is it when it comes to a street electric motorcycles.
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HD invested in Alta and used them for developing their electric platform.