Electric Motorcycle Blues / LiveWire Tanks - Again - Adventure Rider

Image: LiveWire

Another quarter has passed for the Harley-Davidson-owned LiveWire electric motorcycle brand, and its finances are not looking good. Actually, they have never looked good, but they now look much worse. When the highlight of its financial results is that it reaffirms its previous guidance that it will post an operating loss of $105 to $115 million, you don’t need to be a rocket scientist to recognize that the company has troubles.

When the numbers are alarming, it’s not unusual for companies to put a spin on how they are presented. LiveWire is no different. In its Third Quarter 2024 Summary of Results, its lead bullet is:

Posting a double-digit increase over the third quarter and a triple-digit increase in year-to-date unit sales is a tremendous accomplishment, isn’t it? In most cases, it would be. But the percentage increases LiveWire crows about are based on sales of a measly 99 electric motorcycles in Q3 2024. Is that something to be happy about? Should that reassure investors? After going public in 2021, shouldn’t LiveWire, a company with a market cap of $1.16B, be able to sell more than 99 electric motorcycles in a single quarter? Well, for LiveWire, not this quarter.

In addition, LiveWire lowered its projection for electric motorcycle sales for the entire year of 2024. It now says it will sell 600 to 1,000 revenue units, down from the 1,000 to 1,500 motorcycles it said it would sell just one quarter ago. Cutting its sales projection by about 33% is a significant change, but that’s not the real worrying detail. Just to reach the lowest limit of its projection (i.e., 600 units), LiveWire will have to sell an additional 126 units in Q4. That’s more units than LiveWire sold in Q1 and Q3. That leaves only Q2 2024 as the quarter when it sold more than 126 units. And that was at the heart of the motorcycle riding and buying season. Do they really believe that they will sell more LiveWire electric motorcycles in Q4, the equivalent of motorcycling’s dead of winter?

If they think they can actually sell 600 bikes in 2024, it is a stretch, particularly since they didn’t roll out any new machines in the previous quarter as they did at the end of Q1. And if Q3 is any example, they likely won’t be able to make their lowered 2024 projected sales during the riding season’s lowest sales period. Many people in North America have already stored their bikes for winter or are thinking of putting their bikes away for the riding season. So, it’s not clear what is giving LiveWire the impression that it will sell more machines in Q4 than it did in Q3.

When times are bad, most companies look for ways to reduce costs. LiveWire isn’t any different and told investors that they had taken a knife to the corporate expenses, saying:

That’s a rather concerning statement. LiveWire reduced costs by $1.4M compared to Q3 2024, which can help prop up profits (or, as in the case here, reduce losses). While reducing administrative expenses is often a good thing (not always, though), trimming engineering and selling expenses can sometimes have just the opposite effect. When you are trying to build a company with new machines, is it a good idea to spend less on engineering? This is particularly concerning given LiveWire’s recent recalls for some not-so-minor glitches.

When engineering costs are pared, bad things can happen. In the case of LiveWire, the S2 Del Mar and S2 Mulholland were recalled multiple times. Both were recalled for the the potential for a fuse to “…open under certain riding conditions resulting in a loss of propulsion without providing prior indication to the rider.” The S2 Del Mar was also recalled for a software issue that could result in the bike shutting down without any prior indication to the rider. If the shutdown happened while the bike was in motion, it might not be able to be restarted. The last significant recall was for “loose rear axles and/or lower shock bolts which, according to their Part 573 report to NHTSA, “…may lead to a loss of control which may increase the risk of a crash.”

The LiveWire S2 Del Mar. Image: Harley-Davidson

Further, more than just fat may have been trimmed. The last bullet of their Q3 summary of results said:

So included in the cuts were reductions in headcount, which is a “nicer” way of saying jobs were lost. While LiveWire didn’t say where the headcount reductions came from, it appears that at least some of them were in the engineering department since their costs were explicitly identified as being reduced. It would also appear that LiveWire reduced its selling costs (i.e., marketing) as well as administrative costs (i.e., administrators). The relocation of LiveWire Labs to Milwaukee may have been a good move since LiveWire motorcycles are manufactured there and its where the mothership Harley-Davidson lives and works.

A LiveWire investor chart showing predicted LiveWire sales for the period 2021 through 2030. Image: LiveWire

Harley-Davidson chose to include kids’ electric balance bike manufacturer STACYC in the LiveWire brand. For several quarters, STACYC supported LiveWire’s financials. STACYC’s financial successes somewhat offset some of LiveWire’s significant losses. But that time is over, and STACYC’s sales have also been falling. In Q3 2024, sales of STACYC balance bikes fell 52 percent. And the 52 percent decline is from a much larger number. In Q3 2023, STACYC sold 7,231 bikes. But in Q3 2024, that figure has dropped to 3,442 bikes. Even with that drop, STACYC balance bikes brought in nearly three times more revenue for LiveWire than did their electric motorcycle segment. While LiveWire electric motorcycles garnered only $1.2M in revenue, STACYC brought in $3.2M.

LiveWire has been pitching that its sales would be much higher for years now. Back in 2022, LiveWire pitched phenomenal growth in an investor presentation. 2022 was to have seen 957 motorcycles sold. For 2023, they claimed that sales would be 7,236 units, and in 2024, they showed 15,736 units making their way off of showroom floors. But perhaps even more incredibly, LiveWire said it would more than triple 2024’s sales to 53,341 in 2025 and doubled down for 2026, saying ~190,000 units would be sold. We all now know that those projections failed, and it looks like the future ones will fail as well. With the benefit of four years of development, LiveWire says its 2024 sales will reach only 600 to 1,000 units, and even those numbers are in doubt. To date, LiveWire has sold a little under 2,100 electric motorcycles.

Both the LiveWire S2 Mulholland (pictured here) and S2 Del Mar have been the subject of NHTSA safety recalls. Image: LiveWire

Recently, the US government gave Harley-Davidson and its LiveWire brand a $89M grant (not a loan but a grant). In a press release, a US Senator said the money supports the $178M investment necessary to upgrade current electric model quality and increase production of the two existing models. One has to wonder why, with LiveWire’s reduced 2024 sales projection to 1,000 motorcycles, they would need to increase production.

With LiveWire’s Q3 2024 reduced sales projection of between 600 and 1,000 LiveWire electric motorcycles being sold in 2024, how long will Harley-Davidson wait until it cuts its losses? MoCo’s financials have not been stellar lately and, in fact, were startlingly dismal for Q3 2024. They could potentially sell off LiveWire’s assets and tech (not easy) to hopefully offset some of their losses or merely close the doors and place the company in bankruptcy. Or, they could think very long-term with a Hail Mary-type pass and continue to throw cash at the company.

When all is said and done, the problem with selling electric motorcycles is not unique to LiveWire. Recently, many electric motorcycle manufacturers have closed their doors, leaving those who placed advanced deposits disappointed and angry. With the cash and help of its mothership, LiveWire has avoided these problems. But the question is, how long will Harley-Davidson keep shoveling money into the hungry cash blast furnace of the electric motorcycle marketplace? Let us know what you think in the comments below.