Major motorcycle manufacturers largely have remained on the sidelines of the industry’s electrification effort. Honda, Yamaha and Harley-Davidson account for roughly two-thirds of the global motorcycle market, yet the only electric motorcycle (e‑motorcycle) between the three companies in production is the Harley-Davidson LiveWire — a $30,000 bike priced out of reach for most consumers.
E-motorcycles have struggled to catch on as quickly as other electric two-wheel vehicles such as e-bikes and e-scooters. While there are practical reasons for this, including the extensive range requirements of typical motorcycle consumers (250 miles or more), another primary impediment has been the lack of participation from major motorcycle manufacturers. The analysis from Guidehouse Insights suggests major motorcycle original equipment manufacturers (OEMs) will rapidly increase their involvement in electrification over the next five to 10 years due to several key emerging market drivers and forces.
Driving the market forward
Despite challenges around battery technology and consumer acceptance, the long-term outlook for e-motorcycles remains promising. We anticipate that global e-motorcycle sales will grow from roughly 1.1 million units in 2020 to 3.6 million by 2030, at a compound annual growth rate of 14.4 percent.
As gas-powered motorcycle markets continue to decline due to an aging consumer base and an increasingly stringent regulatory environment, it’s good business sense for major OEMs to pursue the only segment of the market that’s consistently growing — e-motorcycles. The global motorcycle market, with 38 million annual unit sales, will need to become fully electrified. Increasingly stringent emissions standards continue to make gas-powered motorcycles more expensive, and several city and national governments are moving to outright ban internal combustion engine (ICE) motorcycles.
For example, Tokyo plans to ban the sale of gasoline motorcycles by 2035; other cities in the Asia Pacific region, such as Hanoi in Vietnam, are expected to ban ICE motorcycles sooner. Cities and countries also offer e-motorcycle purchase incentives such as a U.S. federal tax credit of 10 percent or up to $2,500 off e-motorcycle purchase price, and are mandating the creation of low and zero emissions zones. More than 250 cities across Europe have a low emission zone. Additionally, lithium ion battery prices continue to decrease, and range capabilities continue to improve, which is making electrification more attractive for the major OEMs.
Several major OEMs poised to release new models
Momentum behind e-motorcycles is building with the major manufacturers. In February, Harley-Davidson unveiled its five-year plan called The Hardwire. The company’s plan included creating a new division specifically for e-motorcycle development. This structural change should enable Harley-Davidson to better focus its efforts and more rapidly develop e-motorcycle products over the next decade. In the near-term, it is expected to roll out a mid-power, lower cost e‑motorcycle in late 2021 or early 2022.
Honda is also making significant investments in e-motorcycles. The Japanese motorcycle company filed patents in August for electric versions of its CB125R and CB300R motorcycles, which are small, high volume bikes popular in India and other major motorcycle markets. By leveraging existing parts and designs, Honda could create lower cost e-motorcycle solutions. The company also has been investing and piloting battery swap programs with its PCX seated e-scooter and Mobile Power Pack batteries in Indonesia and the Philippines. Battery swapping involves the manual or automated switching of a vehicles’ discharged battery pack for a fully charged one, avoiding the delay associated with traditional EV charging.
Honda and Yamaha will achieve far greater sales volumes than Harley-Davidson over the next 10 years by designing electric two-wheelers for the Asia market.
Yamaha has released a series of e-motorcycle concepts and patents in the past, but the company has been relatively silent over the past year or two on new developments. The company, however, has taken a more active role in the seated e-scooter market through a partnership with battery swapping platform provider Gogoro in Taiwan.
Honda and Yamaha have the edge
Harley-Davidson has been the most active major motorcycle manufacturer in the electrification effort. If the company can execute on product quality and offer an affordable price for its upcoming mid-power bike, it could help boost the e-motorcycle market — similar to how the Tesla Model 3 created mass market potential for electric sedans.
However, most motorcycle sales globally are not in North America and Europe (where Harley-Davidson sells most of its bikes). At Guidehouse Insights, we estimate that 83 percent of all motorcycle sales are in the Asia Pacific region, where Honda and Yamaha lead the market. These companies are also focused on developing smaller and lower power electric two-wheelers, which account for the majority of sales globally. Honda and Yamaha likely will achieve far greater sales volumes than Harley-Davidson over the next 10 years by designing electric two-wheelers for the enormous Asia Pacific market.
Battery swapping also will play a key role in accelerating e-motorcycle adoption, a technology that Honda and Yamaha have been far more active in developing. On March 1, the two companies pushed further into this space by announcing a partnership with Piaggio and KTM to develop international standards for battery swapping. Also in March, the Swappable Battery Consortium for Electric Motorcycles — consisting of Honda, Yamaha, Suzuki and Kawasaki — reportedly reached an agreement to standardize swappable batteries and replacement systems for e-motorcycles in Japan.
This partnership could provide a key demonstration of how industry-led battery swap standardization can emerge. Countries targeted by Honda and Yamaha — such as India, China, Indonesia, Thailand, the Philippines and Vietnam — are also the markets best suited for e-motorcycle battery swapping applications. They have high urban density rates and high percentages of households that own two-wheelers. Battery swap business models reduce or eliminate market barriers around extended charging times, range anxiety, high upfront costs and battery reliability because riders easily can carry and switch out batteries on the go.
With a growing list of countries instituting relatively near-term timelines to outright ban the sale of gas-powered cars, it would be naive to think ICE motorcycles wouldn’t be banned simultaneously or soon thereafter. While major motorcycle OEMs have played a small role in e-motorcycle product and technology development, they have little choice but to join the growing movement toward electrification if they want to stay in business.