Day: October 19, 2018

Managing Expectations

Alta, a manufacturer of electric dirt bikes, very recently announced they are closing their doors.   Here’s the article I read on it:  Alta Motors Ceases Operations.  This is interesting on several levels.  Alta previously announced a strategic partnership with Harley-Davidson.  I thought this would figure into Harley’s Livewire project and help both companies enormously, but I guess that isn’t the case.  Last year, Alta lowered their prices substantially.  I thought this would  increase their sales, even though their prices were still high.  Alta had the electric dirt bike niche all to themselves, and this niche seemed to be more suited to an electric motorcycle’s range limitations.   Basically, motocross racing doesn’t require extended range, making Alta’s focus appear to be a well-thought-out strategy.   And finally, Alta had sold a large number of bikes, and they had orders for several hundred more (see the link above).

I guess, in the final analysis, it all comes down to profitability and cash reserves, and if you don’t have enough of either, you can’t keep going.  This makes Alta the second big US e-bike effort to flop (the first being the Brammo).

We are living in interesting times, and that is especially true with respect to the e-bike world.  The e-bike industry is simultaneously emerging and going through a shakeout.

I have been to the mountain. In this case, I did it on Slick. Slick isn’t the last e-bike that will emerge from Chongqing’s inner chambers; he’s only the first of many.

The CSC City Slicker, the newest player in this arena, is already playing a significant role.  The three big things Slick has going for it are its price, its quality (it’s world-class; see our earlier blog posts) and CSC’s well-earned reputation for customer service.  The biggest challenges for CSC and the City Slicker, I think, will be overcoming the US aversion to Chinese products, the ongoing uncertainties in the US/China trade relationship, and redefining customer expectations.

Overcoming US aversion to Chinese products is the least of these issues, and personally, I wouldn’t waste a single second attempting to do so. I think CSC and Zongshen put that issue to bed with the RX3 (it’s a world-class machine, with quality as good as or better than any motorcycle produced anywhere in the world).  To be blunt, anybody still singing songs about Chinese slave labor and low Chinese quality is too stupid and too ignorant to waste time listening to.  They won’t change their minds, so expending any effort attempting to convince them otherwise is an exercise in futility.  Hey, there are still people who think the earth is flat and that we faked the moon landing.  Best to forget about them, thank your lucky stars you aren’t that stupid, and move on.

I think the current uncertainties in the US/China trade relationship will sort themselves out within the next several months.   I think the tariff issue will either go away or have relatively insignificant effects, and I think much of what is going on now is posturing and positioning for a serious set of negotiations between our leaders.  Our trading relationship with China is, to borrow a phrase, too big to fail.

So we’re down to that last issue, redefining expectations, and that will be the biggest challenge for CSC and the electric motorcycle market.  There’s no question that CSC has a pricing advantage that is insurmountable, and I think when CSC announced the City Slicker it set a new reality in the US e-bike industry.  I think Alta realized that and that it might have played a role in their throwing in the towel.   I have to think that the folks at Zero are similarly eyeing the situation and ingesting huge amounts of Pepto-Bismol (and that’s using as charitable a phrase as I can think of).   You might argue that Alta and Zero have (or had) bigger motorcycles with different missions, but that would be as shortsighted and wrong as arguing that all Chinese goods are low quality or the earth is flat.  Yes, Zero motorcycles are bigger and have more capability, but that’s the world as it exists this instant.  The world does not stand still, my friends.   Do you think, even for one second, that the City Slicker is the only sensibly-priced e-bike that will emerge from Chongqing?  Do you think that future e-bikes from China will be small and have the same limitations as do today’s e-bikes?   I have been to the mountain, folks.  The answer is no.

A street scene in Beijing. You might see 50 e-bikes for every gas-powered scooter over there. It’s a tsunami, and it’s coming this way, folks.

But I digress:  Back to this expectations thing.   The City Slicker is not a bike that you can hop on and ride 2000 miles through Baja with a few stops for gas (or topping off the battery).  The range is limited to something like 40 to 60 miles today, depending on how fast you want to go.   The challenge here is to reach customers willing to use their City Slickers like their iPhones…something you plug in and top off whenever you have a chance.  That’s a different market than folks who buy internal combustion bikes.  But it’s potentially a huge market, as I saw firsthand in China where zillions of e-bikes were tethered to extension cords in front of every business on every city street.   More on this expectations thing:  CSC recently announced the price for a replacement Slick battery, and I think it’s about $1100.  Some of the keyboard commandos were choking on that number.  Hey, go price a replacement Zero battery.   You could buy three brand new City Slickers for what a Zero battery costs.   Like I said earlier, the challenge is going to be redefining expectations.  Are we up for it and will CSC market the City Slicker (and the Chinese e-bikes that will inevitably follow) in a manner that emphasizes this new reality?

Time will tell, but I know where I’d put my money.

That’s Not How We Do It In China

See that gap?  That narrow space between the semi-truck hauling 20-foot long, 6-inch diameter solid aluminum rods and the BMW M6? I’m taking it, man, riding the horn button and twisting the throttle: zoom-zoom. See that intersection? The one with a whirlpool of scooters, three-wheeled single-cylinder diesel trucks and at least a hundred cars spinning left leaving eddys of pedestrians lapping at the edges? I’m a Hurricane Hunter riding straight into the maelstrom buffeted from side to side, tip-toeing around, swerving, cussing, sweating and focused, man, focused.

China’s city traffic requires all your intensity, taxes all your ability and is like nothing I have ever seen on the planet. There is no respite. There is no pause, You must lock on and track hundreds of individual trajectories from every point on the compass, constantly. Insane traffic scenarios unfold at a lightning pace, there’s no time to marvel at the stupidity. There’s only time to act.

The chaos is cultural: Chinese motorists drive like they’re riding a bicycle because they were only a few years ago. In less than one generation the Chinese have gone from pedals to 125cc Honda clones to driving millions of air-conditioned automobiles on surface streets designed for a sleepy agricultural nation. At any given moment dozens of traffic rules are being broken within 50 feet of your motorcycle. It’s a traffic cop’s dream.

Except that there aren’t any. For a Police State there are not many police in China. I’ve ridden entire days and not seen one Po-Po. My Chinese friends tell me the police show up for collisions but otherwise stay low-key. Because of this hands-off approach stop signs are ignored. Red lights mean slow down. You can make a left turn from the far right lane and no one bats an eye.

China uses the drive-on-the-right system but in reality left-side driving is popular with large trucks and speeding German sedans. Get out of the way or die, sucker. Painted lane-stripes are mere suggestions: Drive anywhere you like. Of course, sidewalks and breakdown lanes are fair game for cutting to the front of the cue.

China’s modernization process has happened so fast that the leap from two-wheeled utility vehicle to motorcycles as powersports fun never really occurred. In China there are millions of people riding motorcycles but relatively few motorcyclists.

If the cars don’t get you there are other strange rules that serve to dampen the popularity of Chinese motorcycling as a hobby. Motorcycles are banned on most major toll ways between cities. Law-abiding motorcyclists are shunted off to the old, meandering side roads. Which would be fun if they weren’t so infested with heavy, slow moving semi-trucks and near certain construction delays. In practice, since tollbooths have no ability to charge motorcyclists, Chinese riders blow through the far right lane, swerving to avoid the tollgate’s swinging arm. Ignore the bells, shouting and wild gestures of the toll-takers and roll the throttle on, brother.

Being banned from the highway is not a deal breaker, but being banned from entire cities is. In response to crimes committed by bad guys on motorcycles many cities remedied the problem by eliminating motorcycles altogether. Sales of new motorcycles in these forbidden cities is non-existent.

Rules designed to discourage motorcycling abound. Vehicles over 10 years old are not allowed to be registered, thus killing the used and vintage scene. Gasoline stations require motorcyclists to park far from the gas pumps and ferry fuel to their bikes in open-topped gas cans. Add to that the general opinion of the public that motorcycle riders are shifty losers too poor to afford a car.

So why do Chinese motorcyclists bother to ride at all? It’s not the thrill of speed; 250cc is considered a big bike in China and it’s really all you need to keep up with the slow moving traffic. I’ve spent a lot of time with Chinese riders and even with the language barrier I get that they ride for the same reasons we do: The road, the rain, the wind. After being cooped up in a high rise apartment (very few Chinese live in single-family homes) I imagine the wide-open spaces between crowded cities must seem like heaven. They did to me. Chinese motorcyclists and Low Riders ride a little slower, taking long breaks to smoke a cigarette, drink in the scenery or just nap. Every motorcyclist you meet is instantly your dear friend because we share this passion and despite all the minor regulatory hassles everybody knows love conquers all.

More epic motorcycle adventures?  You bet!