Starting an electric motorcycle company is a tough row to hoe. If you’re lucky enough to secure investments, you still need to make it to production. If you move models off the assembly line, you still need to move them off the showroom floor. It’s a niche space with competition from all sides.
That niche has been shrinking lately, not growing, as some players in the electric motorcycle space have filed for bankruptcy in the first four months of 2024 while others continue to struggle to reach goals.
Collapsing CAKE
Electric motorcycle company CAKE was known for putting Scandinavian design on two wheels. If Apple and Ikea designed an electric motorbike together, it would probably look like something from CAKE’s lineup. It’s that minimalist aesthetics that earned CAKE much of its attention. (Well, that, and its hefty price tags, but that’s another issue.)
By the turn of the decade, the Swedish startup was the darling of the industry. At least to venture capitalists, it was. In 2019, CAKE raised $14 million during its Series A fundraising round. That total pales in comparison to its Series B haul, which topped $60 million in 2021. Those funds allowed the brand to expand its production and retail sales facilities.
During this period, CAKE opened a retail and service center in Los Angeles, grew its operations in Italy, and inked a distribution deal in Japan. It also released the up-spec Bukk electric dirt bike and the Kibb, a semi-autonomous electric ATV, in late 2022. Around the same time, CAKE’s fortune started running out.
Despite opening Series C fundraising in August, the startup hadn’t secured enough capital by the end of 2022. CAKE then shifted its fundraising efforts from Europe to North America in early 2023. Its case wasn’t helped by the collapse in March 2023 of Silicon Valley Bank (SVB), the 16th largest bank in the country at the time, and one that primarily served startups and venture-backed firms.
With fundraising options running low, CAKE CEO Stefan Ytterborn pitched a strategic partnership deal to several manufacturers, including Harley-Davidson. Ytterborn claimed that potential investors showed interest, but a deal never materialized. After stringing out the available capital for as long as possible, CAKE ultimately filed for bankruptcy in February of 2024.
Ytterborn isn’t throwing in the towel, though. He still intends to find an investment partner and restructure the company for another go at it. While such an outcome seems improbable from this vantage point, others have pulled off similar feats, including Arc CEO Mark Truman.
All over again
The Arc Vector is the definition of excess. Its 16.8 kWh battery wedges into a three-piece carbon fiber monocoque frame. An Öhlins ILX56 shock suspends its hub-center steering front end. Its motor reportedly produces 128 foot-pounds of torque. Its claimed range is 150 miles. Oh, and I almost forgot, its MSRP is £98,000 (nearly $123,000…$123,000!!!).
It’s an electric motorcycle reserved for exclusive customers. That’s made clear by Arc’s sales figures, as the British startup has only sold 11 units, one of which went to Hollywood star Ryan Reynolds in September 2023. Should we be surprised that Arc encountered financial issues shortly after?
According to Arc CEO Mark Truman, U.S. distribution issues sharply impacted the company’s revenue and forced it to seek investment. (Who knew that dealing in unobtainium could be such a high-risk business model, huh?) Soon after, in March 2024, Arc went into administration. If you don’t speak British English, administration is akin to bankruptcy in the states. Truman is currently working with his partners to resuscitate Arc yet again. After all, this isn’t his first go-around on the administration carousel.
Truman founded Arc Vehicle Ltd, in 2017, but the business entered administration in September 2019. He then revived the project as Arc V Ltd, in 2020, only to suffer the same fate all over again in 2024. Just like CAKE’s Ytterborn, Truman hopes someone throws Arc a lifeline, but the prospects don’t look good. That goes for much of the electric motorcycle industry at this point in time.
Closing in
LiveWire benefits from something that neither CAKE nor Arc did: backing from a major manufacturer, namely, Harley-Davidson. But even that doesn’t guarantee success. In the second quarter of 2023, LiveWire only sold 33 units, when its only motorcycle model was the expensive LiveWire ONE. It delivered 50 motorcycles in Q3 before the S2 Del Mar’s arrival drove deliveries up to 549 units in Q4. Despite selling 21% more units in 2023 than in 2022, the company’s revenue fell by 18%. The same pattern continues today.
In the first three months of 2024, LiveWire’s sales grew by 86% (compared to Q1 2023), but revenue shrank by 16%, due to selling lower priced Del Mar models plus a drop in sales of its Stacyc bikes for kids. As Lance recently reported, Harley is relocating LiveWire’s California-based operations to the brand’s Milwaukee headquarters and cutting 10% of the company’s employees in an attempt to manage costs. When LiveWire went public and began trading on the New York Stock Exchange, it projected sales of more than 15,000 motorcycles in 2024. It currently projects that this year’s sales will be less than a tenth of that.
It’s safe to say the electric motorcycle industry is struggling, and not just the manufacturers. Los Angeles’ Hollywood Electrics opened its doors in 2009 and quickly became the nation’s number-one Zero Motorcycles dealer. It held that title for nearly a decade. Unfortunately, after 15 years of doing business, Hollywood Electrics closed its doors in February.
In the car space, sales of electric vehicles are still rising, but at a slower rate as the industry has to move beyond early adopters and win over mainstream buyers. Electric motorcycles face even more challenges, particularly competition from bicycles that are less expensive, easier to own, and fulfill the urban commuting duties many consumers need. 2024 looks like a particularly challenging year for electric motorcycle manufacturers, startups, and dealers.