Headed into the end of the year, a series of announcements tied to “next generation” vehicles show the appeal of spinoffs, SPACs, and the desire of large, marquee firms to have a stake in the burgeoning electric vehicle (EV) and autonomous driving verticals.
The latest news, per Reuters: Harley-Davidson is planning to list shares in its electric motorcycle division, LiveWire, after having spun off the unit earlier this year.
In terms of mechanics, the LiveWire unit will enter a merger with a blank-check firm in a deal that values the electric motorcycle operations at about $1.8 billion. In order to go public. LiveWire is merging with special purpose acquisition company (SPAC) AEA-Bridges Impact Corp. There’s also the participation of Kymco, a scooter manufacturer that Harley-Davidson lists as a “strategic partner” in manufacturing LiveWire’s electric motorcycle. In terms of financing, as noted in a Harley Davidson press release: $400 million comes from the SPAC, $100 million is being put up from Harley-Davidson and $100 million from Kymco. Post-merger, Harley-Davidson will maintain a 74% stake in the EV company.
Investor materials delving into the deal, released Monday (Dec. 13), note that EV penetration is relatively low, at about 1% in North America, as estimated by total number of units, and that percentage is slated to grow to 10% within five years; in Europe the respective percentages of current and future unit penetration stand at 2% and 13%; and in China the tallies are 26% and a projected five-year penetration projection of 45%.
LiveWire, according to the presentation, has a four-year to five-year head start vs. the competition (and noted that Harley Davidson already has a 45% share in the U.S. motorcycle market).
Digital First Ecosystem
And in a nod toward the digital first ecosystem that surrounds the electric cycles, the firms said LiveWire combines physical and digital channels, with a platform model in place that replaces “the fragmentation of hundreds of individual digital front ends” and “unlocks the experience customers expect from a modern retailer and the efficiency to boost channel economics.”
The companies also stated that the digital conduits also help the ability to scale beyond the basic vehicle sales with software and subscriptions, financing (Harley finances $3 billion in loans annually) and merchandise. From having sold about 390 units in 2021, the financial projections call for more than 100,000 units sold in 2026, with vehicle revenues over the corresponding periods scaling from $6 million to $1.4 billion, and “all other” revenue (the ancillary streams) surging from $33 million in 2021 to $277 million.
In other evidence of the “listings appeal” of high-tech vehicles, we wrote earlier this month that Intel’s own initial public offering (IPO) of its Mobileye autonomous vehicle unit helps smooth the path for Wall Street to take concentrated, focused bets on the sector. Intel is gunning to list shares in the self-driving automotive business by the middle of 2022. Mobileye had been acquired by Intel in 2017, for $15 billion. In terms of the market potential, Intel has estimated the automotive chip market could be worth as much as $115 billion by decade’s end.
Intel said, in announcing the spinoff, that Mobileye has shipped its 100 millionth EyeQ chip system. The system, as Mobileye notes on its site, helps improve the processing of dozens of sensors, including high-resolution cameras and radars. In an investor presentation last year, Mobileye noted that in autonomous vehicle development, a key concern rests with obstacle classification.
Read also: Mobileye IPO Paves Way for Wall Street Bets on Autonomous Vehicles
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More