Harley-Davidson Shares Slide as Finance Boss Announces Exit

A key Harley-Davison exec is riding off into the sunset, automakers and suppliers are finding that the best sites for factories in the U.S. are actually quite limited despite the abundance of space in this country, and Toyota and Exxon are proposing cleaner gasoline. All that and more in this Thursday edition of The Morning Shift for April 13, 2023.

1st Gear: Moves at Harley

Harley-Davidson Chief Financial Officer Gina Goetter will leave the company at the end of April to oversee finances at Hasbro of all places, the motorcycle maker announced Wednesday afternoon. From Reuters:

Harley issued a statement saying that Vice President, Treasurer David Viney will serve as interim CFO after Goetter’s departure on April 28.

Shares of the company were down 2.8% in extended trading after falling more than 6% on Wednesday.

Goetter was appointed CFO in September 2020 and played an integral role in Harley’s restructuring plan, called “Rewire,” to phase out less popular bike models and simplify its business strategy by catering to an older customer base. […]

After cutting hundreds of jobs in 2020, Harley has either beaten or met Wall Street earnings forecasts in recent years, while navigating high inflation and supply chain constraints. The company benefited from strong demand for leisure purchases during the COVID-19 pandemic.

This comes after Harley finished off 2022 with some good news, some bad. The company saw shipments rise by 18 percent in the fourth quarter, compared with the same period a year earlier. However, that quarter was also the first in which Harley’s electric motorcycle business, LiveWire, was spun off on the stock market from its traditional offerings, in a move similar to what Ford’s done with its separate “Model E” and “Blue” business units. It wasn’t a sterling debut for LiveWire; the division sold just 69 bikes over that span. Who would have guessed the Harley crowd would be averse to the concept of clean mobility?

2nd Gear: The Search for the Perfect EV Megasite

Sure, the United States is a big country with lots of land. But space isn’t the only consideration for every car company or battery supplier that wants to raise a new factory this decade, as Reuters reported Thursday using Volkswagen’s new electric truck division as a case study:

Volkswagen’s off-road brand Scout Motors studied 74 different parcels of land across the U.S. last summer as it hunted for a place to build a $2 billion assembly plant.

It quickly eliminated almost all of them. In one case, they learned it would take six years to build a needed rail link. Others lacked access to clean power – crucial for a project for “green” electric vehicles. Some did not offer enough nearby skilled labor.

“We were hitting a deadline,” said Scott Keogh, Scout’s CEO, so they settled for a parcel in South Carolina that has all their desired features but is a bit smaller than they initially wanted – 1,600 instead of 2,000 acres.

Scout’s scramble highlights a challenge facing dozens of global manufacturers. Fueled by a combination of hefty government incentives, a transition to new transportation and energy technologies, and national security concerns about relying on distant suppliers, especially in China, there’s a factory-building boom taking place across the U.S.

But all that new construction has a real estate problem. More specifically, a “megasite” problem. While the U.S. has plentiful land, there are not that many places to quickly plunk a billion-dollar-plus factory.

Labor, infrastructure and energy are generally desirable for any manufacturing campus, but some companies have very specific needs. Consider Intel. While Scout recognized a rail link as critical for its megasite, much like Rivian (which is also referenced in the article), the chipmaker actually required a plot that wasn’t too close to passing trains, because the vibrations they’d create would wreak havoc on production of nanometer-sized silicon.

Good old-fashioned advertising matters too, as South Carolina officials reminded Reuters. That’s where Scout ultimately decided to base its headquarters:

The VW Scout plant, for instance, is situated in clear view of a major interstate highway connecting South Carolina’s coastal regions to the upper Midwest. That means putting the Scout name, being revived by VW after four decades of dormancy, in sight of tens of thousands of passing motorists a day.

“We have a lot of people who are coming from the north or from the Midwest down that highway that would drive right by that facility as they go to the beaches of South Carolina and Georgia and Florida,” said Harry Lightsey III, South Carolina’s secretary of commerce. “That was all important.”

3rd Gear: Trucking Fuels of the Future

Battery-electric tractor-trailers are picking up use, and experts believe roughly 12 times the number of them will be built by 2030 compared with hydrogen fuel-cell rigs. Still, truck makers say they’re not prepared to spurn hydrogen yet, as a Bloomberg story published Thursday illustrates:

Battery-electric trucks are already making an impact on the road, with Volvo, Daimler Truck and Volkswagen’s Traton offering different-size models to logistics clients. DHL has put several of Volvo’s e-trucks to work on London streets. Germany’s DB Schenker in January ordered 100 electric trucks from Traton’s MAN brand and has an agreement with Sweden’s Volta Trucks for some 1,500 e-rigs. Danish shipping company Maersk last year ordered 300 vehicles from Swedish startup Einride for its US warehousing, distribution and transportation business. […]

But don’t count out fuel cell trucks just yet. Their drivetrains convert hydrogen into electricity that then powers the motor, emitting only water vapor. A fuel cell powertrain weighs less, allowing the vehicles to drive longer distances with greater loads and shorter refueling stops.

While Volvo has six battery-electric trucks on offer and sold more than 4,300 of these vehicles since 2019, it’s also pursuing fuel cells. The company last year started testing hydrogen trucks with 1,000 kilometers (621 miles) of range that can be refueled in 15 minutes. Daimler Truck has done similar trials the last few years.

From the outside looking in, it really seems like when you consider weight, refueling (or recharging) time, and all the energy involved, hydrogen makes the most sense for trucks, while battery-electric is best suited for passenger vehicles. Unfortunately, that’s not really the way any of this works, because ultimately the one that gets the necessary infrastructure first will win out. EVs will have the volume, so electric trucks it’ll be.

4th Gear: Toyota and Exxon

In another alternative fuel-related story, Toyota and Exxon have announced they’re working together to test low-carbon blends in internal-combustion engines. Also from Bloomberg:

The fuel blends are made from cleaner feedstocks and could one day cut greenhouse gas emissions from internal combustion engines by as much as 75% compared with regular gasoline, said Andrew Madden, Exxon’s vice president for strategy and planning, citing initial trial results. The fuels proved compatible with Toyota vehicles, raising the prospect of a drop-in solution that could compete with battery-powered cars in future.

The fuels are “very much at the test phase” and would require government policy support before becoming commercially available, Madden said said in a Wednesday interview. They’re mostly a mix of existing feedstocks like renewable biomass and ethanol produced using cleaner processes, he said.

“Having a solution for liquid fuels that we can use in the existing fleet, having it in the kind of policy construct where we allow the market to innovate, is the lowest cost way to decarbonize transportation,” Madden said.

The one consideration the story doesn’t raise is price. Which is key, because synthetic or low-carbon versions of petroleum could only be an ideal Band-Aid for conventional fossil fuels so long as they’re not prohibitively expensive by comparison.

Maybe that’ll be solved in the 2030s. Either way, Toyota remains one of the only automakers holding EVs at somewhat of an arm’s length, so the Japanese automaker seems an ideal partner for Exxon. After all, InfluenceMap did recently consider both among the “five most influential corporations obstructing global climate action.”

5th Gear: Cruise Must Grow

General Motors’ self-driving taxi arm Cruise is determined to expand its footprint this year and nobody can do anything to stop it. From Automotive News:

In 2023, Cruise aims to expand its commercial operations, currently limited to portions of San Francisco, Phoenix and Austin, Texas. It’s preparing for volume production of the Origin, an autonomous vehicle with no steering wheel or pedals, at GM’s Factory Zero in Detroit.

Cruise CEO Kyle Vogt said the company is on track for — if not ahead of — its goal to reach $1 billion in revenue by 2025.

Achieving that target is not a certainty, though some analysts who follow Cruise and GM say it’s a reasonable goal. The company’s ability to transition from a cash-burning startup to a sustainable business would represent a significant milestone for Cruise and the nascent robotaxi industry, which has had a rougher path toward viability than many in the industry expected.

“Almost all of our energy as a company is going into scaling,” Vogt told Automotive News. “Figuring out how to set up new markets, crank up the volume of vehicles, get ready for the Origin, make sure all of our support systems handle that kind of volume. And so our metrics and reporting have started to resemble that of a business operating at scale.”

The city of San Francisco pleaded with California officials to restrain Cruise and competitor Waymo to “a series of limited deployments with incremental expansion” back in January. Trouble with that is, you can’t sustain yourself as a business on limited testing. This is why moving fast and breaking things will always be the motto of Silicon Valley.

Reverse: Oh Sometimes, I Get a Good Feeling, Yeah

It was on this day in 1997 — 26 years ago — that Tiger Woods won his first major, the Masters tournament in Augusta, Georgia. This is relevant to us, a car website, because it coincides with one of the most memorable yet middlingly successful auto-athlete endorsement deals of the modern era.

Neutral: RIP Craig Breen

Rally fans around the world are mourning the loss of the 33-year-old Irishman, who died in a testing accident in Croatia early Thursday ahead of next week’s World Rally Championship event. His co-driver, James Fulton, was unharmed. Our condolences go out to Breen’s loved ones.