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Electric motorcycles: A ride for Tesla to profitability

Tesla’s (TSLA) chief Elon Musk has surprised us earlier with Model 3 and Semi truck in the auto space, but will this stop? AlphaStreet believes it won’t and the surprise would continue. Tesla lovers expect that it will awe the market with an electric motorcycle in the near future despite Musk’s near-death incident fears. The electric motorcycle industry has got a huge growth potential and Tesla could take a pie out.

Already Harley-Davidson (HOG), which had dominated the industry in the US with a market share of nearly 47%, has taken the advantage of Musk’s fears and intends to bring out an electric motorcycle. Zero Motorcycles, which has been selling diversified electric motorcycles since 2006, opened a new exclusive dealership in Orange County, California recently.

Tesla Electric Motorcycle
Picture Courtesy: Wikimedia Commons

The escalation of electric motorcycles in the market has been on the upward trend of late. An ex-employee of Tesla has founded Rexnamo Electric in India with an aim to solve the electric mobility problem. Rexnamo founder and CEO Naman Chopra, with his experience from Tesla, made India’s fastest electric bike that can go from 0 to 60 km per hour in less than 6 seconds with a top speed of more than 170 km per hour.

Meanwhile, in Tesla 2018 shareholder meeting, a question was put forth before Musk whether Tesla has an aim of building electric motorcycles. Musk has made it clear that Tesla will not make any electric motorcycles due to a near-death incident that happened when he was young. Musk had stopped riding the bike after he was almost hit by a truck.

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Related: Tesla 2018 Shareholder Meeting

The market analysts believe that developing an electric motorcycle would be easier than making a car due to rigorous crash tests. It is expected that Tesla will likely face the loss from not entering the electric motorcycle space. Many consumers have already shown interest in an electric motorcycle from Tesla that could make the company a lot more profitable.

In 2016, the US motorcycle market size was estimated at $7.85 billion and is expected to reach $10.88 billion by 2025, according to a report by Grand View Research. The younger generations are more attracted towards motorcycles rather than a car. The motorcycle market growth has been attributed to the rise in demand for better and efficient mode of transport, as well as low cost and easy to move in crowded areas.

US Motor Vehicle Registration and Fuel Consumption
US Motor Vehicle Registration and Fuel Consumption

Fuel consumption has risen considerably for the years due to a rise in the vehicles registered and an increase in the vehicle-miles traveled. This has prompted motorcycle manufacturers to bring in greener vehicles and electric motorcycles are most preferred for turning them greener.

If Tesla is stepping into the motorcycle industry, then the key players it has to face include Harley-Davidson, Polaris Industries (PII), Audi’s Italian unit Ducati, German-headquartered BMW, Suzuki Motor, Kawasaki Heavy Industries, KTM, Triumph, Honda Motor (HMC) and Yamaha Motor.

Market analysts expect that Tesla could take a bigger bite out of the motorcycle industry if it steps in. Also, they believe this could make Tesla into a diversified automobile maker rather than sticking on to only cars. Venturing into the electric motorcycle space is a win-win situation for Tesla if Musk forgets the incident happened to him.

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