by Bianca Flowers
(Reuters) – Harley-Davidson Inc on Tuesday split from its LiveWire electric motorcycle division in a SPAC deal that established the first publicly traded electric bike company in the United States.
New shares of LiveWire Group Inc., a subsidiary of the former Harley-Davidson (NYSE) electric motorcycle company, fell 6.2% in the afternoon after rising 24% in early market trade in its US market debut Tuesday after a merger Unit with $1.77 billion. Blank check company.
LiveWire has one electric bike model starting at $16,999 and another at $22,799, both of which are exorbitant price tags in an environment eroding consumer confidence where Americans are still dealing with record inflation to make ends meet.
“People will not buy these units in 2023 if they are facing 8% or 9% inflation. They will want to buy groceries,” said Jaime Katz, chief equity analyst at Morningstar. Last year, the electric vehicle unit agreed to merge with special purpose acquisition (SPAC) company AEA-Bridges Impact Corp.
Shareholders of AEA-Bridges approved the merger last week, even as investors grew cautious about blank check companies as a record number of SPACs liquidated in 2022 amid rising interest rates and market volatility. The acquisition was originally expected to expire in the first half of the year.
“I think there might have been a better time to do it — there might have been something facilitating actual implementation that was kind of like now or never,” Katz said.
On Investor Day in May, company executives projected unit sales of more than 100,000 electric bikes by 2026. Like other automakers, the company has faced supply chain issues affecting its ability to keep showroom floors stocked during peak riding season.
Harley CEO Jochen Zeitz said in an interview with CNBC that the world’s largest motorcycle manufacturer has secured supplies for its electric bikes “for the next few years.”
Harley released its first electric motorcycle, LiveWire, in 2019 before deciding to relaunch the bike as its own sub-brand. Hoping to make up for lost market share as the company’s core baby boomer customer base grows and interest in motorcycles grows as the recreational activity fades, the Milwaukee-based company is striving to become more competitive with other electric motorcycle manufacturers. Harley-Davidson will own the majority of LiveWire with a 74% stake.