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The 'Tesla of motorcycles' revs up for a big 2021

Yahoo Finance’s Alexis Christoforous and Brian Sozzi discuss the future of the electric motorcycle industry with Zero Motorcycles CEO, Sam Paschel.

Video Transcript

BRIAN SOZZI: Two-wheelers are seeing a big boost in demand, which has fueled electric bike sales. In fact, sales are up more than 137% this year, according to the NPD Group. Zero Motorcycles CEO Sam Paschel joins us now. Sam, really big news for you, about a week and a half ago signed a 10-year deal with Polaris. What made you make that deal? And what are you seeing in your business?

SAM PASCHEL: Well, we've been at this now-- at the electric motorcycle and electric powertrain side for 14 years. So our technology is leading. And as we look to branch into categories beyond our core business of electric motorcycles, we look to partner with the best brands in the world and the best businesses in the world, and Polaris is number one. In the key categories they compete in, they are the best off-road vehicle company in the world, and we're just thrilled to have them as a long-term partner.

BRIAN SOZZI: Sam, every article I see about Zero Motorcycles out there calls you the Tesla of motorcycles. What are you doing? Why are your bikes being compared to Tesla?

SAM PASCHEL: I think that what you see, the similarities are one, we've been the brand that helped to define the category and have been the protagonist for electrification in two wheels in the same way that Tesla does in the four-wheel space. And I think when you look at the performance of our vehicles and the gap that we have over companies that are trying to enter this space, I think those two factors, the supremacy of the technology that we've been working hard to create and the fact that we have been, again, at the forefront of both defining the category and leading the category, are the two reasons that that comparison gets made a lot. And we love it. We think that's a fantastic comparison.

ALEXIS CHRISTOFOROUS: Sam, what do you make of an iconic name like Harley trying to get into e-bikes? And it didn't go very well. It seemed like their customers were not ready to embrace the e-bike just yet. Do you think that that is specific to Harley Davidson? Does it speak more to what Zero is doing right? Why do you think we saw that?

SAM PASCHEL: You're going to have to bring the Harley folks on to talk specifically about their business. What I will tell you is that making a world-class electric motorcycle isn't as simple as taking an existing internal combustion engine bike and putting a new powertrain into it. The types of challenges that you face, the size of the problem, it isn't a difference in degree, it's a difference in kind.

And unless you've really spent the time to have commercial vehicles on the road and found all of these corner cases that can really derail you and derail the performance of your motorcycle, you're going to have a really hard time doing it. We talk a lot about the idea that this is a vehicle with a central nervous system, with a brain. And we've got a mature brain that's had a lot of experiences.

And if you're just entering, you're a lot more likely to have the brain of a toddler. And toddlers are phenomenal, they're cute, but they're really unreliable human beings. And it's just a really steep hill to climb. It takes a long time to figure out how to make these well.

So Harley's a phenomenal brand. They are 100% giving it a real shot. We welcome anybody into the space that's going to make a high-quality vehicle and raise awareness for the category, but it's a really hard thing to do well.

BRIAN SOZZI: Sam, I don't want to get too political here, but if there is a change atop of the White House and Joe Biden is, in fact, the person that wins the election, how does what he has proposed in terms of climate change impact your business? I imagine under his leadership you might see more EV tax credits.

SAM PASCHEL: Yeah, I think that's an interesting question. We've been engaged and involved as the leader in the space for a while on the tax credit side. I actually had an opportunity go and testify to House Ways and Means Committee about a year and a half ago.

You know, for us, we focus on running a business, and we focus on making products that our consumers really want to go and buy. So as you see tax credits, of course, they're a tailwind for the business. As you see electric vehicle mandates, they bring attention to the category. We've always tried to run a business that's a little bit independent of the political space because, as you'll see, the pendulum will swing one way and the other, and there are things that are big benefits for us. But fundamentally, we focus every day on making an electric vehicle that consumers are really excited to throw a leg over, go out and ride, and then having their lives.

ALEXIS CHRISTOFOROUS: What about who's buying these bikes? I mean, you know, I'm out driving, checking out the autumn colors. I see a bunch of bikers out, and they tend to be baby boomers. Are you seeing younger folks coming in wanting to buy these bikes? And will electrified bikes sort of bring in that younger rider?

SAM PASCHEL: Well, first, we got to get you to throw a leg over a bike and go for a ride. I think you'll enjoy the fall colors even more on a Zero Motorcycle. For us, the electric motorcycle in the United States does tend to skew older and demographic.

We have three basic types of riders. We have a rider who's an enthusiast that typically has more than one motorcycle in their life. We have a returning rider. And then we have a prospect who tends to be younger.

We see a lot of returning riders who, as opposed to the average age in the motorcycle space which is north of 50, who are in their early to mid-40s. They're adopters of new and disruptive technologies. So we have a slightly younger demo, but still people with some disposable income. And then on the prospect side, we're seeing people even younger than that who get really excited about electrification, but want to do it differently than just maybe an automobile, and they're coming into our space.

BRIAN SOZZI: Sam, our super producer Nick Monte just bought a gas-powered Harley Davidson. He loves motorcycles, constantly talking about motorcycles. How do you convince-- young guy, you know, he's I'm guessing early to mid-30s. How do you convince those types of riders, you know what, forget your gas-powered bikes, come over and hang out with Zero and the electric bike-- electric bike crowd?

SAM PASCHEL: I think fundamentally at the core of our DNA, we're very different from what a gas motorcycle is and the experience that it provides. The biggest thing for us is-- a motorcycle ride engages all five senses. Your experience on an electric motorcycle is going to be better across the majority of those senses as you go out there.

So by and large for anybody who's interested, the thing we always focus on is get to one of our dealerships. We have over 100 in the United States, over a hundred in Europe. You come into a dealership, you throw a leg over a bike, and you take it for a ride. And you're going to come off of that motorcycle ready to trade in your gas bike and wanting to have a Zero Motorcycle in your life.

BRIAN SOZZI: Sam, 30 seconds left. You know, we talked to Polaris CEO Scott Wine last week about the deal with the company. Do you have any plans to go public anytime soon? This is a very capital-intensive business. What's your longer-term view?

SAM PASCHEL: Yeah, you know, for us, I'm focusing on, with the team here, building and running the best business we can. As we see success from the Polaris deal and in the market, the options available to us are going to be-- there's going to be a lot of them, right, for what we do next and what happens. That's really going to be driven by the needs of the business and not by, you know, pre-created idea of public's the next space or another partnership's the next space. So for us, the needs of the business will dictate the next steps for Zero Motorcycles. It's our job here to build the best business and brand we can, and we know that creates a lot of options for us.