Self-Driving Vehicles = Growth For STOVs?

Google Prototype self-driving low-speed vehicle.

My colleague recently penned an article exploring the nexus of self-driving cars and golf car-type vehicles. Some of the key takeaways:

  • Hardware costs are dropping precipitously and may soon be within striking distance of being affordable for golf car type vehicles.
  • Golf car manufacturers are already exploring the technology and in some cases conducting testing.
  • Other companies are using GEM vehicles as self-driving test vehicles.
  • Gated communities with low speed vehicles provide a lower complexity environment that is more conducive to self-driving solutions.
  • Self-driving technology could expand potential growth avenues in non-golf car markets, an area of focus for golf car manufacturers

The article points to gated communities and urban fleets as potential market segments for deployment of self-driving technology. There are also other potential market impacts not addressed in the article that this technology can have.

For one, self-driving technology could provide an impetus for LSVs sales in the personal transportation sector. Purpose made LSVs have not quite reached their potential in this segment due to the relative cost of LSVs compared to the available market alternatives such as used golf cars, golf cars modified to be LSV compliant, customized golf cars and new golf cars. Put simply, not enough customers have found the additional price of LSVs to be worth the additional benefits. LSVs for personal transportation have done best where local regulations have favored them such as where golf cars or modified golf cars are not allowed on public roads but LSVs are, or where night time driving or other driving restrictions require LSV compliant technology.

Self-driving technology could be a differentiator for personal transportation LSVs. Since they are higher priced, LSVs are likely to feature self-driving technology before traditional golf cars. While it is possible existing golf cars could be retrofitted with self-driving technology, it may prove cost prohibitive and, more importantly, likely to encounter regulatory issues. It’s one thing to slap on some lights and an auto-style windshield, it’s quite another to install the software and hardware components necessary to create a self-driving vehicle, not to mention supporting the system with updates moving forward.

Regulatory issues brings to mind another consideration in regard to self-driving technology, medium speed vehicles (MSVs). While a few states in the US allow medium speed vehicles, at the Federal level NHTSA has never created a MSV classification and, in fact, has strongly opposed the idea on safety grounds. A MSV would require prohibitively expensive safety features akin to a highway capable vehicle.

Can self-driving change this dynamic? It is a possibility worth considering. In January, 2017 NHTSA completed their investigation (PDF file) of Tesla’s Autopilot and Automatic Emergency Braking (AEB) system, which was initiated following a fatal crash of a Tesla with a tractor trailer in Florida. Their conclusion was that, “A safety-related defect trend has not been identified at this time and further examination of this issue does not appear to be warranted.” However, for the purposes of this discussion, the most important finding of the report was related to Tesla vehicles before and after they had Tesla’s Autopilot Technology Package (ATP) installed at purchase or through updates. “The data show that the Tesla vehicles crash rate dropped by almost 40 percent after Autosteer installation.”

This is an astonishing drop, and even more so considering it does not take into account whether Autopilot was in use. Therefore, this improvement is likely a conservative finding. The question is straightforward. Can MSVs use self-driving technology to make them safe enough to pass NHTSA’s regulatory rigor? Why rely on a package of older and likely more expensive safety technology to improve MSV safety when a potentially cheaper and possibly more effective solution is on the horizon. It may soon be time to revisit the possibility of creating an MSV classification, which could open up a range of potential growth markets.

Marc Cesare, Smallvehicleresource.com

Textron Partners with New Holland on Rustler UTV

New Holland Rustler 850

A partnership between Textron and New Holland bares fruit with the launch of the New Holland Rustler 850.

Textron Specialized Vehicles continues to expand their footprint in the small, task-oriented vehicle market partnering with New Holland to produce the Rustler 850 utility vehicle. New Holland, a leading manufacturer of agricultural machinery, turned to Textron 18 months ago to help them update their Rustler brand of utility vehicles with a new vehicle. The partnership makes sense for both companies. For Textron Specialized Vehicles, the partnership gives them access to New Holland’s well-established distribution channel in the ag market. For New Holland, they can more efficiently use their product development resources by taking advantage of Textron Specialized Vehicle’s expertise in utility vehicles. One challenge for the new vehicle will be the relatively depressed demand in the ag market that has been ongoing for a number of quarters.

The Rustler 850 is based on a Textron chassis but has a number of features and characteristics based on New Holland’s market knowledge and feedback from their dealers. These include:

  • 1,000 lb. capacity cargo bed that can fit a full pallet
  • 1,500 lb. payload capacity
  • 2,000 lb. towing capacity
  • 45 mph top speed for more speed than some other farm focused UTVs
  • Front end design that recalls their T6/T7 tractors
  • Trademark New Holland blue color

Other key features include:

  • 62 hp, OHC, EFI engine
  • All-Wheel Drive with automatic locking front differential and selectable locking rear differential
  • Dual A-arm front and rear suspension with performance shocks
  • 9.3″/10.4″ of front/rear suspension travel
  • 11.25″ of ground clearance
  • Electronic power steering
  • 4-wheel hydraulic disc brakes
  • 26″ Kenda All-Terrain tires
  • ROPS and 3-point seat-belts
  • Front steel brush guard

Current available attachments include a LED light package and winch with a cab with heater, electric dump bed and camo graphics in development. A four-person version is also in the product line plan. The Rustler 850 will be available this spring.

Learn more:  Farmindustrynews.com

Marc Cesare, Smallvehicleresource.com

How Will Textron’s Arctic Cat Acquisition Impact The STOV Market

Textron E-Z-GO Logo

Textron’s recent acquisition of Arctic Cat raises some interesting questions about the acquisition itself and how other companies in the market may react. In particular, what does the acquisition mean for Club Car.

One question is whether or not Textron will continue investing in the Bad Boy Off-Road brand. Except for the electric powered Bad Boy Off-Road UTVs the brand’s product offerings are redundant given the more popular Arctic Cat product lineup. One can argue that the dealer networks are sufficiently different that the brands can effectively reach different customer bases and not cannibalize each other’s sales.  A quick perusal of the Bad Boy dealer network indicates that most of their dealer s are golf car related with some power sports dealers. Moving forward, Bad Boy how much resources are put into product development, and what type of vehicles they develop should indicate the direction the brand will take in the context of Arctic Cat acquisition.

Another issue is the potential clash of corporate cultures between Textron Specialized Vehicles and Arctic Cat. Textron is a large conglomerate with over $13 billion in sales annually and a particular corporate culture while Arctic Cat is a much smaller company coming out of a powersports background. How well these companies will mesh will be interesting to see. Keeping Arctic Cat as a stand alone operating unit can mitigate any cultural problems to a certain degree. However, any future financial difficulties at Arctic Cat could generate more intrusion from Textron management regarding Arctic Cat operations.

Club Car is targeting the commercial market with the Carryall 700 and other vehicles.

A more intriguing question is how the acquisition of Arctic Cat might impact Club Car, which is now the only large stand alone fleet golf car manufacturer. While Yamaha Golf Cars are separate from their UTV and ATVs business, they are both part of their Power Products division. Similarly Textron has developed their Textron Specialty Vehicles division that combines a range of small, task-oriented vehicles from airport tugs, to fleet golf cars to off-road ATVs and UTVs.

Ingersoll-Rand and Club Car has taken a decidedly different approach. Rather than collecting other categories of vehicles, they have opted to focus on building out the sales of golf cars for personal/golf use and commercial oriented utility vehicles that are based off of their golf car platform. Management confirmed this approach when asked about the Arctic Cat acquisition during their recent fourth quarter earnings call.  According to recent financial results Club Car has been successful with positive growth in the commercial/utility segment while the fleet side continues to lag. However, the business is relatively small compared to the overall size of the company which had $13.5 billion in sales in 2016, and Club Car is part of their smaller Industrial segment.

This raises the possibility that Club Car may be an inviting candidate for divestiture. But who might be interested in buying Club Car? One possibility is Honda Motor. They already have a range of motorcycles, ATVs, UTVs and scooters. An acquisition of Club Car could further diversify their vehicle portfolio. In addition, golf is a popular sport in Japan so there could be some degree of personal affinity among the management towards owning a leading golf car company. Club Car would offer a premium brand and a different distribution channel that might be useful for moving other Honda products. It would also add some electric vehicle expertise to Honda as well as additional global manufacturing capabilities.

Another possibility is Polaris, which has been acquiring small vehicle brands over the past several years. Polaris tends to acquire leading brands in a particular segment and many consider Club Car to be the leading golf car brand. Besides the premium brand, Club Car would bring some other positives to the table:

  • Global brand and distribution
  • China based manufacturing facilities as well as Southeast US facilities and supplier network not far from Polaris’ new Huntsville, AL facility
  • Large volume of electric vehicle sales that can be used spread costs of new battery and electric powertrain development.
  • Entry into the golf car segment
  • Largely separate distribution channel from existing products but similar enough to cross-sell some other Polaris brands
  • Good presence in commercial small vehicle market that Polaris has been targeting

The one drawback is that, from previous presentations, Polaris management considers the golf car segment a low growth segment. In large part this is due to the stagnant fleet golf car market which is the major portion of the golf car segment. However, E-Z-GO’s recent introduction of lithium battery powered fleet golf cars represents a potentially significant shift in the market. If lithium battery golf cars can disrupt the fleet market, this might create a more appealing market to Polaris. Providing an opportunity to leverage their expertise in electric vehicles, increase electric vehicle unit volume to lower costs and find a growth avenue in an otherwise stagnant fleet market. Despite recent headwinds from recall issues, Polaris still has the financial resources for such an acquisition. It will be interesting to see if they move in this direction.

Marc Cesare, Smallvehicleresource.com

John Deere Streamlines Gator Production

Marc Cesare,, Smallvehicleresource.com

John Deere's New Four Seat XUV 825i S4

A four seat Gator utilty vehicle from John Deere, the XUV 825i S4

John Deere is close to finishing an expansion of their Horicon Works facility in Wisconsin to consolidate Gator utility operations under one roof. The 388,000 square foot expansion allows the company to add assembly and shipping to production operations at the location. Management expects the move to be completed by March 2017. As part of the expansion, 70 new assembly jobs and 10 salary positions will be added to the existing work force of about 1,000. According to management, “We’ll be able to serve our dealers and customers better, improve the overall quality of the vehicles, and make our operations more efficient.”

While the growth in the UTV market has slowed, investments like this and others from the major players indicate that they continue to expect some market growth. John Deere spent an estimated $35 million on the expansion. The work and commercial utility segment, where the Gator is popular, has been targeted by a number of companies in search of sales growth. Coupled with the lower overall UTV market growth and other factors, this has increased the competition in the UTV market.

Learn more:  Stackyard.com

Star EV Launches Sirius Luxury Golf Car

Marc Cesare, Smallvehicleresource.com

The new Sirius electric vehicle from Star EV

The new Sirius electric vehicle from Star EV at the PGA Show.

At 2017 PGA Merchandise Show electric vehicle manufacturer Star EV revealed their new luxury golf car model, the Sirius. The Sirius has a 4kW AC motor, 350 A Curtis AC controller and has a top speed of 19.5 mph or 25 mph for the LSV version. Other features include:

  • Electronic locking trunk
  • USB port
  • LED illuminated dashboard
  • Self-canceling turn signals
  • Large bagwell
  • Optional golf ball holder inserts
  • Optional 2-in-1 Combo Seat

Star EV showcased the standard Sirius model with the Combo Seat and a customized version showing off the company’s available accessories such as multiple wheel options. While the models at the show were standard 2 and 4-passenger vehicles, the Sirius line will expand to include 6 and 8 passenger models. The Sirius will be available at Star EV dealers later this summer.

It will be interesting to see what the pricing for the vehicle will be compared to other offerings in the market. I don’t believe it will be at the level of a Garia, but where will the Sirius sit in the market, given the features and price, relative to offerings from Club Car, E-Z-GO and Yamaha?. This could be the start of a trend towards offering more “luxury” models if the larger manufacturers follow suit.

For those interested, Sirius is the brightest star in the Earth’s night sky and is derived from the ancient Greek word for “glowing” or “scorcher”, according to Wikipedia.

Learn more:  PRweb.com

E-Z-GO Launches ELiTE Lithium Powered Fleet Golf Cars

Marc Cesare, Smallvehicleresource.com

E-Z-GO RXV

The E-Z-GO RXV fleet golf car is one of models that will be offered with the lithium battery pack.

E-Z-GO has announced their EliTE series of golf cars, a lithium battery powered offering for the fleet market. The ELiTE vehicles will use Samsung’s SDI lithium technology and provide zero maintenance batteries with a five-year unlimited amp-hour warranty and increased energy efficiency. The technology will be offered in the RXV® ELiTE, Freedom® RXV ELiTE, Freedom RXV 2+2 ELiTE, TXT® ELiTE, Freedom TXT ELiTE and Freedom TXT 2+2 ELiTE. According to E-Z-GO some of the advantages of these lithium powered vehicles include:

  • Zero-maintenance batteries that don’t require watering, terminal post checkups and cleaning like traditional lead acid batteries
  • 59% more efficient than the Club Car Precedent and 52% more than the Yamaha Drive AC
  • Reduced charging time allows for short “opportunity charging” between rounds
  • Reduced energy costs
  • Longer run times
  • Lighter weight can reduce turf damage and soil compaction

These advantages are similar to what SVR heard from LiV Golf Cars, a start-up golf car manufacturer that tried to break into the fleet golf car market with lithium powered golf cars not to long ago. While the technology sounded promising, the company had trouble trying to muscle in on the big boys turf. However, the technology has the potential to be quite disruptive as golf car leases are typically tied to the life of the vehicle’s battery pack.

Economically it makes more sense for a golf course to changeover a fleet than just replace the battery packs. A golf course will typically turn over their fleet when the battery pack needs to be replaced, 3-4 years depending on use. Why spend $600-$1,000 per vehicle for a new battery pack when you can lease a whole new set of vehicles for not much more than your current payments? If the lithium battery packs are kept through their warranty period, 5 years, or even longer, you are potentially doubling or almost doubling the changeover time. Obviously, this has implications for fleet golf car sales volume.

How disruptive lithium golf cars will be depends on whether they perform as advertised and how much more they will cost than current fleet golf cars. If the energy cost savings are significant and the pricing not to high the payback time could be relatively short. In the long term the maintenance free aspect of the battery pack may prove to be a significant factor as well, since maintaining lead acid batteries properly continues to be a challenge. This will probably not manifest itself until the vehicles are out in the market and golf course managers better understand how much less maintenance they require.

The full press release from Textron follows:

E-Z-GO® Launches Innovative ELiTE™ Series Vehicles to Industry

Lithium-Powered Golf Fleet Vehicles Developed in Partnership with Samsung SDI

AUGUSTA, Ga. (January 26, 2017) — E-Z-GO, a Textron Specialized Vehicles business, is proud to yet again revolutionize electric golf cars with the introduction of its ELiTE Series lithium golf cars as a fleet offering. Activated by Samsung SDI lithium technology, ELiTE vehicles offer zero-maintenance batteries with a five-year unlimited amp-hour warranty and increased energy efficiency.

E-Z-GO vehicles are designed and manufactured in Augusta, Ga. by Textron Specialized Vehicles Inc., a Textron Inc. (NYSE: TXT) company.

“The E-Z-GO partnership with Samsung SDI resulted in a giant step forward for the industry when it comes to high-efficiency vehicles and zero-maintenance battery power,” said Michael R. Parkhurst, Vice President, Golf for Textron Specialized Vehicles. “ELiTE Series vehicles are the biggest advancement in golf car technology since E-Z-GO introduced the E-Z-GO RXV® golf car, with its groundbreaking AC drive and IntelliBrake™ technology.”

New ELiTE Series vehicles are powered by hundreds of Samsung SDI lithium cells that are loaded into a single battery pack. The battery pack is controlled by an advanced Battery Management System that monitors efficiency, temperature, state of charge and the health of the batteries. These batteries are used to safely and reliably power electric cars, e-scooters, power tools and many other electrically powered vehicles, equipment and appliances.

The revolutionary ELiTE Series vehicles are powered by zero-maintenance lithium batteries that don’t require watering, terminal post checkups and cleaning like traditional lead acid batteries do. This means less time in the shop for maintenance and repairs, and more play time for the vehicles.

ELiTE Series vehicles are 59 percent* more efficient than the Club Car Precedent and 52 percent* more efficient than the Yamaha Drive AC. Charging time is significantly reduced, and ELiTE vehicles allow courses to “opportunity charge,” plugging vehicles in for quick charging sessions between rounds that can rapidly restore significant levels of energy to the battery system, as opposed to the lengthy recharge cycles required by lead-acid batteries.

With less power required to charge ELiTE Series than leading lead-acid competitors, golf course managers can cut energy costs while enjoying the extra revenue that comes from all-day uptime.

The batteries in ELiTE vehicles are also lighter than traditional lead acid batteries. ELiTE Series vehicles batteries are half the size and a fraction of the weight of lead-acid batteries, reducing turf damage and soil compaction due to vehicle weight.

E-Z-GO is confident in the reliable and enduring performance that ELiTE vehicles will bring to courses, which is why the vehicles’ batteries are backed by a five-year, unlimited amp-hour warranty.

E-Z-GO ELiTE Series vehicles were tested at Tijeras Creek Golf Club, in Rancho Santa Margarita, Calif., where last year, 73,000 rounds of golf were played. The award-winning course is known for its challenging hilly, brutal terrain. Tijeras Creek Golf Club regularly rotates vehicles in the current lead-acid golf car fleet in and out of service daily to allow for ample recharge time.

“From day one, the ELiTE Series vehicles have been going around our golf course anywhere from 36 to 54 holes a day, and during that time frame, we aren’t having to recharge them,” said Rob Heslar, Director of Golf at Tijeras Creek Golf Club. “There’s a confidence factor in the ELiTE Series lithium car for me. I’m not concerned about putting my customers in an ELiTE Series golf vehicle because I know they won’t worry about becoming stranded in an uncharged vehicle.”

The exclusive ELiTE lithium technology will be available in the following 2017 models:

RXV® ELiTE, Freedom® RXV ELiTE, Freedom RXV 2+2 ELiTE, TXT® ELiTE, Freedom TXT ELiTE and Freedom TXT 2+2 ELiTE.

ELiTE Series vehicles will be on display during the PGA Merchandise Show in Orlando, Florida. Learn more about ELiTE Series vehicles, by visiting www.ezgo.com/elite.

Contact:
Brandon Haddock
Director, Communications
706. 772.5931
bhaddock@textron.com

– See more at: http://investor.textron.com/news/news-releases/press-release-details/2017/E-Z-GO-Launches-Innovative-ELiTETM-Series-Vehicles-to-Industry/default.aspx#sthash.pK3tx7Dp.dpuf

Textron Acquires Arctic Cat

Marc Cesare, Smallvehicleresource.com

Textron Specialized Vehicles will now compete in the recreational side-by-side market with vehicles like the 2017 Wildcat X from Arctic Cat with RG Pro suspension.

Textron is buying Arctic Cat for $247 million. Arctic Cat will become part of Textron’s Specialized Vehicle business and Textron’s management stated that the current manufacturing, distribution and operational facilities will be maintained. Arctic Cat employs about 1,600 people in production and management facilities mostly in Minnesota. Textron management remarked that the acquisition will allow for “…more aggressive investment in product development, dealer networks, marketing and customer service.” For the full fiscal year ended March 31, 2016, Arctic Cat reported a net loss of $9.2 million on net sales of $632.9 million. Sales are roughly split between ATVs/UTVs and snowmobiles. For fiscal year 2017 they were expecting similar sales.

This acquisition by Textron makes them much more of a direct competitor with Polaris. While Polaris has been expanding into more work and transportation related products with acquisitions of GEM, Aixam, Goupil and Taylor-Dunn, which puts it in direct competition with Textron’s Cushman, TUG and E-Z-GO vehicles, Textron has been expanding with their roll-out of the Bad Boy Off-Road brand of UTVs and ATVs. This acquisition significantly adds to the products and markets where they will be competing head to head.

This deal should provide the Arctic Cat brand with a lot more financial muscle to expand their dealer network and develop new products. For Textron there are a number of benefits:

  • In Arctic Cat they acquire a well established brand.
  • They acquire a power sports dealer network which is distinctly different then what they currently have.
  • They expand their reach in the UTV market, not only in terms of sales volume and distribution, but in the pure recreational market segment
  • They add a completely new type of vehicle to their portfolio with snowmobiles
  • They add geographic diversity to their manufacturing facility portfolio

It will be interesting to see what happens with the Bad Boy Off-Road brand. There is some overlap of product lines with Arctic Cat. A quick perusal of the Bad BoyOff-Road dealer network reveals that many or even most of the dealers are golf car related dealers with some power sports dealers. They could continue to develop the brand or fold some of the products into the Arctic Cat brand. Perhaps, lower than expected success of the Bad Boy Off-Road launch was one reason for acquiring Arctic Cat. Why spend a large amount of resources building a new brand in a very crowded market with no guarantee of success when they can acquire a well established brand such as Arctic Cat.

Learn more:  Arctic Cat

BRP Recalls Can-Am Defender UTVs

Marc Cesare, Smallvehicleresource.com

2016 Can-Am Defender

The 2016 Can-Am Defender is part of the recall.

BRP has issued a recall for about 780 model year 2016 Can-Am Defender utility vehicles because the vehicles can unexpectedly roll away when in the “park” position. The recall includes Defender, Defender DPS and Defender XT models. Consumers should immediately stop using the recalled vehicles and contact a BRP dealer to schedule a free repair.

This recall is on the small size compared to what is typical in the industry. Luckily, no injuries have been reported.

The following information is from the Consumer Product Safety Commission.

Recall Details

Units:  About 780

Description:

This recall involves model year 2016 Can-Am Defender, Defender DPS, and Defender XT model side-by-side off-road vehicles. The vehicles were sold in various colors and have four tires, two seats and a cargo box on the back. “Can-am” is printed on the side of the cargo box and the model name is printed on the side of the front of the vehicle beside the headlight. The model name and vehicle identification number (VIN) are printed on a label under the glove box. Contact BRP or a BRP dealer to verify VINs included in the recall.

Incidents/Injuries:  The firm has received six reports of the vehicles moving when in the “park” or “P” position. No injuries have been reported.

Remedy:  Consumers should immediately stop using the recalled vehicles and contact a BRP dealer to schedule a free repair. BRP is contacting all known purchasers directly.

Sold At:  Can-Am dealers nationwide from October 2015 through December 2016 for between $10,000 and $15,700.

Importer(s):  BRP U.S. Inc., of Sturtevant, Wis.

Manufactured In:  Mexico

Consumer Contact:  BRP toll-free at 888-272-9222 from 8 a.m. to 8 p.m. ET any day or online at www.can-am.brp.com and click on the Off-Road website and then the “Owners” tab at the top of the page and then “Safety” and then “View Notices” for more information.

Polaris GEM Issues Recall

Marc Cesare, Smallvehicleresource.com

Polaris GEM e2

The 2016 GEM e2 is part of the recall.

GEM, owned by Polaris, has issued a recall for 2016-2017 e2, e4, e6, and eL XD models because the drive mode switch can send an incorrect signal, causing the vehicle to go in the opposite direction than intended. This is a fairly large recall for GEM in relation to their annual sales. It seems few Polaris brands can escape recall issues of late.

The following information is from NHTSA.

Campaign Number: 16V884000

Manufacturer Polaris Industries, Inc.

Components ELECTRICAL SYSTEM

Potential Number of Units Affected 1,644

Summary

Polaris Industries, Inc. (Polaris) is recalling certain 2016-2017 GEM e2, e4, e6, and eL XD electric vehicles manufactured May 29, 2015, to November 18, 2016. The drive mode switch can send an incorrect signal, causing the vehicle to go in the opposite direction than intended.

Remedy

Polaris will notify owners, and dealers will replace the drive switch, free of charge. The recall is expected to begin in December 2016. Owners may contact GEM Consumer Service Department at 1-855-743-3436. Polaris’ number for this recall is L-16-01.

Notes

Owners may also contact the National Highway Traffic Safety Administration Vehicle Safety Hotline at 1-888-327-4236 (TTY 1-800-424-9153), or go to www.safercar.gov.