My colleague, Stephen Metzger, attended the 2020 PGA Show in Florida. His observations of the latest products on display “…suggests a new generation of diverse vehicles going well beyond the golf market. In general terms the emerging market that trends will play into is that of urban/suburban mobility. “ He lays out his observations and what they say about the strategies of the three major manufacturers in a new article.
PGA Show: Big Three Strategies
Club Car is looking towards connectivity and telematics technologies for new market opportunities. The company is monitoring developments in the urban/suburban mobility market. According to management, Club Car’s lithium battery powertrain and Onward PTV platform positions the company well to take advantage of new opportunities .
E-Z-GO is leaning on their latest technology advancements like their first to market (of the big three) lithium powertrain for fleet and PTVs, their IntelliBrake technology, AC drive, 72-volt powertrain and new quieter and more efficient EX1 gas engine. In addition, they continue to monitor the urban and suburban mobility markets.
Yamaha emphasized their new, fully independent suspension which is likely a precursor to a lithium powered vehicle. The absence of much heavier lead acid batteries has significant implications for the suspension setup and vehicle ride quality.
Other PGA Show Insights
Automotive features such as touchscreen LED displays and rearview cameras are continuing evidence that more automotive features are becoming standard in PTVs. The trend fits nicely with the ongoing development of the urban/suburban mobility market. A slice of this market includes low-speed vehicles and PTV like vehicles. Manufacturers also displayed scotters and golf specific, electric powered vehicles. The technology of the latter category could likely be adapted to the urban/suburban mobility markets.
New urban and micro mobility technology creates a potential challenge to the existing players in the PTV market. This technology is wide ranging from electric skateboards and electric bikes to three-wheeled and larger autonomous vehicles. While the technology is typically discussed in the context of the urban environment, it can also be well suited to the gated and vacation community markets. These alternative mobility technologies do not provide a head-on, direct competition to PTVs, but neither are they merely tangential. They can challenge the existing PTV players by taking multiple, smaller slices of the market pie. In addition, they are attracting a host of new players and new investment.
Electric Bikes & Scooters
The gated and vacation community skews older so skateboards are probably out, and at first glance electric bikes and electric scooters (Vespa like) may not seem to make sense. However, electric bikes and scooters can offer a slice of the market an alternative transportation experience. An electric pedal assist bike can provide exercise without as much exertion as a traditional bike. In addition, if you already bike, it extends your existing trip range and experiences. Scooters offer an alternative to PTVs for quick single or two-person trips. This technology can also be applied in the form of a bike or scooter share program, providing access to the whole community. A share program would seem well suited to a planned community that has a large enough population and well planned out destination points.
They are fun to ride and, in the case of bikes, can provide additional exercise opportunities. They are a less expensive alternative, especially if you need an occasional second mode of transportation and have a small footprint. Furthermore, their speed range fits well in the low speed planned community environment. They can also be used to venture outside the community with likely less restrictions than PTVs.
On the other hand these modes of transportation have some drawbacks that limits their appeal. First, they can only accommodate one or maybe two people in the case of scooters. They have limited carrying capacity for running errands. They also do not provide any protection from the elements or as much collision protection from other vehicles as a PTV does. In addition, older folks may not feel as physically capable of operating these vehicles. Although, the low speed and well planned roadways can ameliorate this issue to some degree.
Three-wheelers & Autonomous Vehicles
On the other end of the spectrum you have larger multi-passenger vehicles that provide a more direct competition to existing PTVs. Vehicles like the FUV can carry two passengers or one with cargo. As a three-wheeler, the FUV can operate at higher speeds and has no restrictions for venturing outside of communities on public roads. At the same time, this vehicle can be speed limited for golf course and planned community use. With autonomous vehicles planned community residents could displace at least some of their PTV usage, and possibly all of it if the the service is robust enough.
With the ability to travel from golf course to community roads to public roads, the three-wheeled vehicle offers greater versatility than PTVs. Capable of higher speeds, it also has greater functionality than PTVs for certain use scenarios. For autonomous vehicles, the low-speed, well-defined and relatively limited planned community road networks offer an ideal environment. For residents less inclined or capable of driving a PTV, they provide a method to maintain mobility.
The FUV is currently much more expensive than PTVs and even LSVs. Therefore, customers may not find the increased versatility and functionality worth the price. They also are limited to two passengers, and as a result are less useful for family outings. For autonomous vehicles the technology is still in the development phase. In addition, some customers may prefer the convenience, customization and the statement made by owning a PTV. Furthermore, the cost of this type of service is not currently known.
New Players, Investment & Disruptive Innovation
An additional aspect of urban and micro mobility that PTV manufacturers must contend with is the increased number of market players, capital investment and disruptive product innovations that the technology brings. For example, Harley Davidson and Jeep have revealed at least prototype electric bikes. Completely new companies like Arcimoto have entered the market. Tech companies like Alphabet (Google) and traditional auto manufacturers are developing highly sophisticated autonomous vehicle technology. In addition, you have ride share companies.
PTV manufacturers are potentially at a disadvantage because they have neither the focus of disruptive startups or the financial resources of much larger companies. On the other hand, they do possess strong knowledge of the market and a distribution network to serve the market. They also have experience in developing and manufacturing electric vehicles in a highly competitive environment.
One strategy for PTV manufacturers to take is to start developing new mobility platforms themselves. The question is whether they have enough resources and commitment. They would have to balance maintaining their current product lines while trying to introduce entirely new a category of products. Another strategy would be to leverage their distribution and marketing expertise by acquiring or partnering with new market entrants to launch to product categories. They could also decide to keep improving their existing products and manufacturing efficiency. As a result, they could maintain or lower prices while increasing the value of their products. Therefore, new entrants could find market entry to difficult or limited to niche markets. However, compared to the other two strategies, this strategy offers less upside. In addition, it still leaves them vulnerable to a disruptive technology. The first two strategies provides the opportunity to potentially expand into urban markets.
My colleague Stephen Metzger discusses Club Car’s product development strategy in a new article. In particular, he analyzes Club Car’s partnership with AEV Technologies and the resulting offering, the Club Car 411 utility vehicle. Rather than develop the vehicle in-house, which Club Car has the capabilities to do, they decided to go outside. Is management embracing a new approach to product development or is this just a one-off exercise? In addition, an interview with Brian Rott, President Cart Mart in California, discusses how the 411 fits in the market.
Road use regulations for golf cars, LSVs, ATVs and UTVs that have been passed or are being considered at the state, county and city levels since June, 2019 are summarized below.
The majority of the ordinances expand the use of golf cars, LSVs, or UTVs on city streets.
Most of the legislative activity is occurring in the Midwest
Road Use Regulation By Location
Wisconsin – Title fees for low speed vehicles will increase from $62 to $157, similar to other vehicles.
Barnegat Light, NJ – The Council, after earlier tabling an ordinance that would allow the use of golf cars on certain city streets, have decided to not pursue the issue further. A critical issue was that the vehicles would have to cross a higher speed road, which would require an exception to state law.
Brazil, IN – Residents registered nearly 100 golf carts and off-road UTVs since an ordinance passed in February, 2019.
Wakefield, IN – The City Council is considering an ordinance to allow golf cars on certain city streets. The police chief and a councilman are looking at similar ordinances and potentially expanding the ordinance to other types of vehicles.
Paola, KS – Starting in January, 2020 residents will be able to drive UTVs on city streets with posted speed limits that are 45 mph or less. Regulations require that vehicles have lights, turn signals and reflectors, drivers have a valid license and vehicles be registered.
St. Joseph, MI – The city commissioners are considering allowing residents to drive golf cars on city streets in the Harbor Shores, Edgewater and Ridgeway neighborhoods.
Newport, RI – The Newport Jitney provides free, advertiser supported rides around town on two low-speed vehicles that seat six and eight passengers.
Glynn County, GA – A new county ordinance goes into effect in October that will allow golf cars on certain streets. The ordinance has different regulations for LSVs vs. PTVs. A key difference is that LSVs can travel on streets with posted speed limits of 35 mph or less while PTVs can travel only on 25 mph or less streets.
Perry Village, OH – The Village Council passed an ordinance to allow LSVs, golf cars, UTVs and mini-trucks to be driven on local low speed streets. The vehicles must be inspected, licensed and have certain safety equipment.
Oregon-based Arcimoto recently started production of their Fun Utility Vehicle (FUV) to meet pre-order demand for 4,100 vehicles. Technically a motorcycle, the FUV is an electric powered three-wheeled vehicle that seats two. Many states have a special classification for three wheeled vehicles and only require a regular driver’s license to operate the vehicle. The current FUV Evergreen edition costs $19,900 but the company hopes in the future that volume production will reduce base model pricing to $12,000 and possibly below $10,000.
Arcimoto FUV Specs
The Arcimoto FUV is essentially a trike with two wheels up front and one in the rear. Each wheel up front has an electric motor. The vehicle has a 19.2 kWh lithium ion battery pack for a range of just over 100 miles and a top speed of 75 mph. The FUV has handlebar steering with a twist throttle and finger activated regenerative braking. Foot operated hydraulic brakes on all three wheels augments the regenerative braking. Other specs include:
Two USB ports
Lockable rear storage
The company is also developing a one person delivery vehicle and an emergency responder vehicle based on the same platform.
The Arcimoto FUV satisfies a need for a small, energy efficient vehicle that can be driven locally. Even though the FUV can operate at highway speeds I believe the sweet spot for the vehicle will be on roads up with speed limits up to 50 mph. Gated communities and vacation destinations that already allow low speed vehicles (LSVs) and golf cars will be a key market.
The problem with this market currently is that LSVs and golf cars can only go 20 to 25 mph and are often restricted to certain public roads based on speed limits and local ordinances. Classified as a motorcycle and with the power to operate at higher speeds, the FUV avoids this issue. This combination greatly increases the functionality of the FUV. The FUV with a speed limited setting can go from golf course to gated community to higher speed public roads. Therefore, the FUV is appropriate for a wider range of activities.
I currently see three main challenges that may limit the FUVs appeal. The first is consumer acceptance of driving a three-wheeled vehicle with handlebar steering. This is different than many consumer’s traditional driving experience. The second is price. The company should target the $10,000 to $13,000 price range to be competitive with LSVs, PTVs and golf cars. Although, the increased functionality of the vehicle is a mitigating factor that could allow for a pricing premium. The third is that the vehicle is only two passenger, so it may have limited appeal for families or larger groups.
The FUV is a direct challenge to the LSVs and more importantly the personal transportation vehicles (PTVs) that have become a key growth market for the traditional golf car companies. The decline and stagnation in fleet golf car market has forced these companies to target the utility vehicle and PTV markets for growth. (LSVs have largely been relegated to college and corporate campuses with some personal transportation use.) This could become the classic case of the outsider coming in and disrupting a market.
Where are the golf companies?
There is no reason the golf car companies could not have developed this vehicle first and they certainly have the resources and time to create a vehicle of their own. However, in the past these companies have missed opportunities such as the utility vehicle market for which they were well positioned. In addition, the FUV could serve as an alternative to a second or third automobile for running local errands or short one or two person commuting.
What Does The Future Hold
It will be interesting to see what kind of uptake the consumer version has. Recreational vehicles like the Can-Am Spyder and Polaris Slingshot have not completely taken off and remained niche. However, they are more recreational and less of a practical and green transportation alternative than the FUV. I think the delivery version of the FUV might be the sleeper product. Given concerns about urban congestion, pollution and sustainability, these vehicles could become a popular option for last mile logistics in crowded cities. The urban environment could play to the vehicle’s strengths of smaller size and zero emission powertrain while mitigating weaknesses such as limited top speed and driving range.
Earlier this year Club Car introduced the Club Car 411 utility vehicle, an all-electric vehicle for cargo services and low speed logistics. The 411 is the result of a partnership between Club Car and AEV Technologies, a manufacturer of light-duty battery-electric vehicles. The partnership combines AEV’s expertise in design and manufacturing with the dealer network and brand power of Club Car.
Club Car 411 Target Market
The Club Car 411 is targeting the space between full-sized trucks and smaller golf car based utility trucks. The partners designed the vehicles to have a lower cost of acquisition, operation and overall ownership while meeting the demand for clean energy vehicles. Typical uses would be on corporate and college campuses, in warehouses and as part of municipal fleets.
The Club Car 411 comes in three basic configurations: a van box, a pickup with sides and a flatbed. The vehicles have a curb weight of approximately 2,100 lbs depending on the configuration and a payload capacity of 1,100 lbs. As an LSV the top speed is 25 mph and it has a range of 50 miles. A 10 Kw, 13.4 hp AC motor paired with a 240A AC controller powers the rear-wheel vehicle. The six sealed lead acid batteries provide a range of up to 50 miles.
Standard Features & Options
Standard features include a backup camera, 7″ LCM display, reinforced ABS body panels and cabin heating. The 411 has a reinforced steel chassis, 4-wheel, hydraulic disc brakes and power assist steering. Options include fleet management systems including GPS and geofencing.
This is a curious move by Club Car. Clearly the vehicle fits with their existing customer base and dealer network, but rather than develop the vehicle themselves they partnered with AEV Technologies. I speculate that the partnership reduces Club Car’s development costs and associated risks. For AEV, the partnership gives them access to a large customer base. AEV Technologies also makes a three wheeled vehicle similar to the Arcimoto FUV. Therefore, if the FUV makes inroads into Club Car’s PTV market then they could have a ready for market vehicle to compete against it.
Panasonic is partnering with electric compact utility vehicle manufacturer Tropos Motors to improve vehicle performance. Tropos Motors manufacturers the Able and Able XR electric compact utility vehicles that are low speed and electric powered. The Able features a 72V system with a 13 hp motor and gel lead acid batteries for a 50 mile range. In contrast, the Able XR uses lithium batteries in a 96V system with a 13 hp motor and a range of up to 160 miles.
Compact Utility Vehicle Niche
The electric compact utility vehicle (CUV) is part of the “right-sizing” trend in commercial vehicles. Smaller than a full-size pickup but larger and more capable than a modified golf car, CUVs are designed to be the right tool for the job. Or, in many cases, multiple jobs. In particular, they are useful on college and corporate campuses and urban environments where their smaller size is an advantage and a high top speed is less critical. Like many CUVs, a user has the option of limiting the Able models top speed to 25 mph. Therefore, with the proper safety options, they can be classified as street legal low speed vehicles.
Tropos Motors Capable and Versatile
The Able lineup has 1,100 lbs of payload capacity for the street version and 2,000 lbs for the campus version. Similarly, the towing capacity is 2,000 lbs and 3,000 lbs. Clearly they are capable of hauling and towing for a wide range of applications. Like many CUVs the Able lineup is versatile with their Easy-Swap system of bed packages to perform a wide range of on campus tasks. The bed packages include a pickup style, boxed van for hauling cargo, trades/maintenance configuration for carrying tools, a special sweeper package and a trio of emergency services packages.
Green and Cost Efficient
By virtue of their electric powertrains, electric CUVs can help organizations meet their sustainability goals while limiting air and noise pollution on campus. These smaller vehicles usually have a lower cost of purchase. Furthermore, the electric drive train also produces a lower cost of operation.
Currently, Tropos Motors is a relatively small manufacturer but landing Panasonic as a partner is big deal. What could be an important factor in the growth of this niche is the decreasing cost of lithium batteries. Partnering with Panasonic gives Trompos Motors access to a high volume lithium battery manufacturer. The trade-off between the range, performance and reduced maintenance of lithium batteries and their higher costs is key. As the price comes down, a wider set of applications become possible and less frequent re-charging is needed. The latter may also translate into less charging infrastructure needed. Marc Cesare, Smallvehicleresource.com
Optimus Ride, a self-driving startup company with roots in MIT, will be expanding their autonomous shuttle service next quarter to New York and Northern California. In both cases the service will be operating in a more controlled environment than public roads. In New York, Optimus Ride will operate their shuttle service on private roads in the 300-acre Brooklyn Navy Yard. The private development features light and heavy manufacturing and is home to about 8,500 workers. In Fairfield, CA the autonomous shuttle service will be deployed at Paradise Valley Estates. The Estates are a private, 80-acre, retirement community.
Optimus Ride NEVs
Optimus Ride uses GEM e4 and e6 models for their vehicles which are LSVs and therefore limited to a 25 mph top speed. They were first deployed in Weymouth, MA by the Boston-based company. Last year another 15 cities in the state announced an agreement to serve as a test bed for the autonomous shuttle service. Learn more: Theverge.com
The use of NEVs in a controlled environment as a testbed for autonomous vehicles is not surprising. SVR has previously discussed the advantages of using LSVs in gated communities for self-driving technology. These environments are more controlled than public roads with a limited, clearly defined set of low speed roadways. In addition, the older populations who may not be able to or want to drive can potentially find the greatest value in the service. At the same time, the gated community offers a challenging environment for testing the technology. Similar to public roads, there is a mix of pedestrians, cyclists and vehicles, albeit on a smaller scale. The low-speed roadways offers a cost advantage as well, since an electric LSV costs far less than a highway capable EV.
My colleague Steve Metzger recently attended the 2019 PGA Show. He reports on the trends in personal mobility vehicles from established and new players. In addition, he discusses the mainstreaming of lithium batteries and related implications. The following is a summary of key insights from the article.
The personal mobility market in the form of personal transportation vehicles (PTVs) is attracting an increased level of product development.
The major fleet golf car manufacturers, Club Car, E-Z-GO and Yamaha are turning their attention to PTVs and other non-golf markets.
New models incorporate a greater variety of features and more automotive style features
The Sirius PTV from Star Electric Vehicles is the most likely candidate to seriously challenge offerings from Club Car, E-Z-GO and Yamaha.
Club Car introduced lithium battery powered models and other manufacturers are considering the technology as well
Both Trojan Battery and ReLion Battery presented lithium batteries targeting the aftermarket for PTVs, golf cars and light-duty utility vehicles
Lithium battery market penetration has implications for the recycling of fleet golf cars, used PTVs and future demand for public road access for PTVs
EFI engine technology continues to advance in the face of improving battery technology as market choice will likely increase before a winner shakes out
Potential California LSV legislation could become a model for other states and a market driver
Product engineers may drive the market in the next 3 to 5 years
A recent article speculated that Ingersoll-Rand’s acquisition of Precision Flow Systems could pave the way breaking up the conglomerate. Club Car is one of the pieces that seems a poor fit with the rest of Ingersoll-Rand. If this is the case, then Polaris Industries might be a good suitor.
The Pros for Acquiring Club Car
A strong international brand
Club Car has a number of characteristics that match previous Polaris acquisitions. First, Club Car is a leading brand, if not, the leading brand of the three major golf car manufacturers. Second, it is an international brand. Third, Club Car participates, in part, in a fragmented industry. Therefore, Polaris would have an opportunity to use their resources to establish a more dominate market position. While the golf car fleet market is primarily a three company affair, Club Car, E-Z-GO and Yamaha, the non-fleet personal transportation vehicle (PTV) and light utility vehicle markets are more fragmented markets. Fourth, a large installed base of vehicles forms the basis for a substantial parts and accessories business. This was a key reason for the Polaris purchase of Taylor-Dunn.
Club Car complements Polaris vehicle portfolio
A large portion of Club Car vehicles sold are electric and would fit well with the Polaris EV portfolio. Other EVs in the Polaris portfolio include GEM, Goupil, Taylor-Dunn and Aixam. Polaris could spread their battery and EV powertrain development costs over a larger number of vehicles. In addition, Club Car’s end markets and distribution network would complement current efforts by Polaris. Their PTVs would complement the street legal GEM vehicles and their light utility vehicles would complement the more heavy-duty Rangers.
In addition, the golf manufacturer’s dealer network would expand Polaris’ footprint. While there is some overlap with the GEM and Taylor-Dunn dealer networks, there would also be a large number of additional dealer locations in the US and internationally. Furthermore, these dealers could be used to expand the GEM and Taylor-Dunn distribution. Club Car end markets such as golf courses, resorts, colleges, airports and other institutions would also take Polaris into new markets or broaden their vehicle offerings where they overlap.
The Cons for Acquiring Club Car
Is there enough growth?
Polaris looks for acquisitions in growing markets and/or traditionally strong but neglected brands that they can leverage. In the case of Club Car, the fleet golf car market has been declining for a number of years. The PTV and light UTV markets are growing but not at really high rates and are a smaller part of the business. Club Car isn’t necessarily a neglected brand but is somewhat lost among much larger Ingersoll-Rand businesses. In contrast, Polaris might be able to focus more attention and resources and make a strong brand even stronger.
Another acquisition to swallow
Polaris has already made a number of acquisitions in the past year, adding Boat Holdings and the Marquis-Larson Boat Group to start a new boating business. Acquiring Club Car would require more management time and focus to successfully integrate the business into Polaris. In addition, the purchase would likely add additional debt to their balance sheet. Polaris management might want to finish integrating their recent acquisitions before adding another piece and avoid increasing their debt.
What Will Polaris Do?
A strong argument could be made that Polaris should acquire Club Car if it’s for sale. The key questions are whether the management perceives if there is enough growth in the market, and do they think they can use their resources to drive more growth. The combination of the PTV and light UTV markets along with the parts and accessories business may offer enough potential. Timing may also be an issue. Any down turn in the economy, which some are predicting, would hurt Polaris. Discretionary income drives a significant portion of their sales.