Should Polaris Acquire Club Car?

Club Car Tempo
The Tempo, Club Car’s fleet golf car introduced in 2018.

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.

Marc Cesare, Smallvehicleresource.com

Polaris Reports Another Strong Quarter

2019 Polaris Ranger Crew XP 1000 EPS
The 2019 Polaris Ranger Crew XP 1000 EPS in Sunset Red Metallic is part of the Ranger product line that recently commemorated its 20th anniversary.

Polaris Q4 2018 Earnings Overview

Polaris reported another strong quarter and full year with 4th quarter sales of $1.6 billion, up 14% from last year. Full year sales topped $6.1 billion, up 12% from the prior year. The ORV/Snowmobile segment reported sales of $1.1 billion for the quarter, an increase of 7% year over year. The ORV portion declined 2% as the company had a tough comparable with the prior year’s quarter. On a negative note, management expects tariff and trade war costs to total between $110 to $120 million company wide for fiscal year 2019. They will hit the ORV and Motorcycle businesses the hardest. A significant portion of the Q&A on the call revolved around tariff and trade war costs. A summary of the earnings call highlights related to the STOV market follow.

Polaris Earnings Call Highlights

  • Polaris side-by-side retail sales increased mid single digits % while ATV retail sales decreased mid single digits %
  • Average selling price for the ORV segment increased by 7% but were partially offset by tariff, logistics, and commodity costs
  • Polaris gained market share in the side-by-side market for the quarter and the full year
  • Management believes they are gaining share from Japanese competitors and Arctic Cat, now owned by Textron
  • Global Adjacent Markets revenue increased 4% to $122 million on the strength of commercial, government and defense and Aixam businesses.
  • Polaris increased wholegood prices 3.5% for the ORV/Snowmobile segment at the start of 2019 to counter tariff and trade costs
  • Revenue for ORV/Snowmobile and Global Adjacent Markets segments are expected to increase mid-single digits % for fiscal year 2019
  • Management does not expect to enter into electric powered markets until there is large consumer demand. Their response pertained to motorcycles but appears to be their general philosophy.

Learn more: Earnings Call Transcript (seeking alpha.com)

PGA Show STOV Trends

Cushman Hauler 800 ELiTE
The new Cushman Hauler 800 ELiTE from Textron is powered by lithium batteries.

My colleague Stephen Metzger recently attended the 2019 PGA Show in Orlando, FL. Two trends stood out from his journey through various exhibits. First, the on-going development of feature-rich and customizable personal transportation vehicles (PTVs), particularly through automotive-type features. Second, the mainstreaming of lithium power.

PTVs to the Forefront

The manufacturer announcements at the PGA Show and the current PTV shopping experience points to a clear emphasis on PTV market. Both large and small manufacturers are driving this trend. This is part of an overarching effort by manufacturers to pursue growth in the non-fleet golf car markets. They are targeting the utility and personal transportation segments as fleet sales have declined and then stagnated.

Customization with automotive features

Manufacturer websites now allow for easy and quick customization with the simple click of a few buttons. Build your own functionality adds accessories and provides transparent pricing in seconds. Many of these accessories are automotive-style features like LED lighting, high-end audio systems, premium upholstery, and bodywork accents. In addition, these trends are evident not only in offerings from major vehicle manufacturers but from new and smaller manufacturers as well as aftermarket accessory providers.

Lithium Powers Up at the PGA Show

The mainstreaming of lithium powered vehicles is the second key trend evident at the PGA Show. E-Z-GO the first major manufacturer to significantly move to lithium did so two years ago. Now they are expanding their lithium powered lineup beyond fleet models and some PTVs to include select utility vehicles. More significantly, Club Car announced their own lithium powered fleet vehicle, the Tempo, and likely will offer their Onward PTV with a lithium option later in the year. Missing from the lithium powered party for now is Yamaha Golf Car.

Lithium Market Implications

The move to lithium powered vehicles will likely produce significant changes in the STOV market. Greater range, charging times, and lengthier warranties on battery packs are key improvements. Consequently, they will affect the fleet vehicle cycle, electric powered UTV capabilities and PTV functionality. One effect that should not be underestimated is the maintenance free nature of lithium battery packs. Proper maintenance of lead acid batteries continue to vex individual owners and fleet managers. Maintenance of lead acid batteries continues to be a challenge despite being used for decades and the introduction of advanced watering systems and other technologies. Poor maintenance can lead to a less efficient powertrain, and potentially a large bill for a new battery pack.

For more detail on new products and trends at the PGA Show read my colleague Stephen Metzger’s article.

Marc Cesare, Smallvehicleresource.com

Textron Expands ELiTE Vehicle Lineup

Cushman Hauler 800 ELiTE
The new Cushman Hauler 800 ELiTE from Textron is powered by lithium batteries.

Textron Specialized Vehicles Launches Hauler 800 ELiTE Electric UTV

Textron Specialized Vehicles launched the Cushman Hauler 800 ELiTE electric powered utility vehicles. Samsung SDI lithium technology powers the ELiTE series. The Cushman Hauler 800 and 800X will feature the lithium battery pack. Textron is targeting golf course superintendents with these models.

ELiTE Powertrain

The Hauler 800 and 800X ELiTE powertrains feature a 48-volt AC drive with a 11.7 hp (peak) motor and two zero maintenance lithium ion batteries. In comparison, the existing electric Hauler 800 and 800X have a 48-volt AC drive with 4.4 hp continues motor and six deep cycle batteries.

Learn more: Textron.com

SVR’s Take

Textron’s initial introduction of the ELiTE lithium batteries in fleet golf cars was successful. As a result, utility vehicles used on golf courses are a logical extension of the program. Furthermore, from a macro market perspective, Textron is the first major manufacturer in the STOV market to make a strong push with lithium powered vehicles. While others have offered lithium batteries as an option on some vehicles, Textron is the first to incorporate them into key models.

Where is the Competition on Lithium Batteries?

Polaris diverse lineup sprinkled with lithium models

With the 2017 acquisition of Arctic Cat, Textron Specialized Vehicle business became an even more direct competitor with Polaris. Polaris has been active in the electric vehicle market for years. They invested in Brammo, and acquired Goupil in France and GEM and Taylor-Dunn in the US. However, to date, Polaris has not made a big push into lithium powered utility vehicles in the US. GEM vehicles have an option and the European based Goupil offers two lithium battery pack options for many models. Polaris briefly offered their Ranger EV with a lithium pack but the model was significantly more expensive. Their volume in fleet golf cars provides Textron with an advantage over Polaris when introducing lithium powered models.

Club Car enters the fray

At the recent 2019 PGA Show Club Car introduced its lithium powered fleet vehicle, the Tempo. According to sources, they are likely to introduce a lithium powered version of their Onward PTV later in the year. Like Textron, Club Car will have the advantage of production volume through fleet sales. They likely will follow suit and offer lithium powered utility vehicles in the future. A smaller manufacturer likely to follow the trend is STAR Electric Vehicles.

Marc Cesare, Smallvehicleresource.com

Yamaha Unveils UMAX Rally 2+2 Light UTV

Yamaha UMAX Rally 2+2
The new Yamaha UMAX Rally 2+2 light utility vehicle with convertible rear seating.

Yamaha Launches UMAX Rally 2+2 at PGA Show

Using the 2019 PGA Merchandise Show as a launch pad, Yamaha Golf-Car Company unveiled their new light utility vehicle, the UMAX Rally 2+2. Aiming for a broad swath of the market, the company is marketing the vehicle as crossover model for work or play. The vehicle’s “rugged” styling is less golf car and more closely aligned with the rest of the UMAX line. The UMAX Rally 2+2 features a lifted suspension, front brush guard, wide fender flares and a convertible rear seat. In addition, customers can choose between a electronic fuel injected gas engine or AC electric powertrain.

UMAX Rally 2+2 Features & Specs

Additional features and specs include:

  • Powertrain Options: Yamaha 402cc, single cylinder EFI gas engine or 48V, 6.7 hp AC electric motor with 350 amp controller
  • Rear coil suspension system with individual coil springs with dual compressions for standard or heavier loads
  • Front bucket seats
  • Basket storage area behind the front seats
  • Sealed under-hood storage compartment
  • In-dash storage pockets with anti-slip rubber mats
  • LED headlights
  • HybriCore steel chassis
  • Tru-Trak II fully independent automotive-style strut front suspension
  • Mechanical drum front and rear brakes
  • 23″ tires
  • 15 mph top speed

This model will be available at authorized Yamaha dealers in Spring 2019.

Learn more: Yamahagolfcar.com

SVR’s Take

Similar to many other UTV manufacturers, Yamaha is building out their utility vehicle line to drive sales growth. Marketed as a ‘work or play’ vehicle, this model is also trying to tap into the growing PTV market. The UMAX product line now includes four different models with most offering an option of gas or electric powertrains. Essentially, the UMAX Rally 2+2 adds a crew version to the lineup. The product line is versatile and can appeal to a wide range of commercial and consumer end users. The line offers varying levels of cargo and passenger capacity as well as light off-road capabilities.

Tracker & Textron Partner on UTVs/ATVs

The Tracker Off Road ATV & UTV model lineup

Partnership Overview

Tracker, a leading boat manufacturer, and Textron Specialized Vehicles are forming a partnership to produce UTVs and ATVs and sell them under the new Tracker Off Road brand. Tracker is part of the White River Marine Group that includes Tracker, Triton, and Ranger boats, as well as Bass Pro Shop and Cabela’s. The Tracker Off Road vehicles will be sold through select Ranger, Triton, and Tracker, and other independent dealers, as well as at Bass Pro Shops and Cabela’s locations. They will be built at the Thief River Falls, Minnesota plant that produces Arctic Cat vehicles.

Tracker Off Road Product Lineup

The Tracker Off Road lineup includes four ATVs and four UTVs. The ATV line includes entry level youth and adult models and two more models with more features and capabilities. This lineup should be able to target a wide swath of the ATV market. The UTV lineup includes a personal transportation vehicle (PTV), and three models currently sold under the Prowler nameplate: the Prowler EV, Prowler Pro and Prowler Pro Crew. The corporate presentation also mentioned the potential of selling the Wildcat XX and even snowmobiles through the same distribution network.

Learn more: Businesswire.com

SVR’s Take

The Textron Tracker partnership continues the trend in the UTV market of brands expanding beyond their traditional distribution networks. Typically, an established UTV brand partners with a traditionally non-UTV brand. They either re-brand existing models or develop similar but unique models to sell through the partner brand’s distribution network. Previously, major UTV brands have used this approach to gain access to farm equipment and outdoor power equipment distribution networks. In this case, Textron is tapping into marine distribution and outdoor apparel networks. In a similar vein, Polaris and Can-Am have recently acquired boating manufacturers. Primarily these acquisitions diversify their powersports portfolio. However, it would not be surprising to see them sell a select range of off-road vehicles through these marine networks. If the dealers believe they can make a profit and there is no territorial conflict with the traditional powersports dealers then these networks expand their geographic footprint and reach.

Marc Cesare, Smallvehicleresource.com

Honda Launches Talon 1000R/X Sport UTVs

Honda Talon 1000

The Talon 1000R and 1000X are Honda’s entry into the sport UTV segment.

Honda Talon 1000X

The Honda Talon 1000X is designed for tighter and rockier trails.

Honda Talon 1000R

The Honda Talon 1000R is for dunes and more wide open riding.

Honda Launches Talon Sport UTVs

Honda recently introduced the Talon 1000X and Talon 1000R UTVs. They are Honda’s long awaited entry into the sport UTV market. The Talon 1000X targets tighter wooded trails and rockier environments while the Talon 1000R aims for more wide-open dune riding. The models should be available in early 2019. I’ve seen sources mention January while others mentioned March. The first date might be production and the second could be arrival at the dealerships. In any case, the following specs are common to both versions.

  • 104-hp, 999cc, twin-cylinder, 4-stroke, SOHC engine
  • Six-speed dual clutch transmission
  • Power steering
  • Hill Start Assist
  • Hydraulic brakes with two 250mm discs;
  • Electronic Brakeforce Distribution (EBD) system
  • LED High/Low Headlights
  • About 1,500 lbs in weight
  • Tire sizes:  28x9x15; 28x11x15
  • Bolstered seats with harness pass throughs
  • Roof is standard

See the Talon in action:  Official Honda Talon 1000 video

Talon Model Differences

The two models have different widths, wheelbases, slightly different suspension systems with different suspension travel. a slight difference in suspension travel and different color options. The following specs are some of the key differences between the vehicles.

Pricing Update

In early January 2019 Honda announced pricing for the vehicles.

Talon 1000R — MSRP: $20,999; Availability: Spring 2019

Talon 1000X — MSRP: $19,999; Availability: Spring 2019

Talon 1000x Key Specs

  • Double-wishbone front suspension, Fox Podium 2.0 shocks with Quick Switch 3
  • 3 Link rear suspension with high-clearance trailing arm, Fox Podium 2.0 shocks with Quick Switch 3
  • Front/Rear suspension travel:  14.5″/15″
  • Red/Gray with red suspension accents
  • Gray/Blue with silver suspension accents
  • Width:  64.0
  • Wheelbase:  87.6

Talon 1000R Key Specs

  • Double-wishbone front suspension, Fox Podium 2.5 shocks with Quick Switch 3
  • 4+ Link trailing-arm rear suspension with toe link, Fox Podium 2.5 shocks with Quick Switch 3
  • Front/Rear suspension travel:  17.7″/20.1″
  • Red with red suspension accents
  • Green/Silver with silver suspension accents
  • Width:  68.4
  • Wheelbase:  92.7

Initial Reviews

The following are some initial reviews and analysis of the Talon from around the industry.

UTVonDemand

First Look Review (video). Provides fairly in-depth analysis of the engine and drive train and highlights many of the key features that the reviewer likes.

  • 999cc twin cylinder SOHC engine should provide good low-end torque
  • 270 degree firing order makes it run like a single cylinder
  • Based on Pioneer engine but bigger throttle bodies, bigger injectors, different heads and more flow
  • Claiming 104 hp but may have higher torque than other UTVs with more hp
  • Rubber mounted engine to dampen vibration
  • 3 Driving Modes:  Sport, Normal and Manual with paddle shifters
  • Hill Assist – Push dash button and it holds the vehicle from rolling back for 3 seconds
  • “Big deal” for this vehicle is the transmission has a dual high and low range so you can  go rock crawling without changing the gear set out
  • Claim extra strong driveshaft and axles
  • i-4WD system with electronic braking control to transfer power up front from a spinning wheel to the wheel with traction
  • 68.4 1000R  Front/rear wheel travel 17.7/20.1
  • 64″ 1000X Front/rear wheel travel 14.6/15.1- this may be a little short compared to competitors
  • Can use 30″ tires – 28″ are standard and custom designed by Maxxis
  • 15″ rims for bigger brakes
  • 1000X has 3 link system podium 2.0
  • 1000R has a 4 link for added strength and Podium 2.5;
  • More suspension tuning with 3 mode QS3 compression on both models
  • Power steering sport tuned for feedback and speed sensitive
  • Standard roof is designed with rain gutters and air vents for trailering backwards
  • Good seat sliders
  • Holders in doors and t-bar has nice latching system
  • Seats have pass throughs for harnesses
  • Pedals laid out for two or one foot driving and passenger has different places to place feet at speed or more relaxed driving
  • Cupholders with rubber for holding in drinks
  • Good cargo capacity and design
  • 1 yr warranty

Hondaprokevin

Provides specs in a nice layout and plenty of pictures

UTV Action

General overview of key specs and some commentary.

  • Probably will competitively priced around $20,000
  • Trail riders anywhere will like it but sand riders may wait for turbo option

UTV Driver

They provide a top ten feature list for the vehicles

  • Bolstered seats with harness pass throughs and harness bar
  • 15″ rims for larger brakes and 30″ tires
  • Sizable cargo bed with tie-downs
  • Dual Clutch six-speed transmission
  • Paddle shifting
  • FOX shocks
  • Hill Start Assist
  • 4-link trailing arm system on 1000R
  • Engine
  • Strong, durable build

SVR’s Take

Honda’s entry into the sport market has long been rumored so this isn’t much of a surprise. People may not have expected  two different models, but targeting the main sport sub-segments makes sense. The initial reactions are very positive and Honda’s reputation for quality and performance have riders expecting a good vehicle.

Increased Competition

Not surprisingly, Honda’s entry makes the sport end of the market now quite crowded. As a result, the competitive landscape raises the question of how Kawasaki will respond. They have been focusing more on the utility side of the market with their recent model introductions and have not made any really big changes with their more recreationally oriented Teryx product line. I would suspect they might come out with a new high-end sport vehicle in the next year and probably as a separate product line.

Lithium Battery Powered Golf Cars on the Rise

Trojan Trillium lithium battery

A lithium battery from Trojan’s new Trillium product line.

Trillium Lithium Battery Line from Trojan

Trojan Battery, a major player in the golf car and small task-oriented vehicle market, recently introduced their new Trillium line of Trojan Intelligent Lithium batteries. The line is targeting the aftermarket segment and is designed to be a replacement for existing lead acid batteries. According to Trojan the switch can be made “without the need for expertise in Li-ion technology or system integration.” Likewise OEMs can use the new battery line “…without significant investments in custom pack design and development.”

Sign of More Market Penetration

Trojan’s new product line is another indication of the growing use of lithium batteries in the golf car market. For a number of years there has been a lithium battery aftermarket that has largely consisted of smaller companies packaging together the various components. They either sell directly to golf car owners and/or through dealers who can install the components. However, this has been a niche market. In 2015 LiV Golf Cars tried to sell a lithium powered fleet golf car but were undercut by the big players too many times and retreated from that market. There are also smaller volume OEMs like GEM and luxury golf car maker Garia that offer lithium powered vehicles.

E-Z-GO Entry a Gamechanger

The most significant move towards lithium batteries came in 2017 when E-Z-GO, one of the major golf car manufacturers, launched their ELiTE line of lithium powered fleet golf cars. They also offer the option on some of their personal transportation vehicles. Financial reports show that E-Z-GO sold over 20,000 ELiTE vehicles in 2017. Samsung SDI is the lithium battery supplier for E-Z-GO. Rival golf car manufacturer Club Car has been linked to battery manufacturer LG Chem but has not yet introduced any lithium powered vehicles.

What Lies Ahead

The entry of a brand name such as Trojan should boost the aftermarket segment. Customers will likely have more trust in a Trojan backed product. In addition, if it is as easy to use as advertised, then this niche market should expand. The E-Z-GO product appears to have launched fairly successfully. Continued success will likely force Club Car and Yamaha to introduce their own lithium powered vehicles. Perhaps as soon as the upcoming PGA Show early in 2019. Once that happens, the move towards lithium batteries could accelerate quickly.

Marc Cesare, SVR

Road Use Regulation Roundup – November 2018

golf cart signRoad Use Regulation Summary

The following is a summary of some of the 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, 2018.

Some trends in this latest regulation roundup:

  • There is a fairly even split between ordinances that will allow more small vehicles on the roads and ordinances that will restrict use or clarify existing regulations.
  • California is allowing San Diego cities and the county to create a regional LSV plan..
  • Once again most of the legislative activity occurred in the Midwest and Southeast.
  • Florida municipalities were the most active followed by Minnesota, Wisconsin and Ohio.

Road Use Regulation by Location

Largo, FL – Largo officials denied a request from a mobile home community to allow the use of golf cars on nearby public roads. Officials cited safety concerns and potential cost issues as signs would be needed to notify other drivers that golf cars might be on the roads.

St. Johns County, FL – The county Board of Commissioners is replacing the existing golf car ordinance with one that would provide more clarity and uniformity in the county so the Sheriff’s Office can provide better enforcement.

Panama City Beach, FL – The Florida Highway Patrol reported a number of low seed vehicle and golf car accidents on Back Beach Road which is a state highway route. According to road use regulations the vehicles are not allowed on the route.

Holmes Beach, FL – The town commissioners are considering new golf car regulations that would require the addition of limited safety equipment or a full LSV set of accessories. In addition, they are considering keeping the vehicles off main thoroughfares.

Oconto, WI – The Oconto City Council revised an existing golf car ordinance to allow the use of utility vehicles on city streets. In response to citizens, the Council is considering an ordinance allowing ATVs and UTVs on some city streets.

Greendale, WI – The Greendale Village Board passed an ordinance to allow the use of low speed vehicles on certain city streets.

Austin, MN – The local police department is making an effort to educate citizens that UTVs and ATVs are not allowed on city streets.

St. Cloud, MN – Stearns County passed an ordinance to allow golf cars and LSVs on public roads. A similar ordinance had sunsetted in May.

Covington, OH – Operators of OGGO and Gest low speed vehicle transportation companies asked the city to amend their current low-speed vehicle ordinance to allow the company’s LSVs to operate on certain streets. The transportation is free for the riders. The services will be operating in Cincinnati and Newport as well and generate revenue from advertising.

Toledo, OH – The City Council is considering making permanent an ordinance that allows recreational and commercial use of golf cars in certain areas of the city. Currently a pilot program, the council is also considering expanding the areas of the city where the ordinance would apply.

Edmonton, KY – The Edmonton City Council approved an ordinance that would allow golf cars, ATVs, UTVs and mini-trucks on city streets.

Reedsville, WV – The City Council considering changes to the local vehicle ordinance listened to concerns of citizens regarding the use of UTVs and ATVs on town roads. Some citizens use their vehicles for practical purposes while others are “joy” riding on off-limit streets. The vehicles can be used on certain roads for a legitimate farm use. The changes would require drivers to show proof of farm use and have safety signage attached to the vehicle.

Woodstock, GA – The Woodstock City Council tabled a small vehicle ordinance in order to further discuss the definition of golf cars, ATVs, low-speed vehicles and personal transport vehicles, and the safety features required for each.

Poplarville, MS – The Board of Alderman is sending a resolution to the state legislature to allow the use of golf cars and other low speed vehicles on city streets.

California – Governor Brown signed a bill that gives cities in San Diego County and the county itself the authority to establish a LSV transportation plan.

South Carolina – A new law is about to go into effect designed to more easily allow police to enforce violations related to driving golf cars and other low speed vehicles. Violating any golf cart rule will be a misdemeanor punishable with a maximum fine of $100 or 30 days in jail, unless the offense is deemed to be a felony.

 

 

Arcimoto FUV: A Threat to PTVs?

Arcimoto Fun Utility Vehicle - FUV

The electric powered Arcimoto FUV (Fun Utility Vehicle) is just coming to market.

Oregon based Arcimoto is beginning to roll out their three-wheeled Fun Utility Vehicle (FUV). The combination of price point, size, electric powertrain and ability to travel public roads makes the Arcimoto FUV an intriguing alternative to golf cars, PTVs and LSVs.

Update – Arcimoto responded to a number of questions I sent them and I have added the information to the relevant sections below.

Arcimoto FUVs already on the Road

The first 10 FUV prototypes hit the road this past June. The company completed another 15 vehicles, referred to as their beta series, in September. These went to five customers and the remainder to rental locations. Vehicle rental franchising in tourist locations is a key part of Arcimoto’s marketing plan. As of the end of June the company has 2,800 reservations for the FUV.

Volume Production

Management expects to begin production and delivery of their A series of vehicles during this quarter. The A series marks the move to higher volume production. Plans call for a run rate of 200 vehicles/week or roughly 10,000/year by the end of 2019. The company has deliberately designed smaller sized production facilities that can produce approximately 10,000 vehicles per year.  A production facility costs approximately $10 million. This limits initial capital costs and creates a facility that can be profitable relatively quickly. Furthermore, the facility can be easily replicated in other parts of the country or the world.

Vehicle Features and Specs

The Arcimoto FUV is a three-wheeled vehicle powered by a 67 hp electric motor and a 12 or 20 kWh lithium-ion battery for a range of 70 or 130 miles and a top speed of 80 mph. As a three-wheeler, most states classify the FUV as a motorcycle or similar vehicle. Therefore, it does need the same  safety requirements as a full-sized, highway capable vehicle. The FUV can seat two passengers, one behind the other, and features regenerative braking, hydraulic brakes, a windshield with wiper and defrost, and heated seats and hand grips. Additional options include full HVAC, soft or hard shell doors, rear cargo box, bluetooth speakers and racks for golf clubs, bikes, surfboards, etc. The target price for the base model is $11,900 with a fully decked out model reaching the $19,000 range.

Arcimoto FUV Dimensions

Arcimoto FUV Dimensions

Versatility and Price Point Creates an Alternative to PTVs

The FUV is a versatile vehicle for gated communities. The vehicle can move from golf course, to community pathways to public roads. On public roads the FUV faces none of the restrictions of a golf car, PTV or LSV since it is classified as a motorcycle. Therefore, it can travel on higher speed roads and at night. The FUV can travel faster and farther as well. In terms of speed, the FUV may need a speed limiter option for use on golf courses or within communities depending on local regulations. According to Arcimoto, the vehicle does have the capability to cap speeds to meet specific needs.

The company is targeting a $12,000 base price. Therefore, the FUV is pricier but competitive with LSVs and fancier PTVs given the trade off between price and functionality. One of the reasons LSV sales never really took off in gated communities as expected is that the additional price premium did not offer a significant benefit over new or refurbished golf cars. LSVs are most successful where regulations greatly restrict the use of PTVs or golf cars on local roads. However, if anything, municipalities are becoming less restrictive regarding golf car use. Furthermore, in states like California, Massachusetts, Maryland, Arizona, and Illinois there are tax incentives available for the FUV. There is also the possibility that electric motorcycle or similar incentives could be brought back at the federal level. The company is lobbying to have the tax credits for motorcycles and three-wheeled vehicles brought back. This additional cost reduction could further boost the attractiveness of this alternative vehicle.

Arcimoto FUV Drawbacks

There are some potential drawbacks to the Arcimoto FUV in the gated community setting.

Higher Driving Speeds

Some communities may object to the vehicle’s higher speed capabilities. Some type of speed limiter could address this, or not, depending on the locality. In addition, given the older demographic in gated communities, some drivers may not feel safe driving at higher speeds on local roads. Nevertheless, driving up to 40 to 45 mph would include a large swath of vehicle usage inside and outside a gated community. In effect, the FUV could displace both PTV miles and a sizable chunk of driving performed with highway capable vehicles.

Seating Configuration

Seating configuration is another potential drawback. The seating in an FUV is one passenger behind the other rather than side by side. Some users may feel this reduces the social aspect while riding in the vehicle, particularly on a golf course.

Vehicle Storage

For seasonal usage by vacation home owners, there is often a need to store the vehicle for several months without any usage. This can be an issue or at least require some planning for the current battery powered vehicles. According to Battery University a lithium ion battery should be stored at 40% percent charge if being stored for an extended period. Arcimoto did not answer my question directly on this subject but expect to have a battery pack with a lifetime of “…8-10 years with normal vehicle usage, and still maintain more than 80% of their original charging capacity.” The pack replacement cost is expected to be under $2,500 inclusive of the residual value.

Marketing, Pricing and Local Regulations Critical to Success

The success of the Arcimoto FUV in displacing golf cars, PTVs and LSVs will depend on three key elements:  marketing, pricing and local regulations. The last may be the most important. If gated communities object to the FUV’s higher speed capabilities, and there is no technological fix, foreclosing the market. The pricing may be the easiest to address. If Arcimoto can hit their target price at volume production, even without tax incentives there is a compelling cost benefit story for the FUV.

The marketing element depends in part on where Arcimoto’s management wants to invest resources. The gated community market may be too small to target during the initial phases of the vehicle’s rollout. In addition, golf car dealers mainly serve this market. The company likely does not have relationships with this distribution channel. On the other hand, their rental franchise plan could overlap with these dealers as some are located in tourist oriented beach communities and have high PTV use. This angle could serve as an entry point to the market. In response to my questions Arcimoto stated that they put on a test ride event for the FUV at The Villages, a gated community in Florida, on November 12th. They also noted that the short drives and warm weather make resort communities a great market for the vehicle.

In a years time we will have a better idea whether the Arcimoto FUV has met with success, and whether it threatens the PTV market.

Marc Cesare, SVR