In what may prove to be the biggest deal in the off-road vehicle community, the leader of the segment, Polaris, has teamed up with comparatively tiny Zero Motorcycles to develop the future contents of toy-haulers all over America. With this exclusive 10-year deal, Polaris gains Zero’s 14 years of electric propulsion expertise, and Zero gains a broad platform and the potential for its technology to end up in the hands of literally millions of adventure seekers. We spoke to the CEOs of both companies to try to get a better insight into the tag-team deal.
Polaris absolutely dominates the side-by-side market with its RZR, Ranger and General models, and it puts a ton of snowmobiles out into the powder every year. Not only that, it also owns Indian Motorcycle, three different boat companies, GEM and industrial utility vehicle manufacturer Taylor-Dunn. Polaris shifted almost $7 billion in product across 2019, and a not insignificant portion of that was powered by electric motors. So what does this juggernaut of vehicular construction need with tiny little Zero Motorcycles?
Zero, based in Scotts Valley, California, won’t let on exactly how many electric motorcycles it sells each year, but CEO Sam Paschel would let slip that it’s somewhere between 2,000 and 10,000 units. It’s fair to say that it’s probably on the higher end of that number, as the company’s new SR/S has been its most successful launch of all time, despite deliveries beginning in the midst of a global pandemic and economic depression.
Zero’s years of experience in developing and manufacturing compact, lightweight lithium-ion battery packs are built on its status of being a pioneer in jumping on the electric motorcycle trend, probably well before it was financially viable. Now, having watched the demise of Alta and Brammo —more on that in a minute — it’s the only major electric-only road motorcycle maker left standing. Clearly Zero has figured out what the others never could: a new fun experience delivered through a quality and reasonably priced product.
While Zero has built its reputation as a motorcycle company, Paschel makes it clear that he sees value in the company beyond its physical products. After all these years, he says, Zero is a software company. The recently-developed Cypher III operating system introduced on the popular SR/F and SR/S is what sets Zero apart from anyone else in the EV game. Even more than its battery tech and its waterproof electric propulsion systems, this is what makes Zero a viable partner for Polaris.
And Polaris isn’t small potatoes. Besides the assistance on supply-chain management, Zero will financially benefit from whatever Polaris paid to source this tech as well as in economies of scale. As more Zero motors are manufactured for use by Polaris, the price per unit will come down dramatically. This should translate to cheaper Zero EV bikes in the future.
Polaris is quick to note that it has been in the electric game for a long time. In addition to electric industrial vehicles from companies like Taylor-Dunn, Polaris owns the electric-only people mover GEM. It also purchased all of Brammo, releasing the Brammo Empulse electric motorcycle as a Victory Empulse. With the death of the Victory brand, and the abject failure of the Empulse model, the Brammo assets were shifted out of the company for a profit.
Most closely related to this discussion, however, is the Polaris Ranger EV. According to Polaris, it is the best selling electric off-roader of all time, and I believe that. It’s pretty much the only one. Aside from some brands nobody has ever heard of, an electric John Deere Gator and the next-level vaporware bullshit Nikola NZT, the Ranger EV doesn’t really have competition.
The Ranger EV starts at $11,899 and owns the (admittedly limited) market. With around 30 horsepower, 50 miles of range and around 8 hours to recharge on a 110-volt circuit, it’s hardly bleeding edge technology. With a 48-volt AC-induction motor and lead-acid battery chemistry, the Ranger EV is dead nuts reliable, but running about a decade behind the electric curve.
The Ranger EV is already class-leading — hell, it practically invented the class — but Polaris isn’t satisfied with sitting back and letting the world catch up. This deal with Zero will provide its models with the newest tech, quicker charging, more power and an improved operating system. Can you imagine how much fun a Polaris RZR would be with an instant 140 lb-ft of torque available from Zero’s Z-Force permanent magnet AC motor? I’m not sure I can.
I’ll be honest, the minute I heard that Polaris and Zero would be teaming up my brain laser focused on the idea of an electric Indian motorcycle. Maybe a big EV bagger, or an ultra-fun torque monster electric FTR, or an EV around-town hopper like the Scout. Unfortunately that is decidedly not the case. The 10-year deal covers only off-road vehicles and snowmobiles in the Polaris brand.
While I’m a little bit disappointed this deal won’t lead to any more electric street motorcycles on the market, it should still lead to some awesome off-road EVs that I’d be happy to drive/ride. For one thing, the idea of reducing your noise profile in the great outdoors is enticing. If you’re heading out into the woods or the desert to enjoy it, wouldn’t you rather hear the birds chirping than the revs of your machine?
With almost none of these electric off-road machines on the market, will people be beating down the doors to buy them when they come out? Well, right now that’s probably a sure “no,” but by the time this project pushes out its first baby in late 2021 it might be a bit more of a desired thing. According to Polaris, ski resorts have been looking to reduce the noise levels of their snow machines, and an electric snowmobile would certainly help on that front. Add in that some national parks are pushing for a ban on two-stroke engines altogether, pushing out the vast majority of snowmobiles instantly.
And while this coming together was a done deal well before the California governor’s executive order last week, Gavin Newsom’s ban of brand new ORV sales with any kind of emissions after 2035 is certainly wind in the sails of the Zero/Polaris boat. Anyone sufficiently ahead of the curve on electric ORVs will be able to make huge inroads when the day comes that internal combustion quads, side-by-sides and snowmobiles are pushed out.
Norman Mayersohn: I don’t know whether I’m reading too much into it, but is the agreement with Zero strictly off-road?
Scott Wine: It’s strictly off-road vehicles and snowmobiles. You know, obviously they’ve got a great motorcycle. You’ve ridden them. They make great motorcycles. So, we really didn’t see the need right now to build a bike that competed with them, or to spend a lot of time on the motorcycle business. We really needed help with the off-road vehicles and snowmobiles, and that gives them the highest volume opportunity to create a business model that is financially beneficial to them. So, it doesn’t mean that we won’t talk about motorcycle ideas in the future, but right now we’re very very focused on snowmobiles and off-road vehicles.
Because, interestingly, because they’ve built such good motorcycle battery powerpacks, their battery density is better than anyone else we could find, their BMS (battery management system) is really good, their electronics are spectacular, so it’s almost a plug-and-play with our vehicles.
NM: Is this for all classes of off-road vehicles? Work and recreation?
SW: You know, we’ve got bold ambition. My vision is ultimately to be able to offer customers an alternative to choose between powertrains. If you want an internal combustion engine you can get it. If you want an electric powertrain, you can get it. That’s going to take us several years to get to, so we’re just going to work methodically through the portfolio, and where we think customers need electric alternatives the most is where we’ll bring the first product. We’re not ready to make a product announcement, but we do expect we’ll have the first product out of this partnership ready to be launched in late 2021.
NM: Forgive me if I misunderstood the agreement, but is it strictly for technology, or will it be technology and parts? Is Polaris going to be building stuff for Zero?
SW: It’s really a contractual agreement and they’re going to be our powertrain supplier. Battery packs, control systems, motors. We have the option to source the stuff through our traditional supply chains built to Zero’s specifications. So our supply chain management and capabilities is much greater. Part of the agreement is that we drive savings so that they can benefit on the motorcycle side, and that ultimately brings value to us. We get part of that savings from what we buy. It really is a win-win situation. They’re going to have a new business model, and we’re going to have a great supplier of electric powertrains.
NM: When we’ve talked before, you have told me that Polaris would do electric when the time is right. And, you know, we saw the Brammo deal come and go. What is the lesson or the takeaway? How is Polaris now smarter beyond that?
SW: Well, we’re certainly smarter. And you’re probably being kind, but I was a naysayer on electric. It didn’t work for our industry. We tried with Brammo, but we saw no path to make money. Ultimately we sold it to Cummins and did OK financially. What we want and what we waited for was, when can you get that combination of power, weight, pricing and performance. It’s those four attributes, and you have to get them all dialed in.
You know, we don’t have the same real estate that automotive has to put batteries to get the range and performance that they need. So what’s really happened is that over the last several years battery costs have come down, the performance, they’ve been able to build the software to get better performance out of the batteries, and what Zero has done with density is figure out how not to take up as much room. So, you know, we understand the use cases of our customers really well, and about half of our customers have said they would consider an electric alternative. So between the cost coming down, range going up and performance getting better, it just seemed like the right time to make the bet.
NM: Where does Slingshot fit in with all of this?
SW: I think that there is certainly going to be an electric Slingshot in the future. It’s a lower-volume product for us right now, so it’s not our first priority, but really over the next four or five years, I think you can expect almost all of our products to have an electric alternative. An electric Slingshot is a good fit for us.
NM: Are there any plans for electric off-road racing? More specifically, any plans to run in Extreme E?
SW: Did my racers tell you to ask that question? We don’t have plans to do that right now. Our [Indian] flat-track racers are doing a fantastic job, we got one through eight last weekend. But certainly that’s the great thing about electric, I mean, the performance is fantastic. The torque and power curves are just perfect, and Zero has kind of managed it.
NM: Will building electric vehicles end up giving you emissions credits? Is that something you can sell to other manufacturers who lag behind you?
SW: It probably will. It’s not part of the calculation, but you know we’ve been in electric for almost the entire time I’ve been at Polaris. In the last decade we’ve sold a billion dollars worth of electric vehicles. So we’re not really new to the space, what we’re new to is bringing it to our powersports business where we can drive the performance that people need. And I think with the volume that we’ll be able to ramp up pretty quickly, there certainly should be some credits there.
Bradley Brownell: Any thoughts on electric boats? I know electricity and water doesn’t usually mix.
SW: Certainly. There’s a couple of competitors that are doing that now, and there are some communities where that’s the only option you can have. I wouldn’t say it’s near-term in our plans, but I wouldn’t rule anything out.
NM: We know that Harley-Davidson has made a lot of announcements about smaller, low-powered, scooters and e-bikes with electricity. Is there a commercial case for any of that stuff for Polaris?
SW: Right now I’m not going to follow anything that our Milwaukee competitor has done electrically. Actually, I’ve recently ridden some of our prototype vehicles that we’ve designed, and because of our Goupil and GEM and Taylor-Dunn we know a lot about micromobility, and I think we’re stretching that in a lot of directions, so I wouldn’t rule anything out. It probably doesn’t require a Zero powertrain, but...
NM: Are there places now where internal combustion engine powered off-road vehicles can’t go? Are there national or state parks not allowing them? Would we gain any access by going electric to anywhere we can’t access today?
SW: There’s not too many that require electric, but take Yellowstone park for example. We don’t sell any snowmobiles for touring in Yellowstone because they require a four-stroke. And we could develop a four-stroke snowmobile or we could just go straight to electric and take over the whole business.
And snowmobiles is an interesting one. I thought it was the dumbest idea ever when it was first presented to me. Why on earth would anyone want an electric snowmobile? And then they talked about the use cases in various places, especially ski resorts. The ability to stay charged and take away the noise and smell at a ski resort, it’s a great potential.
In many ways, across our powersports business, there’s a potential for a faster adoption of electric powertrains than there has been in automotive.
NM: Invariably, everybody gets caught up in the infrastructure and charging ability question. Particularly off-road, the access to charging is difficult. Is there a plan afoot to address any of that?
SW: We make generators now, just like Honda does, we sell generators. It does provide a pretty useful case for going on a long camping trip, not only to run the lights and heat, but also to potentially charge your electric vehicle. But we’ve looked at the future, you know, what does a hybrid vehicle look like? A lot of different options. Right now, we’re just looking at pure electric with Zero powertrains.
BB: I know that there are some competitors in the off-road space that are doing some hybrid stuff right now, but is anyone else making any big moves in electric?
SW: No one else has done anything big. They’ve talked about concept vehicles. But our Ranger EV, which is a lead-acid battery product, is the greatest selling off-road vehicle of all time in electric. And we don’t sell very many of them. So, nobody’s done it yet. We know there’s going to be a lot of people going after it, and we fully expect to be the innovation leaders in this space.
NM: What is it that Brad and I are missing?
SW: Because you understand what they do, it really is the instant-offense that we can get by being able to partner with them. You know, I talked about a product coming from this late next year, but if we were doing this all from scratch, finding our own battery supplier, finding our own BMS system and building our own controllers and then integrating it all, we’d be three or four years out. I think it’s just the realization that two companies with a similar culture about delivering value and high performance, we feel like we can accomplish that together.
Bradley Brownell: What was the sparking point for this joint venture with Polaris?
Sam Paschel: Well first, if you look at Polaris, they’re number one. They’re number one in the world, they’re the best. They came in and had a desire to take what we understand about electric powertrains, and the integration of those systems, and take the best internal combustion engine off-road vehicles in the world. Basically, take our expertise and their expertise moving products into the market that are going to surprise consumers and give them an exhilarating riding experience. And be the best electric off-road vehicles in the world.
I think there was mutual interest. When we saw what we were great at every day — building a strong motorcycle business and some of the best electric motorcycles in the world — and saw their expertise in chassis and off-road, it was a really natural fit. We created a lot of synergy between the brands.
BB: About how many electric motorcycles are you building in a year these days?
SP: We’re privately held and I think that’s a big benefit to us. So what I typically say is I’ll provide a range. It’s a very broad range, between 2,000 and 10,000 motorcycles per year. But we are averaging, we’ll see where it lands this year when it ends, but we’re growing at about a 40 percent compounding annual growth rate. So that’s massive growth for us, off of what is a sub-10,000 unit base.
BB: With that in mind, where do you see this venture going? Is it going to be Zero producing motors for Polaris, or is Polaris sending you chassis and you upfit them?
SP: They’re a phenomenal industrial organization and they produce a ton of off-road vehicles, and we’re going to play to those strengths. We’re going to be dealing with them on a technology partnership. From a supply chain standpoint, I think it’s still up in the air. Fundamentally, we’re providing a 14-year experience and expertise in the powertrain, the system integration and the software. That relationship from a supply-chain standpoint may need to evolve. We may start providing them with components or not. We may partner together to go find an appropriate source or we may work with some of Zero’s existing supply chain to provide to Polaris.
I think answering those questions is going to be some of the early tasks, in addition to building those vehicles. Whatever solution fits the business and helps to produce phenomenal vehicles as quickly and efficiently as possible, we’re down to do that, because it is truly a joint partnership. We both win as we produce amazing vehicles and Polaris gets them to market.
BB: What is the advantage of electric on a motorcycle, and does that translate to Polaris’s powersports market?
SP: First, I like to talk about experiences not just product. An electric motorcycle is an experience that engages all five senses. Just like riding a gas motorcycle. For two of those senses, your vision and your taste are exactly the same on a gas motorcycle as they are on an electric motorcycle. But with your sense of smell, there’s no fumes, there’s no exhaust. From an acoustic standpoint, there is a sound, you know, obviously I drink the Kool-Aid, it’s a really pleasing sound. It doesn’t make a lot of noise that kinda drowns out what’s happening around you. And for me, the most transformative aspect of an electric motorcycle is the sense of touch. There’s no vibration that makes your hands numb, there’s no noise in the signal that interferes with this really pure connection between the rider, the motorcycle and the road, or whatever surface you’re travelling on.
That’s the big difference between gas and electric, it just engages three of the five senses in a completely different way.
Now, what makes us different and what gives us an advantage over any other motorcycles on the powertrain side, fundamentally we’ve been around for 14 years. We’ve got 14 years and millions of miles of experience on our vehicles that were sold into the world in a commercial environment that consumers have been riding around. And as you do that, you find these corner cases that are really hard to uncover on test tracks or at pilot programs. At the core of what differentiates us, number one, the energy and density required in a powersports application is completely different from what you’d see in an automobile or a bicycle. There are elements of weatherproofing and waterproofing. There’s a packaging challenge as far as size and space inside the vehicle to make an effective system. But more than any of it, there’s a systems integration piece.
When Zero started 14 years ago, hooking up a battery to a controller to a motor and spinning the tire on any kind of vehicle was actually a really difficult challenge. It’s significantly easier today, but the integration of all of those systems to get a really high level of performance, reliability and safety is a different set of challenges than what you experience on the internal combustion engine side.
If I had to boil it down to one thing, it’s our operating system, which is Cypher III. And as much as we’re an industrial company that builds our own vehicles and we’re a vehicle company that designs and builds motorcycles, we’re a software company. We’re consumer electronics as much as we are a vehicle. That central nervous system, the brain of our vehicle, is mature and reliable. And I think anybody else entering this space is going to have a vehicle brain that is the brain of a toddler. I have kids and I’ve lived with toddlers. They’re delightful, but they’re fundamentally unreliable human beings. They fall asleep at weird times, they have tantrums, they spit up. You don’t want the performance capabilities of an electric vehicle in the hands of a toddler.
BB: It’s in the news right now, so what is your take on Gavin Newsom’s 2035 EV mandate?
SP: Let’s get on the phone with Gavin, I’ve got questions for that guy as well! (ha ha) Really, as there are mandates at a state or federal level, which we see a lot, all of the goals that people put out there for electric vehicles, I think it highlights that these are cleaner vehicles, and it brings attention to the category for us. It’s obviously more of a tailwind for our business. I’ve never really run the business here counting on those mandates to drive the business forward. They’re a nice potential tailwind, but our focus has always been on making vehicles that from a performance standpoint fit the needs of our consumers and fit the passions that they have.
Rather than a push from a mandate, we’re always trying to build vehicles that pull consumers in and imagine what their life could be like with this vehicle. We want them to want to buy it, not that they have to buy it. Obviously sustainability and ecology are a big part of what drives the people at Zero, but these mandates we aren’t pushing for them, counting on them, or relying on them to make the products that we make.
BB: You’ve just launched your biggest product in the new SR/S in the middle of a global pandemic, so how has the rollout of that been?
SP: Yeah, when we launched the SR/F the response was incredibly strong. We were not ready for that response and were scrambling on the production side to make sure that we could supply enough motorcycles to meet demand. We learned our lesson, changed so many things about the production process, and were ready to go when SR/S launched. That launch was the best launch we’ve ever had, we had a dealer event in concert with it, got a ton of amazing coverage, the reviews were all fantastic. And then coronavirus hit.
We were finally poised, not just with the production side, but with the vehicle for the moment, and then coronavirus hit and everything just kind of froze. We re-forecast our sales in April and May to reflect what we thought the market was going to do, and we’ve exceeded all of those sales forecasts, both for SR/S and for the business. It obviously didn’t have the opportunity to provide the kind of launch that we were hoping for, because obviously we kind of lost a big part of the riding season.
The response has been amazing, we still did a robust business on it. But for us, we had everything lined up and ready based on the incredible response to SR/F to be able to supply all of the bikes people would need, and then coronavirus shut down our manufacturing facility and we had the fires in Northern California that also had us shut down for two weeks because we were right in one of the fire complex zones, and we were evacuated. It’s still a really great bike for us, but there are so many things that have us asking just how big could it have been if we had had a more normal year.
BB: In your time with the company, where has the company seen the most evolution, whether it be with the company or with the environment in which it sells?
SP: First, when you think about the business itself and what our point of differentiation is, at the very core of who we are as a product company, we created something that’s different from 99 percent of the other offerings on the market. Having an electric powertrain is just fundamentally different from anything with an internal combustion engine. It’s a really good thing for our marketers to have a product that is demonstrably different, and obviously I believe it’s a better riding experience.
One of the first things we really changed is that we had a product that was head and shoulders above everybody else on the electric side, but we hadn’t really articulated that story very well. We were leading with a lot of rational information because it’s a tech space. We were displaying a lot of facts and figures, total cost of ownership, kilowatt hours, specific range data, federal and state level tax incentive structures. And instead, what we needed to do was get out of the way of the performance of the vehicle and really start articulating from an emotional and a cultural standpoint what these vehicles are like, to get people interested enough that they wanted to come and lay a hand on one of these bikes and take it for a ride.
That’s a very high class problem to walk into. To have the hard work of innovating an entire cross-section of what traditional transportation is already in your back pocket, and just have to get out of your own damn way to tell the story well.
And the next thing that was a big change was just the platform. With the launch of Cypher III operating system, then the SR/F and the SR/S, this next generation of electric motorcycles that we built, we were the brand that defined the category of electric motorcycles. You see a lot of people come in and claim leadership positions, who’s the leading brand, who has the best electric motorcycle. We defined the category, we created the category. We’ve been the protagonist for it for 14 years.
Every time we launch a motorcycle, we’re making history, as far as what the evolution of the two-wheel electric space is. These vehicles are truly going to be historical vehicles when you look at the transition from gas to electric looks like.
Those two things, clarifying the brand image and launching the next generation, prior to this deal with Polaris, I would have said those are the two things I’m most proud of in my career with Zero. To bring that EV experience to the biggest off-road brand in the world, it’s that same kind of historic event.
BB: What’s something that I’m missing here in the deal between Zero and Polaris? What’s something that you want people to know about this partnership?
SP: From the very beginning, how we’ve interacted with the people at Polaris, the level of professionalism, the level of engagement and curiosity in the team at Polaris, has been astounding. But I think more than that, from the very first meeting it was very clear that the cultures, there are so many people inside of both of these organizations that use these products every day. The cultural fit between the two organizations I think was one of the biggest factors that got us to a place where this deal got done.
It’s an incredible foundation that we can stand on to build a great business partnership together.
BB: And last question, I’m sure you won’t answer, but when will we see a Zero-engineered electric Indian Motorcycle?
SP: Right now the focus of this deal is on their biggest and most important category, which is off-road vehicles and snowmobiles. I don’t blame you one bit for asking that, I have exactly the same question. I get questions like this all the time, it’s funny. We’ll launch a new vehicle and our dealers will be like “This is awesome, it’s amazing... so what’s coming next?” and I’m like I’m here today to get you excited about the product we’re just launching, and I can’t be looking at the next thing right now.
So there you have it. An interview with both of the bigwigs at both of the companies involved in this interesting and historic deal. I think this is pretty awesome. What about you?