(Bloomberg) --

Ever since Tesla opened up a big lead in electric vehicles that sent its valuation into the stratosphere, auto executives have been doing serious soul-searching about how best to navigate the transition from combustion.

One popular idea: split up their legacy and electric businesses, with the thesis being that a separate EV entity could command a higher valuation and more easily access capital on favorable terms.

This was more in vogue, of course, before the current market winter set in. Ford entertained the idea of a spinoff and ended up executing an internal split. China’s Geely and Sweden’s Volvo formed EV maker Polestar and merged it with a blank-check company. Renault is now planning to carve up the struggling French manufacturer in a bid to revive its fortunes.

Harley-Davidson also switched gears. Chief Executive Officer Jochen Zeitz spun off LiveWire, the motorcycle maker’s electric division, and closed its merger with a SPAC last week. The swooning stock market left LiveWire Group with less proceeds than planned, but Zeitz was undeterred.

Zeitz, a marketing whiz who took over as the head of Harley in 2020, is also CEO of newly public LiveWire. He stopped by Bloomberg’s New York headquarters last week to discuss his strategy for both companies. Here are highlights from the conversation, which have been edited for length and clarity.

What do you get out of spinning off LiveWire as a separate company?

Separating the brands brings strategic clarity that operationalizes itself from day one, in terms of how you go about electric versus combustion.

We’re hiring. The first question is, “Are you serious about electric?” I don’t have to answer that question anymore.

The high-flying engineer would ask, “Why should I join you? I can go to Rivian.”

What’s so unique about our model is that we are a Rivian, but we’re not. Why? Because we can use the infrastructure, manufacturing, supply chain, all the know-how that Harley has built over such a long period of time, without the baggage that comes along with that, that you don’t want if you want to have a very fast, nimble, transformational startup.

That’s the uniqueness of that model that auto doesn’t quite have, and certainly nobody in the motorcycle industry. I wanted to be the first. Thinking 10, 20, 30 years ahead, that’s the right thing to do.

Everyone raves about you — except your dealers. What role do dealers play for electric motorcycles?

[Laughs] I know, they love me so much. Traditional trade is always very retro, let’s put it this way. They don’t like change. I take it as a compliment. 

I don’t have the same restrictions that traditional manufacturers would have. We talk to our dealers that we’d like to come along on the LiveWire journey, rather than everyone can become a LiveWire dealer. We don’t want that. It’s a different consumer. It’s a new segment in terms of the product we’re launching. It’s digital direct, digital from the dealer, and all of these things that you need to do in order to be competitive, while providing service — not like Tesla, which struggles to have service.

The question of growth and people aging out of biking has bedeviled many a CEO at Harley. Is LiveWire the answer?

LiveWire started as an idea 12 years ago when I joined the board. I said, Harley has to start electric. I’m not thinking short-term. I’m thinking, where do we want to be, have to be, long-term? I have now had the opportunity to take it further, faster, by taking it as a separate brand and innovating in the electric space without mixing things up too much.

Everyone will always say, “The Harley electric motorcycle,” no matter what. It’s part of the DNA. It will always be there, so Harley will benefit and it will rub off positively on Harley.

If I can accomplish that without creating confusion, which I feel we created based on how we launched the first model, I think that clarity will eventually help Harley-Davidson in its focus and in its transformation to electric, long-term.

The question about the consumer — you don’t change that overnight. But the narrative of customers aging and da-da, da-da — every brand has to constantly engage and create desirability with consumers, whether you’re Nike, Harley or Gucci. It’s always the next generation, you can never stop. Our job is to make sure that the next generation that ages into Harley is ready and we talk to them when they’re ready.

What about other products, like apparel? Is that part of your growth plan?

I believe the brand has so much more opportunity above and beyond just being a brand for a motorcycle customer. That’s always the core. Retaining that authenticity is critical. But the aesthetic and the appeal of the other products that you’re selling needs to be the same as the motorcycle. I don’t think that we have ever tapped into that credibly, licensing being one example.

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