Zero Motorcycles: The Green Machines for Your Store?

Publish Date: 
Apr 20, 2009
By Arlo Redwine
IN TODAY'S ECONOMY many dealers are looking for additional sources of income, preferably those with minimal startup costs. Claiming to fit that bill is Zero Motorcycles Inc., the Santa Cruz, Calif.-based maker of the electric Zero X dirtbike and (shipping in May) the electric Zero S supermoto.

The company’s business model requires you to stock no inventory except for at least one demo unit of each model that you decide to sell, bought by you at a discount. The company says that within the next three months it will be adding a dual-sport and another dirtbike to the roster. It plans to sell a sportbike in 2010.

According to Zero Motorcycles, it has a little more than 35 independent representatives in the United States but hopes to have 60 by the end of the year. It also has roughly 10 reps in Canada and 10 in Europe, and is looking to expand those numbers to 20 and 60, respectively. About 40 percent of the North American reps are powersports dealers. Most Zero reps own other types of businesses (like an electric vehicle dealership) or just operate out of their homes.

But before we delve more into the business model, let’s review the motorcycles themselves.

Light, Torquey and Quiet

Here’s what Zero Motorcycles has told us about the Zero X dirtbike:

Peak Power: Equivalent to 23 horsepower
Torque: 50 ft.-lbs. at zero rpm
Frame: Aluminum
Weight: 151 lbs.
Top speed: 55 mph
Time to reach 30 mph: 2 seconds
Time between charges: Up to 2 hours (roughly 40 miles), depending on riding style. For example, the charge could last just an hour for a heavy rider pushing the bike hard on a race track
Time to Fully Recharge Battery Pack: 2 hours
Lifespan of a battery pack: Four to six years
Cost of a replacement battery pack: $2,990
MSRP: $7,450
Shipping cost via UPS: $300 to anywhere in the U.S.; $500 to $600 (U.S. currency) to Canada; and about $600 to Europe

The Zero X is fully automatic, and both brakes are operated through hand levers.

The bike has a Speed Controller that consists of two switches, one for speed and one for acceleration. The speed switch can limit the bike to 30 mph, which, in some states, turns it in to a motorized bicycle. The acceleration switch has a beginner mode and a sport mode. So altogether there are four possible configurations.

Options include an upgraded motor and an upgraded fork. Other accessories are in the works.

The original Zero X hit the market in April 2008, and the company sold about 100 of them. The 2009 model, which has twice the range as the previous version, began shipping before the end of the year. Altogether, the company sold a little more than 200 bikes last year.

The current Zero X is actually the third generation. The inaugural model was called the Drift. Fewer than 30 were handbuilt.

Aeronautical engineer Neal Saiki is the father of all the bikes. The inventor already has a reputation in the mountain bike industry for his light frames. His idea for electric motorcycles came while participating in a NASA think tank aimed at transportation solutions. Saiki and his wife founded Zero Motorcycles in 2006 after selling a couple of their homes. Another investor in the company is Zero CEO Gene Banman, a former manager at computer maker Sun Microsystems.


The Zero S supermoto bike doesn’t ship to customers until May, though Zero is accepting $1,000 deposits now. Here’s what we’ve been told about it:

Peak Power: Equivalent to 31 horsepower
Torque: 62.5 ft.-lbs. at zero rpm
Twin Spar Frame: Aluminum alloy
Weight: 225 lbs.
Top speed: 60 mph
Range: Up to 60 miles
Time to Fully Recharge Battery Pack: Less than 4 hours with a 110V or 220V outlet
Typical Cost to Recharge: Less than a penny per mile
Lifespan of a battery pack: Four to five years
Seat height: 35.5 inches
Wheel base: 55.75 inches
Front tire: 110/70-16
Rear tire: 140/70-16
MSRP: $9,950, though the final price is substantially less because the Zero S qualifies for the recently approved 10 percent federal tax credit for plug-in vehicles, as well as for the federal sales tax reduction. Other state incentives may apply
Shipping cost via UPS: $500 to anywhere in the U.S.; about $700 (U.S. currency) to Canada; and $500 to $600 to Europe. The latter is so affordable thanks to a European “virtual distribution center,” a phrase that typically refers to a third party that handles distribution for several companies using high-tech methods — think economy of scale

The transmission of the Zero S is described as a clutchless one-speed.

Stopping power comes courtesy of a hand-actuated four-pot caliper up front combined with a foot-actuated two-pot caliper in the rear. Both are hydraulic and fully floating.

The inverted fork can be adjusted for compression and rebound damping. Likewise, the Fox rear shock can be tweaked for spring preload and damping.

The bike’s dash has both analog and digital speedometers. It also informs the rider of the motor temperature and of how much charge is left. At night, the rider flips a switch to activate a dash light as well as an extra “projector beam” headlight.

Both the dirtbike and streetbike come in the U.S. with a limited one-year warranty covering the motor, motor controller, battery, fork, rear shock and frame. The warranty is upgradeable to two years.

Both bikes are powered by lithium-ion batteries, which reportedly have a better power-to-weight ratio than the nickel-metal-hydride batteries often found in electric vehicles.

Back to Business
So those are the bikes (so far). Now how can you get set up to display them?

To find out, Dealernews spoke with John Lloyd, VP of worldwide sales for Zero Motorcycles. (For two dealer testimonials, click here.)

As mentioned earlier, the company is forgoing the traditional distribution model. Instead, dealers offer demo rides only. If a customer decides to buy, he or she does so directly from Zero through its website (www.zeromotorcycles.com), entering a promotional code provided by the dealer, who then earns a commission of 10 percent to 13 percent. If a customer doesn’t enter a code, and resides in a territory with a Zero rep, the company says the agent will still earn a commission. Zero pays dealers monthly.

Zero usually drop-ships the bike to the customer, except in a few instances in which state law forbids it (Texas, for example). The customer gets the bike within 30 days of placing the order — sometimes a lot sooner depending on the location and where Zero is in its inventory cycle. Ironically, customers in Europe actually receive their bikes much faster, in just two to three days. This is thanks to the European distribution center mentioned earlier.

Final assembly of the dirtbike requires the attachment of both wheels and the handlebar. The battery packs reportedly slide in easily. All is explained in an instruction manual. Lloyd says the shipping process for the Zero S is still being determined. “But it’s probably going to be pretty much completed on shipment,” he says, noting that some minor things will have to be assembled.

Not comfortable with customers doing final prep and PDI on their bike? There’s another option. If you sign an additional agreement to become a Certified Support Center, you can designate that bikes are always shipped to you first. This saves customers from the hassle of prepping. In the case of the streetbike it could also save them a trip to the DMV.

“Here’s the neat thing about this whole relationship,” Lloyd says. “Dealers don’t have to carry inventory, they don’t have to negotiate final pricing, and they don’t have to deal with shipping. We take all that burden away.”

Dealers may dislike that Zero allows reps to operate out of their homes. Lloyd says the company has few such reps, and that it prefers to sell through businesses. Individual agents earn a smaller commission. “They’re not going to get the same commissions as the guy who’s got the overhead and is doing the marketing and putting in a full-time effort on it,” he says.
 
Typical Customer, Marketing Strategy
“We do a lot of marketing and PR; I mean a ton of it,” Lloyd says. “For the next 90 days you’re going to see weekly PR, media, different things we’re doing to drive product sales.”

For example, Zero recently set a couple of Guinness World records by hosting a race it called 24 Hours of Electricross.

Included on the Zero Motorcycles website is a representative locator. Each rep gets an anonymous dot on a map, and when a customer clicks on the dot, he or she is presented only a form for contacting Zero. The company then passes on the lead.

Zero calls it another example of the company’s staying close to the end user. “The stuff that you see coming out in 2009 is a direct feedback from the customers,” Lloyd says.

Who is the typical customer for the Zero X? Apparently guys like Lloyd. “I’ve been riding — and did some racing — for over 35 years, and I’m a big dirtbike guy,” he says. “And guys like me who have been doing it this long, they get on these electric vehicles and are blown away by the power, the torque, the performance, the lightness. They don’t have to look at it as a replacement for their gas bikes.”

Lloyd contends that in addition to regular dirtbike customers, the bikes will bring in a whole new clientele interested in green technology — new riders who will require gear.

Lloyd also relates a story about a motocross racer who placed fourth during a morning heat. After trying out the Zero X during his lunch break, he won the afternoon heat. Lloyd remembers: “He came back to me and said, ‘I’ve practiced with your bike on the demo ride, and it taught me things that I wouldn’t have learned on my gas bike because how light and nimble it is. I used those new techniques with my gas bike and I won the race.’

“So the Zero X,” Lloyd continues, “could be used as a training bike that allows people to train very close to their home, but at the same time has the power and the response and the movements of their gas bike. It could be ridden in areas where gas bikes aren’t allowed to go.”

Zero encourages dealers to take the bikes to tracks and motorcycle shows. The company provides training videos on how to give demo rides. Lloyd says dealers don’t need a dirt track to demo the Zero X; a parking lot works just fine. “People will get the sense of what they’re up against,” he says. “And here’s the neat thing, too: Dealers don’t like to prep a gas bike to do a demo if it’s not going to get sold. And with these bikes there’s nothing to prep. No oil, no clutch adjustments. You literally pop a battery in and go.”

Green in More Ways Than One
Some dealers may be hesitant to sell bikes made by a company that’s been around only since 2006. Where will customers obtain replacement batteries if the company fails?

Then again, green technology is all the rage right now. Even in a down economy Zero Motorcycles claims it’s looking to expand its workforce from 36 employees to 71 by the end of the year. Altogether it plans to sell 1,000 motorcycles in 2009, and claims its factory already has the capacity to produce thousands of bikes.

Zero does not offer protected territories, but the company does designate areas for its reps and will not put another rep in that same area “as long as they’re producing,” Lloyd says.

Zero has product liability insurance for “way more than $2 million,” though Lloyd declines to say for how much.

Although some dealers may like the low cost of not carrying inventory, others may not care for being a broker. But Lloyd insinuates that the business model may eventually change, saying that dealers won’t be stocking bikes “at least for the first year.”

And there’s still the disagreeable idea (for some) of customers prepping their bikes. Zero says it prefers to ship to dealers, especially in the case of the streetbike. “We’re going to be pushing really hard to get it shipped to the dealers, the people who can make sure it’s roadworthy,” Lloyd says.

Although there is no internal engine work to perform, dealers can still expect to sell things like chains, brake pad and tires. Says Lloyd: “Don’t think of this as something that doesn’t need maintenance or service, or maybe even a warranty repair. That’s going to happen.”

At least Zero isn’t going the way of another maker of electric motorcycles, Brammo Motorsports in Oregon. Online magazine Greentech Media reported that Brammo will sell not only though its website, but through five Best Buy stores on the West Coast, starting in May. Employees will prep the bikes in the same garage bays they use to install audio/visual items into cars. No word on whether Best Buy also plans to stock riding gear. Brammo did not respond to our request for an interview.