| Over a breakfast of eggs and buffalo sausage last month, Scott Wine—CEO of Polaris, the motorcycle, snowmobile, and off-road vehicle maker—was giddy about a partnership he was patching together with Zero Motorcycles, an e-bike brand launched from a Santa Cruz garage. "What I keep telling my board is that this gives us instant offense," Wine told me. "If we do it ourselves, we're four years away and probably $50 million in operating expense." A couple weeks later, Wine inked a 10-year exclusive supplier agreement with the 14-year-old company. Why build or buy a state-of-the-art skunkworks when you can rent one? Thus far, old-school vehicle makers have had lots of answers to that question -- none of them very good. Of course, the manufacturing giants that have grown electro-curious want to own the results outright, the intellectual property. But in a few years time that won't much matter – batteries and electric motors are fast becoming commodity products, no different than airbags and tires. Soon, they will be a supplier exercise -- a shopping challenge -- more than a tricky engineering equation. There was also plenty of magical brand thinking along the way. Making a state-of-the-art electric machine would show what the old-fashioned company could do. And even if the unit economics didn't pencil very well, such a rig would be a sort of halo product, burnishing every vehicle in the company. This was the thinking at Harley-Davidson when it set out to build its "LiveWire" electric motorcycle six years ago. The company got flak for not rolling the rig out sooner and, when it finally did, few customers seemed to want one (or at least want one to the tune of $29,800). All the while, sales of gas-burning Harleys skidded nonetheless. CEOs that sell things that go are slowly figuring out that customers who want a new technology, also want it to feel new, not just improved. Call it the Tesla corollary. "Electric Ford F-150" just doesn't hit as sweetly as "Rivian," which is likely one of the reasons Ford took a $500 million stake in the latter, which plans to launch its plug-in pickup next year. The thinking was likely similar in the General Motors war-room when it inked a deal for 11% of Nikola. These startups need factories and supply-chain synergies (and cash) and the incumbent manufacturing giants could use a zippy, new brand and a crowd of employees entirely unplugged from their companies' intricate incentive structure, which for decades has been finely geared for one thing: selling machines that run on old dinosaur goo. The investments are a relatively cheap hedge against the innovator's dilemma and a tidy way to short-circuit calcified corporate culture. An exclusive partnership, however, is cheaper still. Polaris, we should note, is particularly well-geared for electric machines. Almost two-thirds of its money comes from off-road vehicles and snow machines, not motorcycles. The silence of electric motors will be sweeter in nature, Wine reckons, and the range/cost equation will be less brutal when pavement and air conditioning aren't involved. As for motorcycles, Polaris is skipping the "me-too" product for its Indian brand until the market is a bit more mature and the batteries are a little cheaper and a little denser. Meanwhile, the company is building its own in-house e-team; it's just doing so a little more slowly. Eventually, all of its products, including motorcycles, will be available in electric versions. Yes, they will probably cost a little bit more, Wine says. Yes, they will be superior to internal-combustion iterations in every way. And no, he doesn't really want to talk about it much … at least not right now.  Featured in Bloomberg Businessweek, Oct. 5, 2020. Subscribe now. | 
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