Electric motorcycle manufacturer Energica reported on the verge of closure

The Energica Board of Directors met Friday without coming to a decision and is scheduled to meet again today. If Energica does go under, as appears likely, it will follow a trend of manufacturers of high-end, high-performance electric motorcycles that have not been able to build a sustainable and profitable business. That's despite the fact that Energica had some real success, both in producing consumer models that won acclaim and successfully supplying race bikes for the MotoE World Championship, run in conjunction with MotoGP, from 2019 to 2022.

That success is part of the reason why, in Italy, most of the blame is being placed on Energica's parent company, the U.S.-based Ideanomics, a company with an unsteady history.

Energica going down with the Ideanomics ship

Ideanomics bought a controlling interest in Energica in March, 2022 and currently owns more than 70% of the Italian company. Energica's original founders and other members of management own the rest.

Ideanomics has hardly been a stable company, having completely changed its business model and its name more than once. It was formerly involved in video on demand and later petroleum trading, but currently, its focus is promoting conversion to electric vehicles. The former CEO, former CFO, and current CEO were all accused by the U.S. Securities and Exchange Commission (SEC) with providing fraudulent financial information to investors in 2017 to 2019, before Ideanomics acquired a majority interest in Energica. The SEC settled the matter and Zheng Wu, the former CEO and chairman of the board of directors, paid $3.56 million in penalties and interest. The former CFO and the current CEO each paid a $75,000 fine and the company paid a $1.4 million fine.

At the time Ideanomics acquired Energica, its stock was already down about 80% from its peak. Since then, it has gone to being worth pennies and has been delisted by the NASDAQ. Ideanomics has been late in filing some of its financial reports, including its 2023 annual report. And while many in Italy blame Energica's precarious state on Ideanomics failing to provide funding, the reality is that Ideanomics has no money, according to that annual report. The company reported a loss of $2.7 million in 2023 and just $1.2 million in cash on hand.

Even if Ideanomics didn't face a critical cash crunch of its own, it's not clear the company would invest much in ramping up Energica production. The most recent statements say it is focused on local delivery, last-mile transportation options, and commercial fleets as the best opportunity. All of Energica's models cost between $20,000 and $30,000, so they're not a likely choice for delivering your takeout. And while the electric motorcycle segment provided more of Ideanomics' revenue in 2023 than any other division, it still lost money.

Energica's crisis is just more evidence that it's difficult to produce and profitably sell expensive, high-performance electric motorcycles. Damon has not yet begun producing and delivering motorcycles to consumers despite several years of promises. Lightning does not typically release sales figures, but in an interview with me last year, the CEO confirmed that the company delivered about nine motorcycles to customers in 2021. In all of 2022, 69 LiveWire One models were sold. While we've seen some impressive performances on race tracks by some high-performance electric motorcycles, we haven't seen anyone produce them profitably in large quantity for consumers.

I have to think that if a manufacturer such as Energica truly had bright prospects, it would not willingly agree to be taken over by a company that can't decide if it wants to sell video on demand or trade oil futures, a company already well into its downward trend at the time of the acquisition. In its annual report, Ideanomics lists Energica as a business "held for sale," so it appears it has neither the ability nor the intention of keeping Energica going.