tl:dr Harley created the EPA fine thing as a means to eliminate competition in the tuner marketplace. Or not...


Been having a good discussion about Harley tuners/accessories in the tech forums.

One point keeps coming up and I think it bears talking about - the Harley-Davidson agreement with the EPA.

There are multiple ways to look at facts/circumstances surrounding the agreement and "penalty" of $16million dollars, what the agreement/penalty means, how it got there and what it does to the market for similar tuning devices.

First of all, the agreement may be just as it looks on its face - ie. Harley was caught violating EPA mandates and got their hand slapped with a monetary fine and a promise not to make agreement-violating products for 2017 and later motorcycles. Could very well be the entire case.

On the other hand, what if Harley-Davidson was the reason behind the whole episode with the intent to eliminate Harley's competition in the tuner marketplace?

This is nothing but hypothetical, but in view of recent product releases from Harley I have to wonder about the EPA agreement in terms of the broader market.

Now $16million dollars is a very large sum of money to the average Joe but to a multi-national corporation it's a relatively small amount. The kind of amount a corporation's marketing department spends frequently.

Now what if a company like Harley-Davidson sees an opportunity to degrade or eliminate its competition in a particular market while at the same time assuring its position in that same market? A market over time worth $100million or more. Would that be worth spending $16million to secure? To ensure your company owns the lion's marketshare? Would you take that chance?

I think it might.

Now please understand I have no "inside information" or anything like that - just looking at events of the last few weeks.

Specifically I'm talking about the recent release of two products:
1. Automatic Tuning Module with Wide-Band O2 Sensors
2. Tuner software update version 10.002.XXXX

The recently released Automatic Tuning Module with Wide-Band Sensors is interesting because, to many folks here, it provides a means to "violate the EPA Agreement" if it is used with now-illegal Pro Super Tuners (not Pro Street Tuners which are totally legal). It would allow modifying air/fuel mixture tables for Pro Super Tuners which are now "banned" from sale. Several knowledgeable folks maintain Harley would be "crazy" to sell such a product subsequent to the EPA Agreement. Maybe so.

But just last week Harley-Davidson released an update to software used with Pro Super Tuner VCI's that enables use of the Automatic Tuning Module with Wide-Band O2 Sensors. Update 10.002.0002. And it appears this software update does allow use of ATM with WB sensors together with Pro Super Tuners.

So I ask myself "Self, why would Harley-Davidson do such a thing?"

Harley-Davidson may be just flat out crazy. Or they may be crazy like a fox.

If the parts described function as it appears they do, Harley-Davidson has placed itself in a position to dominate the market for tuners for at least Harley-Davidson motorcycles. And the $16million fine Harley paid is simply the cost of admission to a party of one.

Now if your company is one of the aftermarket tuner manufacturers, you have to wake up screaming about having the EPA on your doorstep the next morning with court order to cease and desist manufacturing tuners. Because, Mr. Small Company Tuner Manufacturer, $16million will put you out of business. And the big dog just had their products certified legit.

The EPA Agreement evidently specifically details what tuner products Harley-Davidson can sell, maintain and update. And Harley-Davidson can sell, maintain and update those products as it wishes as long as what it sells/does is in line with the EPA Agreement.

Maybe the whole EPA thing is a construct from HD marketing as a way to eliminate competition in a market they want to dominate.

Dunno really. Just went through the thought process as part of the tech forum thread.

Okay flame suit on...

 

Classic Regulatory Capture.

 

After talking to a local tuner here - he believes and convinced me that HD did agree to the $16M fine as they have much more to gain if the EPA shuts everyone else that makes tuners down.
I believe him as HD has so much more to gain then their $16m "fine" - just take a look at the audio forums and how hard it is to get into the HD head-unit on the touring bikes - they are trying to do whatever they can to limit some - note I said some of the aftermarket modification we are all doing to our bikes...

 

The EPA Settlement was not just about tuners. They also sold 12,682 bikes that did not meet EPA requirements.

Settlement documentation -
https://www.epa.gov/sites/production...avidson-cd.pdf

Here is something else in the settlement that many should take note of:

beginning in 2008, Defendants manufactured, sold, offered to sell, installed, or caused any of the forgoing with respect to 14,968 Screamin’ Eagle electronic fuel injection Race Tuners (Part No. 32107-01L) and at least 324,424 Screamin’ Eagle Pro Super Tuners (Part No. 32109-08, 08A, 08B, and 08C) (hereafter, collectively,“Subject Tuners”)

If you figure each Tuner noted above at $300 each, the total would be $101,817,600.00
............ Note Below that the order does not specify "Subject Tuners" but any "Tuning Product" not covered by CARB certification.
“Tuning Product” means Subject Tuners and similar aftermarket devices,including modules and chips

14. Denial of Warranty.
a. Defendants shall deny all warranty claims for functional defects of
powertrain components for any Harley-Davidson vehicle (Model Year
2017 or later) registered in the United States, if any Defendants have any
information to show that such vehicle was tuned using a Tuning Product
that was not covered by a California ARB Executive Order or otherwise
approved by EPA.

b. Defendants shall instruct Harley-Davidson dealers to deny such warranty claims where any Defendant or any Harley-Davidson dealer has any such information.

c. No later than December 31, 2016, Defendants shall ensure that their
warranty policies and product literature state that Defendants will deny
warranty claims for functional defects of powertrain components for any
Harley-Davidson vehicle, Model Year 2017 or later, that was tuned using
a Tuning Product that was not covered by a California ARB Executive
Order, or otherwise approved by EPA.

.........
26. Sale of Uncertified Tuning Products. Defendants shall pay a stipulated penalty of
$5000 for each Tuning Product they manufacture, sell, offer to sell, distribute, or import in
violation of the requirements of Paragraph 12.

 

Shanneba, that is where I got the figure of $100million.

Note the figure $100million does not take into account the new Automatic Tuning Module with Wide-Band O2 Sensors at $400 apiece or any labor charges incurred with installation, tuning, etc.

There are 324,000 Pro Super Tuners the new ATM can work with. That's an additional $130million in sales.

All for the cost of $16million.

New product, new sales, no competition.

 

Interesting but I am not sure how a gamble like that plays with the share holders?

I guess time will tell.

 

decent theory but doubtful. for the theory to work the EPA would also have to gain something and $16M is not it.

if the EPA was serious, they would have made Harley lock the ecm much like some of the auto manufacturers have done (ram trucks) thus making you buy an unlocked ecm before you could tune with an aftermarket tuner but allowing HD to tune, the locked ecm.

i think the wide band sensors are designed for the 17 market and keep HD in the SE market for performance parts. nothing more nothing less. board of directors would not expose themself to shareholders lawsuits by taking this chance and CEOs would be crazy to try and pull a fast one given the recent VW diesel issue.

again good theory, not certain i buy it.

 

So far there are tunes for some models back to 2014 Stage 1,2,3,and 4 tunes, that can use the new Wide Band O2 Sensors. There will likely be more as they confirm the tunes meet the EPA / CARB requirements.

Of course these tunes must use the HD Stage Kits / HD Cams etc. to actually be EPA/CARB compliant.

HD can still sell the PRO Super Tuner outside the US as long as they add the following :
“Not Authorized For Use In, Or Export To, The United States or its Territories.”

If they sell to Canada or Mexico they must supply the EPA with who they were sold to and the quantity.

 

Harley agreeing to a fine on an investigation that was long known to Harley (therefore time to get replacement products in the pipeline) has no legal bearing on any other aftermarket tuners. That's just not how the law works.
Can Harley benefit from the situation? One would hope so. And that is what the shareholders would expect them to try to do.

 

I hear VW has some extra ECM's...