Micromobility startups have struggled with profitability issues, which have been exacerbated by Covid-19. But these startups could see a post-pandemic rebound. We dive into what micromobility looks like around the world, leaders across the space, and obstacles that these transportation solutions are facing.
Most city dwellers have by now seen the explosion of shared bikes and scooters popping up around their city — and if not, they will soon enough.
As congestion in cities rises, existing transportation — from cars to buses to trains — can no longer keep up with the growing population. Americans have lost an average of 99 hours a year due to traffic congestion, according to the 2019 INRIX National Traffic Scorecard, and in 2019, traffic cost Americans roughly $88B, or an average of almost $1,400 per driver.
With cities pressed to solve their transportation crisis amid rising concerns around gas-powered emissions, micromobility startups are emerging as a powerful alternative to the current public transit mix — especially as the Covid-19 crisis impacts the sector.
So far, the coronavirus pandemic has wreaked havoc on the micromobility industry, especially in its early days as people remained sheltered at home.
But there remains potential for micromobility startups to rebound as people reemerge from lockdown and look for single-rider, open-air transit alternatives. Bikes and scooters could offer safer methods of transportation — allowing outdoor transit, control over social distancing, and fewer points of shared contact — compared to public transportation.
Micromobility refers to short-distance transport, usually less than 5 miles. Increasingly, it is shorthand for the growing crop of bike– and scooter-sharing companies that are poised to remake the urban landscape.
With urbanization on the rise, the majority of trips people take fall within the category of micromobility and thus are prime candidates for bike and scooter usage. In the US, roughly 60% of all trips are 5 miles or less.
And as consumers take advantage of this growing trend, the market opportunity continues to expand. In the US alone, the micromobility market is predicted to be worth between $200B – $300B by 2030. Worldwide, investors have already poured more than $5.7B into micromobility startups since 2015.
While there are certainly some challenges that come along with the growing micromobility trend, including lack of regulation, citywide bans, and theft, this phenomenon has the potential to massively disrupt the mobility industry globally.
In this analysis, we look at micromobility initiatives across the globe as well at the challenges faced in the adoption of these mobility solutions.
TABLE OF CONTENTS
- Why the shift to micromobility?
- The impact of Covid-19
- Micromobility around the world
- North America
- South America
Why the shift to micromobility?
Cities around the world are quickly growing in size and population.
In fact, projections show that by 2050, an additional 2.5B people will reside in urban areas globally. With most cities already dealing with dangerous levels of pollution and gridlocked streets, micromobility could solve a handful of problems.
Among many use cases, micromobility services increase access to public transportation, reduce the amount of cars on the road, lower our environmental footprint, and provide convenient methods of transportation for short trips — all while being cost effective.
Electric scooters, for example, can also be more efficient than other modes of transport. One kilowatt hour of energy can only get a gasoline-powered car to travel 0.8 miles, according to Wired. An electric vehicle can travel 4.1 miles under the same conditions. However, an electric scooter can travel 82.8 miles using the same amount of energy.
Source: Levi Tillemann and Lassor Feasley
For city dwellers, renting a bike or scooter is often much cheaper than owning a car or taking a taxi to a destination. Moreover, they take up less space.
Yet, there are still some rising challenges associated with bikes and scooters. From their general adoption to regulation & infrastructure issues, micromobility solutions are not well-suited to thrive in all regions. (We’ll dive more into this below.)
Covid-19 initially devastated scooter companies, but could ultimately accelerate micromobility adoption
The Covid-19 pandemic essentially decimated demand for public or shared transport as businesses shuttered and people stayed home more. This proved devastating for unprofitable companies, especially ones that were already hemorrhaging money.
As people remained reluctant to leave the house, spending on shared scooters and bikes plunged the most of all transportation methods, nosediving by nearly 100%, according to the New York Times. (Taxis and mass transit were down at similar levels.)
Amid the coronavirus-induced upheaval, Lime laid off 13% of its workforce, saw its valuation fall by 79%, and initially withdrew from virtually all of its foreign markets. Rival scooter sharing company Bird laid off 30% of its staff in March. After acquiring Middle East-based micromobility startup Circ in January, Bird shut down its entire operation in the region in June.
However, hope remains for the post-pandemic micromobility market. There’s already been some signs of recovery: in April, nationwide e-bike purchases were up 85% relative to March 2019, and sales of adult leisure bikes tripled.
Asia has seen demand for micromobility boom as people resume daily operations. Lime has reported that scooter trips in South Korea are up 14% thus far; Meituan Bikes saw record cycling volume surge past pre-pandemic levels; and Hellobike saw 30% month-over-month growth. In the US, Lyft-operated Citi Bike and Lime have also both offered healthcare workers free rides amid the pandemic, positioning themselves as essential infrastructure.
The industry may shrink post-pandemic as smaller players fold. Uber’s $170M investment in Lime brought with it a deal to transfer Uber’s micromobility startup Jump to Lime, and manufacturer Superpedestrian recently acquired Zagster, creating a fully integrated micromobility company.
Remaining industry players could see more demand as people avoid crowded public transportation. Given fewer contact points and the ease of social distancing, scooters and bikes may be seen as less risky than cars, buses, or subways.
Asia leads the way in bike-sharing
Asia has been the leading pioneer in the micromobility world, with China being the first country to implement a dockless bike-sharing platform in 2015.
With less regulatory red tape in place compared to Europe and North America, micromobility startups had the advantage of quick implementation across cities in Asia. This lack of regulation, however, also resulted in an over-saturated market, with millions of bicycles piling up in city streets.
Yet, in a continent fraught with dangerously high urban pollution levels and ultra-congested streets, it makes sense that cities like Beijing and Shanghai are leading the way to reduce automotive transportation and make the switch to emission-free solutions.
Today, shared bikes are now the third most popular mode of public transit in China. Other Asian countries, including Singapore, Taiwan, and South Korea are also seeing much success within the micromobility market.
CHINA PIONEERS BIKE-SHARING PLATFORMS
Docked bike-sharing municipal programs were launched in major Chinese cities as early as 2008, in an effort to alleviate mobility issues.
The first and most successful public program in China is Hangzhou Public Bicycle, launched by the Hangzhou Public Transport Corporation in May 2008. Numerous other cities within China, including Beijing, Shanghai, Wenzhou, Kunming, and Guangzhou, also set up public bike-sharing programs after the Hangzhou debut.
Several Chinese micromobility startups have already achieved unicorn status ($1B+ valuations), the first being Ofo, which was founded in 2014.
At its peak, the Beijing-based bike-sharing company managed to deploy more than 10M bikes worldwide across countries like the US, the UK, Singapore, Australia, France, and more.
But the massive startup struggled to stay afloat with high operational costs and fierce competition. In 2018, Ofo scaled back its international expansion plans and generated controversy when it was unable to refund nearly $170M in rider deposits. Now, the company has largely dropped off the grid, with few bikes in sight on China’s streets.
Ofo competitor Mobike, which was founded in early 2015, also saw growth at breakneck speeds when it first launched, expanding internationally to 19 countries worldwide.
Yet, like Ofo, Mobike was unprofitable. In April 2018, Mobike was sold to Chinese meal delivery Meituan Dianping for $2.7B and rebranded to Meituan Bike. In order to cut costs, Meituan announced its retreat from most of its foreign markets. It also wrote down the brand value of the bike-sharing unit by $198M (1.4B yuan).
Another prominent bike-sharing platform is Hellobike, based in Shanghai.
Hellobike also achieved unicorn status with the help from top investors like Ant Financial, a financial affiliate of Alibaba.
Launched in 2016, Hellobike found its start by targeting smaller cities, rather than major cities like Beijing and Shanghai that were already over-saturated — 95% of Hellobike users reside in second- and third-tier cities. As of October 2018, Hellobike operates in 300 cities across China, with over 20M rides booked each day.
In 2017, it began shifting its focus to e-bikes, rather than regular bicycles, and set up charging kiosks across its operating areas. In 2019, Hellobike’s chief financial officer said that the company had captured 80% of the e-bike market in China.
China’s largest ride-hailing service, Didi Chuxing has also expanded into bike sharing, after acquiring bankrupt bike-sharing startup Bluegogo in 2018. In April 2020, the unit, which boasts both e-bikes and human-powered bicycles, raised $150M from SoftBank and Legend Capital. In June, Didi Bike announced that orders hit 10M daily orders, as China recovered from Covid-19.
INDIA SEES SOME TRACTION
In India, a small group of startups are tackling the complex transportation market, with mopeds attracting particular attention. Poor road infrastructure coupled with congested streets make for difficult challenges, but startups like Bounce, Vogo, and Yulu are addressing them via their micromobility solutions.
Scooter-sharing startup Bounce says it operates more than 20,000 electric and gasoline dockless bikes and motor scooters in the country. In January, it raised $105M in a follow-on Series D round at a $500M valuation. It acquired Ofo’s e-scooter unit in 2018, after the China-based company began to feel the cash crunch.
Vogo is another leading player in India’s micromobility space. Ride-hailing giant Ola backed the motor scooter rental startup in late 2018, infusing $100M to help the company expand its fleets. In May, Vogo’s founder said that demand should bounce back to pre-Covid levels within a few months.
Another competitor is electric bike sharing platform Yulu, which has also found some notable backers. Yulu inked a partnership with Uber in 2019, allowing users to access its bikes through the Uber app. In November 2019, motorcycle manufacturer Bajaj Auto backed Yulu in its $8M Series A round and entered a strategic partnership with the startup to design and produce its e-scooters.
Yulu CEO Amit Gupta remains optimistic about the post-pandemic future, saying, “In the short period that we have resumed regular operations, our business has bounced back pretty fast and much ahead of our expectations. Single self-driven vehicles have been found to be one of the best ways to commute in the post-Covid world.”
SOUTHEAST ASIA GAINS SPEED
Southeast Asia’s first “decacorn” — a startup with a valuation of over $10B — is ride-hailing company Grab, headquartered in Singapore.
Last valued at $14.3B as of June 2019, Grab expanded to offer shared bikes and e-scooters in 2018. The program was first known as GrabCycle and then was rebranded to GrabWheels as the company moved to focus on e-scooters over bicycles. However, the company is facing stricter regulation following the deaths of two e-scooter riders who collided with a car in Jakarta in November 2019.
Source: Nikkei Asian Review
Singapore-based startup Neuron Mobility launched in 2016 to offer dockless bicycles as well as docked electric scooters in Southeast Asia.
However, in 2019, Neuron halted its e-scooter service in its home market as well as Thailand, citing a strategic shift to Australia and New Zealand. Investors include 500 Startups, SeedPlus, and Ace Capital, among others.
Another contender in the Southeast Asia e-scooter market is Singapore-based Beam. The company currently operates in Malaysia, as well as South Korea, Australia, New Zealand, and Taiwan. In May 2020, it raised a $26M Series A to expand within its markets.
As for foreign companies that have expanded to the Asian market, US-based Lime has been operating in Singapore since November 2018.
Despite recent regulatory obstacles, e-scooter operators in Southeast Asia remain optimistic about the growing market opportunity in the region. High population density coupled with strong economic and population growth are challenges that micromobility devices could potentially solve, per Neuron Mobility’s co-founder.
A shift to scooters in North America
The US was the first country to see dockless electric kick scooters appearing on city streets.
In September 2017, Bird dispatched hundreds of its kick scooters onto the streets of Santa Monica, California. Much like the early days of ride-hailing companies like Uber and Lyft emerging, there was backlash from citizens and city officials alike.
Despite regulatory hiccups along the way, the dockless scooter craze witnessed aggressive growth in its early years. Several US-based scooter-sharing companies achieved unicorn status at lightning speeds as big investors poured millions of dollars into the space, though growth has since slowed given Covid-19.
About 70% of Americans living in major urban areas view e-scooters positively, according to a 2018 survey.
Shared bicycle programs have existed in many major cities across North America over the last decade, with the first large-scale system launched in May 2009 in Montreal, but remain less popular than e-scooters.
In 2018, e-scooters overtook shared bikes as the preferred method of dockless transportation. Today, dockless bikes have largely disappeared from cities. For example, Uber acquired Jump Bikes in 2018 but transferred it to Lime in May 2020 as part of a larger investment. Lime has since scrapped tens of thousands of Jump’s older bikes.
BIRD AND LIME: THE TOP SCOOTER UNICORNS
Despite being industry leaders, Bird and Lime have struggled to stay afloat amid the pandemic, with both facing revenue crunches and mass layoffs.
California-based Bird was the first pure-play scooter-sharing startup to exist globally.
The company achieved unicorn status in less than 9 months after being founded in September 2017, making it the fastest company in the world to reach a valuation of $1B. Just 4 months later, Bird doubled in valuation to $2B. Bird currently operates in 80 cities throughout North America, Europe, and more — though the vast majority of these cities are within the US. It previously had scooters on the streets of the Middle East and Latin America, but had to pull back as the startup rushed to cut costs.
To date, Bird has acquired 2 micromobility startups: Scoot, in June 2019, and Circ, in January 2020.
In March 2020, Bird eliminated 400+ employees as Covid-19 caused demand to plummet. Reports of workplace issues, derived from a culture that emphasized expansion at all costs, began to emerge as the pandemic placed additional pressure on the company. Employees brought up issues of poor leadership, hiring sprees followed by waves of layoffs, favoritism, and lack of diversity.
Bird’s largest competitor is Lime, a transportation company that offers shared bicycles and scooters.
Lime also quickly reached unicorn status and was valued at $2.4B — until Covid-19 hit. In May 2020, Uber offloaded its bike sharing business to Lime — shaving nearly 80% off of Lime’s valuation — now at $510M — in the process.
AMERICAN RIDE-HAILING COMPANIES BREAK INTO MICROMOBILITY
North America’s largest ride-hailing companies have recently jumped onto the micromobility bandwagon in an effort to incorporate all forms of transportation into their portfolio of services.
With the acquisition of bike-sharing company Motivate, Lyft became the largest bike-share service in North America at the end of 2018.
As a result, Lyft now owns a majority of the US’s most popular bike-share programs, including Citi Bike (New York), Ford GoBike (San Francisco), Divvy (Chicago), Bluebikes (Boston), and several others. Lyft has also launched fleets of its own electric scooters across American cities at the end of 2018, including in Denver, Austin, Atlanta, Los Angeles, and Nashville, though it’s stopped operations in some cities since.
Lyft has also faced troubles amid the pandemic, laying off 17% of its workforce as of April.
Ride-hailing giant Uber also has also been making moves in the micromobility space.
As mentioned above, Uber purchased Jump Bikes in 2018, but transferred it to Lime in May 2020 as part of a funding round to the company. The transaction would also allow Uber to purchase Lime between 2022 and 2024 at a set price. This announcement came as Uber cut 14% of its workforce, with Covid-19 causing gross bookings to fall as much as 70%.
Uber’s CEO has previously stated that he is very bullish on personal individual electric vehicles such as e-scooters, hoping fewer people will own cars as time goes on.
“During rush hour, it is very inefficient for a one-ton hulk of metal to take one person 10 blocks,” said Uber CEO Dara Khosrowshahi in an interview.
Beyond scooters, electric mopeds have also made an appearance in the US. New York-based Revel, launched in 2018, raised a $28M Series A in October 2019. It has since expanded to Austin, Miami, Oakland, and Washington DC.
Scooters see rapid adoption in South America
Many of South America’s large metropolitan areas are frequently congested with traffic jams and do not have sufficient public transportation systems in place, particularly during peak rush hours. As a result, micromobility solutions like shared bicycle and e-scooter programs are an attractive solution that some cities are turning toward.
While the micromobility trend hasn’t exploded in South America, the region is working on developing its micromobility presence, most notably in Sao Paulo, Brazil — South America’s largest city.
TOP MICROMOBILITY STARTUPS JOIN FORCES IN BRAZIL
One of the micromobility startups within South America was Brazil-based Yellow, founded in 2017. The dockless bike and scooter sharing service raised one of the largest Series A financings in South American history, at $63M.
In 2019, Yellow merged with Grin — an e-scooter startup based in Mexico City and backed by Y Combinator — to form Grow Mobility. However, the company has struggled to find a sustainable business model, according to Reuters. In June, Grow Mobility was acquired by investor Felipe Henriquez.
Other competitors operating in South America include Colombia-based Cosmic Go, which allows people to rent cars as well as e-scooters, mopeds, and bikes, and Madrid-based Movo, which has expanded internationally to several South American countries, setting up fleets of e-scooters within Colombia, Peru, and Chile.
MANY OF SOUTH AMERICA’S PUBLIC BIKE PROGRAMS ARE FREE
It is interesting to note that most public bike-sharing programs within South America are completely free to use, aside from Brazil’s public programs.
For example, Medellin, Colombia has had a public bike-sharing program since 2011 — the first to be created in South America. The EnCicla Bike Share System offers residents and tourists of Medellin with access to more than 1,000 free bicycles.
Buenos Aires, Argentina has a public bike-sharing system known as EcoBici that has been expanding since 2010. EcoBici is completely free to all residents and tourists. The city is also constructing more bike lanes as they continue to roll out bikes and stations — once the expansion is complete, Buenos Aires will have 200 stations, 3,000 free bicycles, and 250km of bike lanes spanning the city.
San Lorenzo, Argentina also launched a free bike-sharing program in 2016, called Biciudad, run by the San Lorenzo Government in an effort to reduce the number of motor vehicles in the city.
Other free public bike systems within South America include BiciQuito in Quito, Ecuador and Movete in Montevideo, Uruguay.
This abundance of public programs could be a hindrance to micromobility startups’ profitability in South America, as the public may often choose the free alternative. Therefore, startups focusing on e-scooters could see more success within the region.
Investors direct attention to opportunity in Europe
Micromobility is not a new concept throughout Europe. In fact, European cities are some of the first to offer shared bicycles as a public service, in addition to already high ownership levels. In Denmark, for example, 90% of the population owns a bike while just 56% own a car.
Amid the pandemic, European cities such as Bogotá, Barcelona, Berlin, and Rome have also closed off streets to cars for bikes, scooters, and pedestrians.
Across Europe broadly, the bicycle market was estimated at nearly $14.8B in 2016, and is expected to grow at an annual growth rate of 5.5% until 2022. Europe’s car market, for comparison, is expected to grow by just 1.7% until 2024, according to the European Cyclists Federation.
The French city of La Rochelle launched a bike-sharing program back in 1974, and is still in use today. The Velib in Paris, replaced in 2018 by the Velib Metropole, was one of the biggest public bike-share programs outside of China. It has since become the model for a properly implemented bike-share system.
JCDecaux, the largest outdoor advertising company in the world, was the foundation of many self-service bike rental schemes that offer thousands of bicycles across many European nations today, including Paris, Brussels, Dublin, Luxembourg, Vienna, and Valencia.
SCOOTERS GAIN POPULARITY IN EUROPE
As European countries prepare to ban production of gasoline and diesel vehicles in the near future, a rise in the usage of electric vehicles seems inevitable. Already, around 12.6M cars in Europe are being or will be affected by restrictions on fossil fuel cars, according to Berylls.
In order to make cities more bike- and pedestrian-friendly, the UK has already committed £250M ($300M) as an emergency fund to construct new bike lanes and wider pavements, out of a £2B cycling and walking package. It has also made steps toward legalizing e-scooters in the country.
Scooter sharing began amassing popularity in Europe in late 2018, but companies lately have seen waves of consolidation.
In March 2018, Daimler and BMW merged their urban mobility companies into a single holding company. The company includes Hive, an electric kick scooter rental company that operates across Europe.
Source: Free Now
Other competitors include Ford-owned Spin, which began its expansion into Europe in June, and Voi, which recently partnered with ride-hailing app Free Now, another subsidiary of the Daimler/BMW holding company, to expand its reach.
In addition, many US-based companies have flocked to the European market as well, including Lime and Bird.
So far, Lime has deployed its fleets across 20 countries in Europe, but had to suspend operations amid Covid-19. In May, Uber offloaded Jump, its electric bike sharing unit, to Lime — lobbing nearly 80% off of Lime’s valuation in the process.
Bird started its Europe launch in Paris in late 2018 and quickly became popular, with over 50,000 rides after only 2 months. In January 2020, Bird acquired German rival Circ. Its scooters can be found operating across Portugal, Belgium, the UK, France, Austria, Spain, and Switzerland, though have also largely been pulled due to the coronavirus crisis.
MONEY BEGINS TO POUR IN
In the past few years, investors have taken note of the opportunity e-scooters present in Europe, where cities have denser populations and far more bike lanes than most American cities. European-based companies have attracted funding in an effort to compete against the US-based companies swooping into the market.
Electric scooter company Voi Technology has raised more than $160M in its fundraising rounds to date since its August 2018 launch. The Swedish startup has secured investments from venture funds such as Balderton Capital, Vostok New Ventures, Project A, and Creandum.
Voi offers its e-scooters in cities across Sweden, Denmark, Spain, Portugal, Finland, and France. In May, Voi poached Bird UK’s chief to head its UK, Ireland, and Benelux operations. It also recently partnered with France-based ridesharing startup BlaBlaCar to offer BlaBla Ride scooters in France.
Berlin-based e-scooter startup Tier Mobility has raised more than $117M to date, and is currently active in 8 countries in Europe. The company says it is the first fully climate-neutral micromobility company. Tier has launched in 5 new cities amid the pandemic, and says it plans to continue its expansion in the coming weeks.
Source: Tier Mobility
Micromobility yet to take off in Africa
With limited infrastructure in place to support bicycles and scooters, most of Africa’s cities have yet to see any kind of micromobility programs. But with the help of organizations like the UN pushing programs forward, the continent could eventually see some change.
Also, as cities across Africa continue to build up their infrastructure, bike and scooter-sharing could become a more viable option for its citizens. So far, Morocco and Egypt are leading the way when it comes to micromobility programs.
THE UN GIVES A HELPING HAND
Marrakech, Morocco, was the first city in Africa to launch a citywide bike-sharing program in 2016. Medinabike is supported by the United Nations Industrial Development Organization (UNIDO), the Global Environment Facility (GEF), and is run by the Environment Ministry of the Kingdom of Morocco. Medinabike has 300+ bikes available for public use across Marrakech.
In the spring of 2018, the United Nations Environment Program partnered with Mobike to launch a bike-sharing scheme for the UN’s Nairobi, Kenya, compound. Employees and visitors may use these bicycles for free and they don’t require an app to be unlocked. This bike-sharing scheme was showcased during Africa Clean Mobility Week, in an effort to show how bike-sharing programs can be used across Africa as an environmentally friendly option for transportation.
Cairo, Egypt, has also launched a public bike share program in May 2018, called “Sekketak Khadra,” which roughly translates to “your road is green.” Cairo’s government partnered with the UN Human Settlements Program (UNHABITAT) to set up several hundred bikes across Egypt’s capital.
SOME AFRICAN STARTUPS BEGIN TO EMERGE
French bike company Smoove is the supplier behind the Medinabike program in Marrakech.
The company has a 5-year contract in place with the city’s government. Smoove also won a bid to launch a fleet of shared bicycles in Lagos, Nigeria, in 2018. As of yet, however, it seems no progress has been made on this project, possibly due to poor road infrastructure within the city.
Baddel is the first electric bike-sharing startup in North Africa, headquartered in Cairo, Egypt. The company has launched a fleet of 101 electric bikes and 15 stations in the resort town of El Gouna. Baddel has plans to eventually launch more fleets of its e-bikes across all of North Africa.
In Nigeria, regulations have made it difficult for bike-hailing startups to flourish. Bike-hailing is similar to ride-hailing, where people can hitch rides on-demand via apps — just on a bicycle, instead of a car. ORide, Max.ng, and Gokada were emerging startups that offered bike-hailing services, but were forced to pivot when Lagos outright banned motorbike-hailing in February.
Max.ng had previously raised $8M from Novastar Ventures and Yamaha, among others. Gokada, which laid off approximately 80% of its workforce after the ban, had previously raised $14M from investors including Adventure Capital, Rise Capital, and CRE Venture Capital. Unlike other bike hailing companies like MAX and OPay, Gokada had only one market (Lagos) and offered only one service (motorbike hailing).
Challenges the micromobility world faces
While the micromobility trend continues to grow worldwide, there are still a number of challenges hindering complete adoption, including limited infrastructure, lack of regulation, citywide bans, and theft.
If a city lacks the proper infrastructure such as sufficient bike lanes, adoption of shared bicycles and scooters becomes difficult and even dangerous to the public. This is one reason micromobility has yet to take off in countries within Africa, as well as in India.
Many of Africa’s cities are simply not bike-friendly, lacking the proper bike-specific infrastructure for people to safely cycle. At present, riding bikes and scooters across African cities is often too dangerous.
In South Africa, for instance, cycling is either seen as an elitist sport for the wealthy or as a mode of transport reserved for the poor. As a result, most South Africans have very little interest in cycling around their cities. In Johannesburg, for example, cycling only accounts for a microscopic 0.2% of all trips taken within the city.
Source: The Guardian
Until countries can set up proper infrastructure, it is unlikely that the micromobility trend will spread across the continent the way it has been able to in other parts of the world.
The same goes for India — the infrastructure is still largely unsuitable for individuals to safely operate bicycles and scooters on the roads. However, the government is currently working on initiatives to improve conditions for cyclists thanks to the Smart Cities Mission. (Read our explainer on smart cities for more.)
Though many micromobility companies raked in millions of dollars through investors, many are still struggling to achieve sustainable profitability — especially as demand free falls amid the pandemic.
Ofo is still dealing with cash flow problems as it still needs to pay supplies and keep operations running. The company is now on the brink of bankruptcy, and millions of users have applied for refunds of their $14 deposits. To cut costs, Ofo has retreated from most of its foreign markets to focus solely on China.
Even pre-pandemic, Bird faced profitability troubles. Bird’s profit margin is 30%, according to numbers released by its founder. In an effort to improve these margins, Bird has changed its pricing structure, even doubling its per-minute fee in some cities.
In October 2019, Bird raised an additional $275M, announcing its strategic shift to unit economics, and in January 2020, it raised $75M more. But questions remain over how these unit economics numbers were calculated. A March 2019 Quartz analysis suggested that each Bird scooter loses $293 for the company.
As of April 2020, the company has laid off 1,400 employees.
Given the early stages of the micromobility industry, companies are still searching for ways to achieve profitability and sustainability.
As dockless bikes and scooters remain a relatively novel concept, most cities do not have proper regulations in place for how these programs are allowed to run, leaving governments scrambling to figure out how to deal with the sudden appearance of fleets of bikes and scooters popping up around their cities.
With this massive influx of companies rushing to establish their own ride-share systems within a city, various cities have begun discussing laws to regulate the establishment and usage of these bike and scooter systems.
However, while some cities are celebrating their successful launches, others are banning these companies from operating, citing safety out of concern for the chaos they bring to the streets.
The Chinese government has been creating new regulations to help control the emerging micromobility market, including punishing individuals that leave shared bikes outside of permitted areas or vandalize the bicycles.
Chinese cities have also been rapidly impounding bikes by the thousands. In Shanghai, the Municipal Transportation Bureau ordered bike-sharing companies to refrain from releasing any more bikes within the already oversaturated city in 2017.
With the speed and unpredictability of scooters zooming by on sidewalks or randomly placed in the streets, some European cities like Paris are banning them on sidewalks as cautionary steps to prevent scooter collisions with pedestrians. Barcelona has taken the extra step to ban the use of shared electronic scooters completely. Electric scooters are currently also banned on public streets and sidewalks in the UK.
Luckily for e-scooter-sharing companies, these laws may change as companies work with cities to better integrate micromobility systems into city life. Bird, Lime, Voi, and Tier are looking to launch trials in the UK as early as June 2020 — brought forward from the initial timeline of 2021 as the British government eases the Covid-19 lockdown. Bird and Lime have also been lobbying for a change of laws enforced since 1835 that has prevented their growth into the UK.
North America has much stricter regulations in comparison to Asia, which means micromobility startups cannot grow quite as rapidly as they did in China. For example, companies must obtain permits and go through legislative processes before they can roll out their bikes and scooters across most cities in the US.
If they don’t, they can face high fines and wind up banned from cities, like Bird and Lime were banned from San Francisco after they placed hundreds of scooters on the streets without the city’s permission. Overall, however, the regulations can be beneficial to cities and startups alike, as they prevent companies from growing unsustainably fast.
Fierce competition between micromobility startups has led to the flood of millions of dockless bicycles across the streets of major cities like Beijing and Shanghai, which has resulted in many problems.
As bikes break, companies often don’t have the manpower in place to fix them in a timely manner, resulting in frustrated users having to test several bikes before finding one that works properly. Moreover, as companies that expanded too quickly go out of business, their bicycle supplies wind up going to waste in massive bicycle “graveyards” all over China.
Source: The Atlantic
The vandalism and theft of bikes and scooters has become a major barrier to many new micromobility companies. This may not be as damaging for larger companies (that can afford to redesign their hardware) as it is for smaller startups that could be driven out of business as a result.
For example, Gobee.bike, a dockless bike-share service, had to abandon its efforts in France completely in February 2018 as it saw thousands of their bikes damaged or stolen. For the same reason, it had already ceased services in Brussels earlier in the year.
In addition, 80% of bikes from Paris’s Velib bike-share program have been reportedly stolen or damaged — some have been even found on black markets in Eastern Europe and northern Africa.
Furthermore, Bird was plagued by theft in Mexico City and Chile — causing thousands of dollars of losses a day.
Micromobility companies therefore must deal with the expenses associated with replacing stolen hardware as well as hire enough manpower to repair damaged ones. Both Bird and Lime have stated that their electric scooters tend to last one to two months before having to be replaced — if even that. A dataset released by Bird found that the average life span was just 28.8 days.
In an effort to increase their lifespan, Bird upgraded to a more durable “Bird Zero” model in 2018, featuring solid-core tires. These models now account for more than 75% of Bird’s fleet, according to its founder.
In general, micromobility companies are looking at new prototypes, tweaking shapes, sizes, and wheel arrangements for vehicles to serve different transportation needs and comfort levels. Seated scooters and hybrids of mopeds and e-bikes, which offer more stability and comfort for passengers, may gain more traction as people look for a more comfortable alternative compared to kick scooters. Ultimately, models that prove to be sustainable, more durable, and safer for riders will likely win out.
For cities with harsher climates, like those in northern Europe, adoption of shared bikes and scooters is not as viable. In the rain and snow, conditions become dangerous and accidents skyrocket. Plus, demand simply decreases when it is too cold to use unenclosed vehicles.
Many scooter sharing companies are moving towards offering more durable fleets to make riding safer in inclement weather.
Skip has even been giving away branded winter gloves and hats to its users in Washington, DC during the cold winter months.
But, ultimately, when weather conditions are too severe, shared scooter and bike companies might be forced to take their fleets off the streets and potentially lose precious profits.
Despite challenges, the future of micromobility looks bright
As with any emerging industry, micromobility companies offering the relatively new service of shared bikes and scooters to the world have some bumpy roads ahead as they face numerous challenges across the space.
While some companies may fail along the way, the companies that do survive will likely thrive in this multi-billion-dollar market, as they provide urbanites with a viable solution to their transportation woes and offer a greener alternative to cars. Covid-19 has accelerated the potential consolidation of the space, but also driven demand in a time where one-rider, open-air transportation solutions are highly desirable.
Of course, much of this is dependent on geography, and whether cities or urban settings can accommodate these methods of transportation successfully.
But with an increasing number of investors pouring enormous amounts of capital into the micromobility industry, we can expect to see more bicycles and scooters on the streets of cities all over the globe moving forward.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
- Patent Analytics to see where innovation is happening next
- Company Mosaic Scores to evaluate startup health, based on our National Science Foundation-backed algorithm
- Business Relationships to quickly see a company’s competitors, partners, and more
- Market Sizing Tools to visualize market growth and spot the next big opportunity