Publications

- May 1, 2021: Vol. 8, Number 5

The micromobility revolution: How bikes and scooters are shaking up urban transit

by Mike Consol

Here is the problem facing city dwellers: Urban congestion continues to rise and existing modes of transportation — such as cars, buses and trains — are not keeping up with growing populations. U.S. commuters have lost an average of 99 hours a year to traffic congestion, according to the 2019 INRIX National Traffic Scorecard. In 2019, traffic cost Americans roughly $88 billion or an average of almost $1,400 per driver.

To circumvent the problem, micromobility startups are emerging as a powerful alternative to the current public transit mix, especially as the COVID-19 pandemic makes commuters reticent to pack themselves onto buses and trains with others of questionable health status.

Though the pandemic has hit the micromobility industry hard, a new report from CB Insights suggests micromobility startups are poised to rebound as people reemerge from lockdowns and look for single-rider, open-air transit alternatives. Bikes and scooters could offer safer methods of transportation by allowing outdoor transit, control over social distancing, and fewer points of shared contact when compared with public transportation.

Not to mention increasing commuters’ fun and fitness levels.

Micromobility refers to short-distance transport, usually less than five miles. Increasingly, it is shorthand for the growing crop of bike- and scooter-sharing companies that are aiming to remake the urban landscape.

With urbanization on the rise, the majority of trips people take fall within the category of micromobility, making those treks prime candidates for bike and scooter usage. In the United States, roughly 60 percent of all trips are five miles or less.

As consumers take advantage of this growing trend, the market opportunity continues to expand. In the United States alone, the micromobility market is predicted to be worth between $200 billion and $300 billion by 2030, says the report. Worldwide, investors have already poured more than $5.7 billion into micromobility startups since 2015.

Though some challenges exist (including lack of regulation, citywide bans and theft) this phenomenon has the potential to massively disrupt the mobility industry globally, according to CB Insights.

Cities around the world are quickly growing in size and population. Projections show that by 2050, an additional 2.5 billion 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 number of cars on the road, lower our environmental footprint, and provide convenient methods of transportation for short trips, all while being economical.

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 magazine. 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.

For city dwellers, renting a bike or scooter is often much cheaper than owning a car or taking a taxi to a destination, and they require less space.

Yet, there are still some rising challenges associated with bikes and scooters. From their general adoption to regulation and infrastructure issues, micromobility solutions are not well-suited to thrive in all regions.

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 percent, according to The New York Times. Taxis and mass transit were down at similar levels.

Amid the coronavirus-induced upheaval, Lime, a micromobility company, laid off 13 percent of its workforce, saw its valuation fall by 79 percent, and initially withdrew from virtually all of its foreign markets. Rival scooter sharing company Bird laid off 30 percent 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 percent 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 percent thus far; Meituan Bikes saw record cycling volume surge past pre-pandemic levels; and Hellobike saw 30 percent month-over-month growth. In the United States, 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 $170 million 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.

A SHIFT TO SCOOTERS IN NORTH AMERICA

The United States 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, Calif. Much like the early days of ride-hailing companies like Uber and Lyft emerging, there was backlash from citizens and city officials. Despite regulatory hiccups along the way, the dockless scooter craze witnessed aggressive growth in its early years.

Several U.S.-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 because of the pandemic.

Shared bicycle programs have existed in many major cities across North America over the past 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.

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 nine months after being founded in September 2017, making it the fastest company in the world to reach a valuation of $1 billion. Just four months later, Bird doubled in valuation to $2 billion. Bird currently operates in 80 cities in North America and Europe. It previously had scooters on the streets of the Middle East and Latin America but pulled back as the startup rushed to cut costs. To date, Bird has acquired two micromobility startups: Scoot, in June 2019, and Circ, in January 2020.

In March 2020, Bird eliminated more than 400 employees as the pandemic began to bite.

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 $2.4 billion before the pandemic. In May 2020, Uber offloaded its bike sharing business to Lime — shaving nearly 80 percent off of Lime’s valuation (now at $510 million) in the process.

U.S. 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 country’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 Austin, Atlanta, Denver, Los Angeles and Nashville, though it has since stopped operations in some cities. Lyft faced troubles amid the pandemic, laying off 17 percent 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 percent of its workforce, with the pandemic causing gross bookings to fall as much as 70 percent.

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 United States. New York-based Revel, launched in 2018, raised a $28 million Series A funding in October 2019. It has since expanded to Austin, Miami, Oakland and Washington, D.C.

CHALLENGES AND OPPORTUNITIES IN MICROMOBILITY

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.

Profitablity also remains an issue. Though many micromobility companies raked in millions of dollars through investors, many are still struggling to achieve sustainable profitability, especially as demand falls amid the pandemic.

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.

With an increasing number of investors pouring enormous amounts of capital into the micromobility industry, one can expect to see more bicycles and scooters on the streets of cities around the globe.

 

This story was excerpted from The Micromobility Revolution report by CB Insights. Download a copy of the complete report here: https://bit.ly/3eY5KIQ

Forgot your username or password?

We use cookies and other tracking technologies to personalize your user experience on our site and perform site analytics. By clicking on “I accept”, you consent to our Privacy Policy.