Preparing for the Mobility Revolution

Shared Micro-Mobility Goes Mainstream
November 2018

The proportion of the world population living in urban areas is expected to rise from 55% today to 68% in 2050. Congestion in cities keeps increasing in the absence of specific regulations such as the London access charge. A recent study shows that ride-hailing contributes to making matters worse, representing about half of the congestion increase in several US cities. Autonomous ride-hailing, may accelerate this trend as ride prices will drop. Incentivizing higher vehicle occupancy and the use of public transit should be part of the solution as they reduce footprint per passenger. Micro-mobility is certainly another solution and it is available today.

 

Bikes, scooters and to a leaser extent moped, i.e., micro-mobility, have developed significantly in cities in most regions over the past decade and built momentum recently. These modes have emerged as strong alternatives to cars for short distances. For reference, about 50% of all trips in U.S. are shorter than 8 km. However, the modal distribution varies greatly by region: in London, only 35% of all trips are done by car whereas the ratio is 50% in Vancouver and 95% in Los Angeles. The quality of the public transit system has a lot to do with this contrast.

 

In addition to reducing congestion, these electric or human-power modes are clean and accessible to people with lower incomes. They complement each other depending on distance and eagerness to travel on two wheels, and help urbanites connect with public transportation. As a result, OEMs and ride-hailing companies are also investing in micro-mobility to offer a broader choice of modes. How is this playing out?

Bike-Sharing Accelerated When It Went Dockless

Bike sharing started to build real momentum about 10 years ago in Europe. In Denmark and the Netherlands, biking has been a key mode of transportation historically— 58% and 53% of the population ride their bike to work respectively in Copenhagen and Amsterdam. In London, bicycles have become the  dominant vehicle during rush hour. In 2007, Paris introduced Velib’ which became the largest fleet with 20,000 docked bikes, which are used for an average distance of 5 km. The fleet now includes e-bikes.

 

Then came a massive wave of dockless bikes in China, with Ofo, Mobike and Hellobike, starting in 2014. Fleets grew fast — Ofo had 85,000 bikes in China after 18 months of operation, before going international. At the end of 2017, 1.5 million bikes had been “dumped” in Shanghai alone. This excess led to the bankruptcy of overly aggressive players. 

In the US, bike-sharing started more slowly, which is not surprising as cars dominate mobility and urban centers are typically less dense than in Europe or Asia. Established in 2009 as Alta Bicycle Share, Motivate provided about 80% of all bike-share rides in 2017. Jump was founded a year later, as Social Bicycles. Together with Lime and Spin, these companies now operate both pedal and e-bikes in many US cities. Deployed more recently, the latter not only allows users to ride farther, but also attracts otherwise reluctant commuters. For reference, a bike generates about $10 of revenue per day in San Francisco, and costs approximately $1000.

 

 

Free Floating E-Scooters Become All the Rage in 12 Months

Shared electric scooters are a recent phenomenon, since their introduction in the US in mid 2017. The GPS-located 2-wheelers address the “last mile” in urban transportation. According to Bird, 68% of scooter rides are to connect with public transit. Lime considers that scooters cover to the 0-2.5 km range and e-bike go up to 5 km.

 

Lime and Bird, have triggered a race to occupy sidewalk real estate. This resulted in waves of small two-wheelers being dropped in cities, without permits initially. In their first 12 months, these startups provided about 10 million rides each. After less than 14 months of operation, Lime, which started with bike-sharing, had deployed its e-scooters in 125 markets in 8 countries (see below), and reached over 20 millions rides. This stellar growth requires significant funding — $400 to 500 million each to-date — at valuations over a billion dollars … that’s fast! In addition, this sudden and massive deployment has reportedly led to a shortage of scooters.

These Chinese-made vehicles cost $300-500 and generate $15-20 per day, with typically a $1 flat fee plus $0.15 per minute — an interesting economic analysis can be found here. It is clear that scooter-sharing is more profitable than bike-sharing. However, e-scooters have to be replaced every month or two as they turn out not to be designed for such intense use. The two startups are now developing their own products to address design deficiencies, especially robustness. 

 

Another issue is the weather. In anticipation of its first winter in northern US cities, Lime is launching a car-sharing program, starting with Seattle. The pilot will include a free-floating fleet Fiat 500Es. In parallel, Lime is developing a 2-seat, 4-wheel battery EV to be produced in China. These EVs will offer an alternative to scooters and bikes in case of poor weather conditions and will enable use cases up to 50 km. Pricing is aggressive at $1 plus $0.40 / min for a Fiat 500E vs. $1 plus $0.15 / min for an e-bike.

 

Other operators include Grin and Yellow in Latin America, Taxify (initially a car-based, ride-hailing), Tier or VOI in Europe, or Skip, Spin and Razor in the US or Wind in Europe and the US.

 

 

Electric Mopeds Complement Bikes and Scooters

Founded respectively in 2012, 2014 and 2016, Scoot, CityScoot and Coup all offer dockless electric mopeds. Whereas the American Scoot operates in San Francisco, Barcelona and Santiago, the French CityScoot has deployed its e-mopeds in Paris and Nice and will soon be in Milan. The German Coup, a subsidiary of Bosch, is present in Berlin, Paris and Madrid. It is interesting to note that back in 2016, Scoot had in their fleet a dozen or so Renault-made Twizy vehicles (full EV, 4 wheels, 2 seats in a row). Instead, the San Francisco-based company decided to expand its fleet with e-scooters in its hometown and e-bikes in Barcelona.

 

Fleets are still of limited size. CityScoot has the largest, with an expected 6,000 vehicles at the end of 2018, followed by Coup with 3,500 (see below). In all cases, these smart-phone activated mopeds have a top speed of 45 km/h and can be operated without a license, using a helmet provided with the vehicle. Based in Silicon Valley, I often spend the day in San Francisco and find it very convenient to use Scoot’s e-mopeds to go from one meeting to another while my EV charges at a city parking structure.

Few OEMs Are Embracing Micro-Mobility to Broaden Their Service Offering

The mobility ecosystem is undergoing a profound transformation, including a shift from vehicle ownership to mobility on demand, and the introduction of cheaper micro-mobility modes. While many OEMs are experimenting with shared mobility on four wheels, fewer are embracing micro-mobility. In my view, this is smart: it is better to cannibalize your own business than to see it go to the competition.

 

In 2017, Ford deployed a fleet of 7,000 GoBikes operated by Motivate (now owned by Lyft), in San Francisco. Last month, the OEM acquired Spin, which operates both bikes and scooters. On its Free2move mobility aggregation platform, PSA offers not only car-sharing and ride-sharing services, but also shared bikes and scooters (see below). Just last month, Daimler announced that its ride-hailing subsidiary MyTaxi would soon launch an e-scooter sharing program with 500 vehicles in southern Europe. Last month, GM announced they will launch two foldable e-bikes in 2019. And a few days later, it was Tesla’s turn: Musk indicated that his company may introduce an e-bike.

Ride-Hailing Companies Are Also Expanding From 4 Wheels to 2 Wheels

For the same reasons OEMs start to adopt micro-mobility, ride-hailing players are broadening their modal offering. In mid 2018, Uber acquired Jump (bikes, scooters) and invested in Lime (bikes, scooters) - the ride-hailing giant started to deploy Jump scooters last month. Furthermore, its CEO has declared that car rides will eventually represent not more than half of Uber’s business, recognizing the potential of micro-mobility (and airborne solutions). In a similar move, Lyft acquired Motivate (bikes) for $250 million in June, and China’s Didi has become Ofo’s largest shareholder (bikes). In addition, Estonia-based ride-hailing operator Taxify, in which Daimler and Didi have invested, also launched e-scooters on the streets of Paris this past September. This broadens their customer base as 60% of their scooter riders are new to Taxify.

 

 

The Take-Aways

It is clear from this analysis that the mobility ecosystem is in the midst of a profound transformation. Consumers are decreasingly inclined to place a significant portion of their assets in a vehicle that’s parked 95% of the time. Instead, they expect access to mobility when and where they want, without commitment. The fast development of the sharing economy is forcing traditional players, OEMs in particular, to truly embrace their proclaimed ambition to pivot from selling cars to providing mobility. Likewise, companies offering shared mobility based on a single mode are racing to deploy across other modes in order to gain a first mover advantage. As there won’t be room for everyone, the race is on!

 

Marc Amblard

Managing Director, Orsay Consulting

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