In June of 2018, Infrastructure Ideas ran a series on the Mobility Revolution (an overview, implications for investors, and implications for policy makers). Two years on, let’s see how the world has changed.
The Mobility Revolution continued at high speed through the rest of 2018 and 2019, and micromobility had as bright a future as any industry at the end of 2019. In 2018, the number of rides Americans took via dockless scooters, bikes, and traditional bikeshare systems more than doubled from 2017, to 84 million trips.
McKinsey was predicting the industry would be a $300-500 billion market by 2030, and Barclays went even better, projecting micromobility as a nearly trillion-dollar business in a decade. For investors struggling to find bright spots in the infrastructure world, this was a big piece of the future. Ride-hailing giants were at the forefront of acquisitions: Uber acquired Jump Bikes in May 2018 for $200 million, and Lyft acquired Motivate, the country’s largest operator of traditional bikesharing systems. Two Chinese bikeshare firms, Ofo and Mobike, arrived in the United States, and together raised over $2 billion in venture capital funding. In fact, Venture Capital investment in urban technology, mostly mobility, surpassed that in pharmaceuticals from 2016 through 2018.
Mobility numbers looked good during 2019: Lime surpassed the 100 million ride mark, and three other providers passed 10 million rides for the first time. There were some significant shifts across segments, and bad news for some – mainly in bikeshare. The two Chinese giants crashed and burned, with Mobike being sold and retreating from foreign markets, and Ofo going bankrupt in June. Uber’s acquisition of Jump Bikes went south, and it sold the small remnant of the company to Lime in early 2020.
Then came the pandemic.
In the first half of 2020, with concerns over COVID infections, macro and micro travel came to a grinding halt. In the cities where micromobility had been booming, people now worked from home instead of commuting, and curtailed outings to see friends, go to the gym, and eat meals. Ridership, revenue and investment in mobility all plummeted. Based on an analysis of Apple iPhone data, the number of passenger-kilometers traveled by private and shared micromobility vehicles decreased by an estimated 60-70% in Europe and the United States since the onset of the COVID-19 crisis. Several providers halted operations in different markets, and laid off large parts of their workforce. An article in Wired Magazine asked: is Micromobility a bust?
It is impossible to know exactly what the future holds, for this “aspiring trillion-dollar business,” which lost half its market in six months. But some optimism may be in order.
For those who survive, the future may not look so bad. As reported by Bloomberg’s Laura Bliss in early August, micromobility is already showing signs of life. In American and European cities that have made progress on reducing the incidence of COVID-19 and in reopening their economies, demand for electric scooter, bike, and moped rental services is growing again. It appears that compared with “closed-space” transport alternatives such as car-share and mass transit, being exposed to the air on a bike or scooter – only needing to wipe down and disinfect handles – feels like a healthier and lower-risk transport option for clients. Ford’s scooter subsidiary, Spin, has reported an increase in ridership in cities where lockdown restrictions have eased. Lime reported record growth in new user signups and in ridership in some cities. Gotcha, which operates fleets of shared scooters and bikes, reported spikes in the number of rides, the number of unique riders, and average trip length in many of its markets. So it seems that some of the people who stopped getting on shared bikes and scooters have decided to get back on them.
Beyond this short-term rebound, there are also a number of underlying developments which may bode well for micromobility companies in the longer term. These include: average trip lengths increasing, dedicated lanes becoming more widely available, more commuters are getting into the act, and less competition.
Longer trips by riders should mean better revenues per trip, and better asset utilization. Industry giant Lime reported a 34% increase in average trip durations during the second quarter, as well as a similar increase in average trip distances, to now over two kilometers. Shared moped operator Revel measured similar upticks. Data from Ford’s Spin subsidiary shows significant growth in trips of two kilometers or longer in several cities in May 2020, compared with a year earlier, and a 44% increase in average trip duration.
Worldwide, the lockdown has driven an increased focus on bicycle lanes. Better cycling space and less battling with automobile traffic should encourage more riders and more trips. Milan has announced that 35 kilometers of streets previously used by cars will be transitioned to walking and cycling lanes after the lockdown is lifted. Paris will convert 50 kilometers of lanes usually reserved for cars to bicycle lanes, and plans to invest $325 million to update its bicycle network. Brussels is turning 40 kilometers of car lanes into cycle paths. Seattle permanently closed 30 kilometers of streets to most vehicles, providing more space for people to walk and bike following the lockdown. Montreal announced the creation of more than 320 kilometers of new pedestrian and bicycle paths across the city.
The penetration of the commuter segment, in addition to the leisure and impulse segment, would also hold the potential for significant revenue increases for micromobility providers. Some of the first positive indications in this regard are coming out of Germany. Here Spin reported from a customer survey that one third of Germans “believe there will be a reduction of car traffic around inner cities in a post-pandemic world and favor the use of micromobility vehicles such as e-scooters.” “Spin scooters are being used now more than ever as a utility rather than for leisurely activities,” said Euwyn Poon, Spin’s President. Location of scooter usage also illustrates this new trend. Downtown areas were formerly the hub of activity for scooter companies, with white-collar workers using the vehicles to commute short distances to work or to grab lunch or coffee during the workday. But in the era of remote work, residential neighborhoods have become new micromobility hotspots, according to maps of Lime rentals in San Francisco and Berlin. Demand for longer-term rentals is also materializing. Spin now rents its scooters by the month in San Francisco; a similar option is available for e-bike rentals for delivery workers in Washington, DC. Unagi, a scooter maker that sells directly to customers, introduced a monthly subscription option for riders in L.A. and New York earlier this month. Bird and Lime have offered monthly rentals for their vehicles since spring 2019.
McKinsey believe (The Future of Mobility) that private- and shared-micromobility solutions will experience a complete recovery in the number of passenger-kilometers traveled, with no significant drop from pre-crisis levels. With what we are seeing, this increasingly looks like a good bet. But usage is only one part of the story.
Making money has been the big issue for micromobility providers during the pre-2020 growth period. Now with a number of players exiting, through closure or acquisition, the financial picture should look better. If forecasts of market size in the range half a trillion dollars materialize, even a few years later than originally forecast, we’re talking about a business on the order of 15-20% of total global infrastructure investment. Hardly anything “micro” about that.
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