Micromobility boost after Covid-19

4th June 2020  

By Edoardo Gava

Since its origin, shared micromobility companies have been in an unstable position, even if supported by massive investments. Moreover, the COVID-19 pandemic has brought significantly more uncertainty upon an industry that has battled with unit financial matters since the beginning. Additionally, the crisis has provoked mass cutbacks, activity shutdowns over a few markets, and (where possible) more solidification.

Regardless of individual startups' battles with local authorities, micromobility as innovation will come out of this stronger than previously.

In fact, with ongoing concerns about the disease and social distancing, consumers may look to alternative modes of transportation that require fewer interactions with strangers.

Of course, even if the momentum could be positive for the whole industry, not all the companies will survive to this hectic moment, or will not be damaged at all. A significative example is that Uber sold off JUMP to Lime, while concurrently leading a $170 million investment in the micromobility startup. According to The Information, that round caused Lime's valuation to down by 79% to $510 million. Last April, Lime was valued at $2.4 billion. As part of the deal, Lime will also acquire Uber's Jump bike-sharing business operations, and the two companies will expand the integration of their mobile apps. On one side, the deal seems to be an Uber's total bet on Lime's operational capabilities. On the other hand, two major players needed to work together in a much leaner way.  The investment agreement included sacrifice from both sides. First, Uber is "dismissing" its Jump scooter business, was this a choice or a business necessity? Since Uber immediately moved Jump's employees to Lime as part of its cost-cutting plan due to the Covid-19 lockdown, those doubts are legit. Secondly, Lime accepts a considerable valuation drop with consequent image damages and questions regarding its profitability path

Moreover, just a few weeks earlier, Lime laid off 13% of its workforce amid the pandemic. Those layoffs came only a few months after the startup laid off about 14% of its workforce and ceased operations in 12 markets. This proves that micromobility services are a tough challenge to scale internationally, and each player should be cautious about enlarging the fleet in a sustainable way. Before the pandemic hit, Bird had already acquired Scoot in July 2019 and Circ in January 2020. During the epidemic in April, Bird as well laid off about 30% of its workforce.

Another potential threat to micromobility providers is a shift in consumer behaviours towards owning a scooter or any alternatives directly. In Italy, the government even pushed citizens to buy personal bikes or scooters through incentives up to €500.

In this period of uncertainty, there are micromobility players that adopted a different approach compared to the "American peers". Dott, a U-Start Club Members’ company, chose the "retail approach" that aims at a gradual and pondered expansion a long time ago. The company was capable of continuing operating in all the cities during the pandemic (as a form of support). Dott did not do a single layoff but relied only on the available government aids. The Amsterdam-based firm is even expanding, entering in the Italian cities of Milan, Rome and Turin.

Why, despite the multiple threats and uncertainty, is still right to bet on micromobility for the future?

The transportation market has a gap right now, a gap created by the demand for public transportation and the need for social distancing. Nobody knows whenever the situation will be back to normal, but, in the meanwhile, cities are expanding bike lines, building an infrastructure that otherwise would have taken years to obtain. For example, Milan has announced 35 additional kilometres in bike lanes, and Paris is accelerating its 2024 plan to make "every road bike-friendly", making ready 650 km for bikes post-lock-down.

In addition to that, even if the public transports will reopen, they will need to reduce their capacity and adopt other hygiene measures.

Only in Paris, before the lock-down, there were 4.5 million daily public transit trips. Now, the capacity is reduced by 50%, people are afraid but will still need to move (maybe less than before due to remote working). Micromobility can fill this gap, even partially. A Tech.crunch expert in the field estimates that, if only 1-2% of public trips will transfer in micromobility trips, the industry would become 10 times bigger.

As the world is trying to move forward, many sectors will evolve and adapt. Personal transportation is one of the most exposed, and I am sure there will be a lot more to tell in the upcoming months about the "micromobility battle" that will continue.