Micromobility: the hit of the moment

18th September 2019  

by Ruggero Calamai & Lorenzo Galletti



Using words from the music world we can define the micromobility industry as “the hit of the moment”. The sector has recently received strong media and investor attention, and according to McKinsey analysts, the market will reach an estimated USD 300-500 billion by 2030, while Barclays analysts say it could even reach 800 billion by the middle of the next decade. Although the market has had a huge increase in the past few years, the story begins in the 1990s in Taiwan: in order to reduce the use of two-stroke scooters in cities, the government have started to promote the use of electric bicycles; this action have launched the market, but the industry really took off when it reached China. From 1998 to 2005, the number of e-bikes increased from 40,000 to over 10 million. Furthermore, after the first boost in demand, in 2005 there has been the outbreak of SARS, a highly contagious and potentially fatal pulmonary virus which has affected China. The outbreak led Chinese people to avoid public transport and instead introduced them to the electric alternatives. Today there are over 200 million e-bikes in China, and according to experts the market is still at an early stage.

After China the market moved to North America. The first bicycle sharing system was launched in 2009 in Montreal, Canada, but such systems did not get a strong attention until the last few years. Between 2016 and 2017 the usage of shared bicycles in the Canadian city grew by 25%, with about 100,000 bicycles in 2017.

In 2017, two major scooter sharing companies, Lime and Bird, also appeared in the United States. Lime started in July 2017 while Bird in September 2017, and both companies have reached the status of “unicorn” (i.e., valuations from $1 billion up) by 2018. It must be said that, although the main companies in the industry come from the United States, the country is not really suitable for the type of transport offered: roads are not built for bicycles or electric scooters, but mainly for cars, contrary to China which is full of bike paths. In addition, the low price of fuel does not discourage the use of car. This is why, although the market has developed in the United States, the most promising area seems to be Europe. It is no coincidence that most of the operators, American or otherwise, are present in Europe.

Currently Europe is not the most developed market for ride-sharing, but it certainly has promising statistics. In Denmark, for example, 90% of the population own a bike, while only 56% have a car. The European bicycle industry is expected to grow by 5.5% per year until 2022, while the automotive industry is expected to grow by just 1.7% until 2024.

THE RIDE SHARING WAR

Following the success of Chinese bicycles and US scooters trying to solve the “last mile” problem between a train and a bus, many similar services were born. Especially in the US, cases like Lime and Bird represented the fastest climb to the billionaire evaluation, reached only after a year of activity. Many other start-ups in the market such as Dott (in the portfolio of the U-Start Club), Tier, Wind and Flash were successful in attracting large investments (between 30 and 60 million euros in 2019). Cities are very interested in these solutions because they meet a real need and alleviate pollution and congestion, even if they cause some issues for municipalities. In fact, they should ensure the safety of the vehicle and also be sure that the city’s infrastructure is good for the huge number of vehicles in the area, addressing problems common to all cities such as those related to the parking of the vehicle on the sidewalk, the use of the helmet, the delimitation of areas in which to drive e-scooters. As already mentioned, Europe is quickly following in the footsteps of the most developed markets such as North America and Asia: Tier Mobility, Wind Mobility, You Technology, Dott and Flash are all start-ups of e-scooters based in Europe, who have raised more than $250 million since they have started. Certainly, their success is based on the great interest of the citizens of the largest European cities, in particular Paris, which has become the largest market of micromobility in the world, together with Manhattan. In Beijing and Shanghai, which have opened the way for reducing car transport and switching to emission-free solutions, today bike sharing is the third most popular public transport mode. In other Asian countries, including Singapore, Taiwan and South Korea, the micromobility market is also having a great success. Several Chinese start-ups in the industry have already achieved unicorn status, the first is Ofo, the largest bike sharing operator in China. The first “decacorn” of South-East Asia, a start-up with an evaluation of over $10 billion, is instead Grab, a highly successful company based in Singapore. Grab expanded the offer with bike sharing and e-scooters in 2018. In North America, the largest companies have recently strived to incorporate all forms of transport into their service portfolio. With the acquisition of the bike-sharing company Motivate, Lyft became the largest bike sharing service in North America in late 2018 and holds the majority of the most popular bike sharing services in the US, including Citi Bike (New York), Ford GoBike (San Francisco), Divvy (Chicago), Bluebikes (Boston) and many more. Even the giant Uber, thanks to Jump, have launched e-bike sharing services (and even scooter sharing) in some of the major cities in the US and Europe. In South America the main micromobility company is currently Yellow, based in São Paulo, Brazil. Founded in 2017, Yellow is a service of scooter sharing and bicycles without dock (can be found and left around, and not in dedicated racks) which generated one of the largest collections in the series A round in South American history, 63 million dollars.

WHO IS GOING TO WIN?

The sector today has several players competing for market shares.

Below a short list of the main growing players.

Bird. Bird, based in California, was the first start-up of ridesharing to exist globally. The company reached the status of unicorn in less than 9 months after being founded in September 2017, becoming the fastest company in the world to reach an estimate of $1 billion. Only four months later, Bird doubled in value to $2 billion. Bird now operates in over 100 cities across North America, Europe, South America and Asia, although most of these cities are in the United States. The first European city where Bird launched its service was Paris, in late 2018, reaching over 50,000 races after only two months. Scooters can now be found in various cities in Portugal, Belgium, UK, France, Austria, Spain, Switzerland and Italy.

Lime. Lime is a transport company that offers shared bicycles and scooters and it also quickly reached the status of unicorn and currently has a value of $2.4 billion. Uber is a major investor and partner of Lime, as the start-up provides Uber with electric scooters. Lime serves more than 90 cities in the United States, and it has also rapidly expanded globally in Europe, South America and Asia.

Uber. Uber acquired the micromobility company Jump Mobility Technologies in 2018. Thanks to that, today the San Francisco based group offers bicycles and e-scooters in 25 different cities across USA and Europe. At the beginning of April 2019, Uber chose Madrid as the first European city to expand its e-scooter sharing service Jump, distributing 566 scooters across the Spanish capital. Uber has also entered Paris, Malaga and Wellington (where both e-bikes and e-scooters are available), as well as Berlin, Lisbon and Brussels.

Dott. Dott, company founded in Amsterdam by Maxim Romain and Henri Moissinac, raised $56.6 million from EQT ventures, Naspers, Axel Springer Digital ventures, DN Capital, Felix Capital, FJ Labs and U-Start Club. The company is choosing a careful approach for growing in order to build a good reputation and sustainable service; its strategy is based on a process of collaboration with local authorities to obtain the authorisation to distribute electric scooter fleets, which usually vary between 1,000 and 2,500 vehicles per city. Dott is currently present in Brussels, Paris, Lyon and Milan, and aims to expand in Germany, UK and Netherlands. The company also plans to launch an e-bike sharing service.

Wind. Wind, founded in 2017, operates across Europe and Asia and employs more than 120 people worldwide, including its own research and development center in China. The company offers its services in over 20 cities around the world, including Germany, France, Spain, Israel, Austria, Portugal, Denmark, Korea and Japan. The company raised $72 million in funding with the latest official financing in June 2019.

The overall picture is that the market is now very fragmented with operators of different sizes. Although Bird and Lime are two large companies in the industry, there are many other smaller and more local businesses operating in different areas. Given the large number of players in various areas, it is clear that a consolidation process will be in place and in the long term will lead to a small number of global players. First, regulation will be a crucial component in the fight to emerge on the market. When the first death of an electric scooter user occurred, governments decided to take a stronger position on e-scooters and their traffic. This has shifted companies' priorities from gaining market share to complying with the law. In conclusion, it is clear that the sector has all the potential to become one of the most important segments of the mobility market. Our analysis shows, however, that there are many obstacles for the actors involved. Will they be able to cope with them and thus reach the size of the market that we all expect?

 

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