After Wild West start, scooter providers chase scale to survive
LONDON, Oct 14 (Reuters) – The era of breakneck growth for electric scooter firms is giving way to more selective expansion focused on profits as they face tougher regulations, more demanding customers and wary insurers.
Hurt badly by global coronavirus lockdowns last year, companies offering by-the-minute rental of e-scooters say ridership is soaring to pre-COVID 19 levels among urban consumers eager to avoid public transport or taxis.
But that doesn’t mean the app-based industry is returning to the free-wheeling, pre-pandemic world where “micromobility” firms were loosely regulated and raked in money from investors.
Scooter firms now face cities that are using licensing to limit the number of operators, consumers demanding better software and vehicles, and insurers leery of safety risks.
This is forcing up costs and will push the low-margin industry towards further consolidation. Some smaller providers have already been snapped up, including Boston-based Zagster, bought by transport technology company Superpedestrian in 2020, and San Franciso-based Scoot, taken over by Bird Rides in 2019.
“It really takes scale to get the economics to work,” says Travis VanderZanden, CEO of Santa Monica-based Bird, which is due to go public via a merger with special purpose acquisition company (SPAC) Switchback II Corp . “So I think we’re going to see some of the smaller players fall by the wayside.”
Bird is a global player that expects revenue to double in 2021 from a pandemic-hit 2020, and then double again to $400 million in 2022. That is still small compared to a car-based ride hailing company such as Uber (UBER.N), which had gross revenues of $4.1 billion in 2019.
Bird’s planned merger – which will go to a Switchback II shareholder vote on Nov. 2 – values the company at $2.3 billion, about 20% below its January 2020 price tag, according to startup data platform PitchBook. Lime, also a global player, saw its valuation fall nearly 80% during a June 2020 funding round from one less than a year earlier.
While the pandemic battered valuations at the top, an analysis by Reuters found it also cut off funding for many smaller e-scooter providers.
“There are a lot of companies that can’t invest in hardware, can’t invest in safety features and can’t invest in training,” says Wayne Ting, CEO of Lime, whose investors include Uber. Lime acquired Uber’s micromobility unit Jump.
The current environment is a far cry from 2017 when electric scooters accessed through smartphone apps first appeared in large numbers. A flood of new providers created “Wild West competitions” as predominantly European cities hosted unlimited numbers of vendors, said Candice Xie, CEO of Chicago-based Veo, which operates in more than 40 U.S. cities.
“A lot of companies raced to the bottom in order to get market share,” she said.
Vehicles were dumped on streets from Detroit to Paris, and the term “scooter blight” was born.
Early rental scooters “were consumer grade and not built for a high level of utilization,” said Voi Scooters CEO Fredrik Hjelm. Stockholm-based Voi operates nearly 100,000 scooters across western Europe.
NEW SHERIFF IN TOWN
Now, cities and countries have tightened regulations, creating tough bidding processes for licences aimed at limiting the number of scooter providers.
Copenhagen temporarily ejected all scooter providers earlier this year while it rewrites its regulations.
Some U.S. cities, including Columbia, Missouri, and Winston-Salem in North Carolina, have allowed e-scooter providers to return with more oversight after expelling them.
Large scooter providers say awarding licences to a few major players with track records guarantees better service and allows them to operate larger fleets profitably.
“This has become a game of slim margins and scaling up,” said Voi’s Hjelm. “And it’s far better to have fewer operators with greater density.”
Britain has launched trial projects for e-scooter providers in certain cities – but with speed restrictions, and users must have a driver’s licence.
“We’re determined to make sure safety is at the core of our trial and that it works for everyone,” said Helen Sharp, head of Transport for London’s e-scooter trial for three operators: Lime, Tier and Dott.
To meet London requirements, Berlin-based Tier has developed software to stop its scooters accessing certain busy roads.
“You might just be able to push it, but it wouldn’t be easy,” said Tier’s UK and Ireland head of cities, Georgia Yexley.
But better scooters and software drive up costs.
Fred Jones, Tier’s regional general manager for northern Europe, said the company’s scooters can now last five years and have 83 replaceable components to extend their lifespan.
“That costs a lot, not just the scooter, but the parts and skilled labour to service them,” Jones said. “If you don’t get that right, the economics won’t work.”
Ensuring they do is key for funding.
Silicon Valley venture capital firm Autotech Ventures avoided micromobility firms until this year when it bought into Chicago’s Veo and another unidentified firm.
“Veo has taken a disciplined approach to growth, achieving impressive unit economics and much higher profitability than virtually all of its peers,” said AutoTech Ventures managing director Dan Hoffer.
According to PitchBook, in the first half of 2021 venture capital deal activity in the micromobility sector fell to $1.4 billion from $4.6 billion in the same period in 2020.
Another problem for would-be e-scooter providers is insurers see e-scooters as inherently more dangerous than bikes or cars.
“Riders are particularly vulnerable, more so than cyclists,” said Martin Smith, technical claims manager for motor at Aviva (AV.L), a large UK insurer that does not cover e-scooters.
Regular motor insurers such as AXA UK (AXAF.PA), Admiral (ADML.L) and Unipolsai (US.MI) also avoid e-scooter providers, leaving them to specialist players, such as Zego. Bird CEO VanderZanden said to get lower insurance rates it uses data from the 300 cities it operates in globally, highlighting the benefits of scale.
It has also added physical safety features like a double brake and developed software to boot irresponsible riders off its service – all running on its own operating system.
“Having amazing vehicles is one thing,” VanderZanden said. “But you need data to show insurance companies to make this work.”
Additional reporting by Paul Leinert in Detroit, Andrea Mandalà in Milan and Muvija M. in Bengaluru Editing by Joe White and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
Looking for a used motorcycle – where to start?
When searching for a used motorcycle in the off-season, riders face a dilemma – where do you start? Social media marketplaces? Classified ads? Local dealerships? While it’s possible to get a good deal in any of these places, they all have their own pros and cons.
A professional’s advice may be critically important
Dealerships usually have a wide selection of used motorcycles and may even offer a warranty for some models. However, used motorcycle businesses mainly focus on newer, more expensive models, which may not be ideal for those looking for a first motorcycle. With that said, beginners often value dealerships because they offer more transparency than private sellers and even share valuable professional advice.
“A dealership may be the perfect place to look for motorcycles for beginners because their employees know the pros and cons of bikes they sell. Businesses that care about their reputation will provide sincere help and support for buyers who aren’t entirely sure what they want to buy,” explains Matas Buzelis, the Head of Communications at carVertical.
An option for riders trying to save a penny
If a rider doesn’t know what kind of motorcycle they want, a used motorcycle lot may be the answer. They offer affordable prices, and buyers can take a look at various motorcycles in one place.
However, buying a ride in a lot carries some risks, as it can be hard to evaluate its condition. Scams in the used motorcycle market are common and taking precautions is necessary. Checking a motorcycle’s history online is a good way to learn about its past damages and mileage rollbacks, helping to avoid bad deals.
If a motorcycle has suffered severe damage in the past, it’s best to skip such a deal, as it can be unsafe to drive.
Facebook marketplace: the Wild West of internet shopping
One can find anything from second-hand books to cars, motorcycles, and other vehicles on Facebook Marketplace. However, it’s also where buyers are the most likely to get scammed. Facebook Marketplace is full of fake accounts, and there’s no control over listings, so it’s important to be extremely careful when buying anything.
If somebody is selling an expensive motorcycle at a low price, it should be a red flag. Scammers often ask to wire them a reservation fee or pay the total amount in advance, which is a huge no-no. Facebook Marketplace is also full of cyber criminals who may hack any device and leave naive buyers penniless.
It’s best to meet a seller in person, carefully check all of the motorcycle’s documents, and inspect its vehicle history report to mitigate risks.
Online classifieds offer the widest selection
Online classifieds have the widest selection of listings, as both private sellers and businesses post their ads. Since most online classifieds websites perform at least some kind of user identification, it’s a safer option than Facebook Marketplace.
It’s best to buy a used motorcycle from an owner who has had it for several years. Such an owner will know more or less everything about their motorcycle and its maintenance, making it easier to plan future expenses. However, some private sellers buy and resell motorcycles – these sellers may not be as sincere about their true condition.
“There are two things buyers need to look for: a good motorcycle and an honest seller. Buyers should look for a well-preserved model which is being sold by its actual owner. It’s better to avoid buying a motorcycle from someone seeking to make a profit, as they may hide defects, mileage rollbacks, and other things,” explains Buzelis.
The year of the app: five transport predictions for 2023
Peter O’Driscoll, Managing Director, RingGo
In 2009 Apple trademarked the phrase “There’s an app for that” to showcase the growth of app availability on its iOS app marketplace. Since then, the app boom has revolutionised lifestyles and, over the space of a decade, apps have become commonplace and vital for daily functions, with downloadable technology on smartphones intrinsic to leisure, business, retail, and transport services.
Drilling down into transport, we can see that sweeping changes in app culture are impacting the way we travel. Traditionally transport has been commodity-based: you purchase a car to go from A to B. Now apps enable the servitisation of mobility, with solutions facilitating everything from e-mobility and ride-sharing, to practical features such as mapping, locating charging points, and paying for parking, all underpinned by data networks and simplified user experience.
Looking further ahead to 2027, Gartner predicts more than 50% of the global population will be daily active users of multiple super apps. These are platforms ‘like a Swiss army knife’ that house a variety of services in one ecosystem, deploying modular micro-apps for a personalised experience. With super apps, tapping on one icon will manage multiple aspects of your day, and the acceleration towards this new era of app technology demonstrates how deep the impact of apps has been so far.
With apps in mind, I am looking at the next 12 months to predict the ways transport will change for the better, the ways automation and technology will improve lives, and how apps will play an integral role in radically shifting the needle toward enhanced mobility.
- Smartphone technology will be engineered with all demographics in mind
Despite preconceptions of ageism, technology-enabled solutions are used by all types of drivers, with demographics across the nation taking advantage of technology’s benefits to convenience. Focusing specifically on the elderly, 9 in 10 (86%) UK pensioners believe smartphones make their lives significantly better according to OnePoll.
Almost two-thirds (64%) believed their depiction in media was either negative or ambivalent, while almost half (45%) have been made to feel frustrated (37%), silly (29%), or angry (27%) by younger people patronising their ability to use their phone. With this in mind, in 2023 I predict that more companies will take an inclusive approach when it comes to engineering technology for smartphones. This will involve ensuring that solutions cater to their needs with three user experience points in mind: accessibility, functionality, and mobility.
When planning journeys from A to B, and rounding off a route by paying for parking, drivers in the UK can expect to see improvements to practical usage and integration of technology in their daily lives.
- There will be more competition in the market and app choice for motorists
The opening of the market to competition outside of the confines of the traditional single-supplier model will begin to gather momentum, and this will mean a wider choice of preferred apps for motorists. In 2022, Open Market pilots in Manchester City Council and Oxfordshire County Council, using the DfT-funded National Parking Platform, showed that it is possible to have multiple providers competing at the same location, bringing more choice and reliability to consumers and councils alike. And now, new entrants that provide services outside of the parking ecosystem will come into play.
With motorists free to use their app of choice this will reduce costs to the motorist and increase digitisation. Evidence from Bournemouth, Christchurch and Poole Council (BCP), who made the move to multiple cashless parking providers in 2021, shows that digital penetration grew by more than 250% over 2 years with the introduction of multiple phone parking providers so app parking now accounts for more than 55% of all parking transactions. This is a trend that I expect to see grow, as more authorities adopt the Open Market construct.
- 3G sunsetting will increase reliance on app-based transport services
The unprecedented growth of 5G, outpacing 3G and 4G uptake, represents the quickest generational rollout for the mobile industry. As 5G is setting new standards of hyperfast connectivity and its star is rising, 3G is fading into obsolescence, which will cause trickle-down effects that mark significant changes in the way we park.
Network providers will be retiring band services, and as this happens hardware will be affected. In parking, chip and pin services for payment reliant on 3G modem hardware will stop working. 3G sunsetting presents challenges for physical payment methods, and potentially costly upgrades to machines to stay connected. Many people are still unaware of these changes, as 79% of people have no idea that the 3G network is being phased out, according to a 2020 survey.
App-based solutions will remain unaffected by network alterations, as these services rely on device connectivity to mobile networks across 4G, 5G, or IVR for those paying via phone call. Apps circumvent these challenges and I predict they will be more attractive to Councils and operators in 2023.
- Digitalisation positively impacting transport strategy for Councils and operators
The main dimension of the impact of digitalisation is around the end-user experience, but the advent of technological solutions also provides useful back-end data. For Councils and operators, with increased digitalisation comes more data points and information about vehicle types, emissions, and dwell times. Armed with this information authorities can use this data to make informed decisions around environmental policies and wider parking controls to make our cities more liveable and more manageable.
Trends in the transport industry are part of a moving picture, and how much is changed in this space is dependent on investment and strategy. Forward-thinking Councils and operators have already seen the benefits of harnessing technology advancements, as well as data-driven insights from Mobility-as-a-Service providers.
Progression of a data strategy is planned for the Government, as over 90% of senior civil servants will be upskilled on digital and data essentials, with learning embedded into performance and development standards, as part of the ‘Transforming for a digital future‘ policy. In 2023, on a local level, I hope to see continued progression of digitalisation ambitions, which will have noticeable and important impacts on the ground level, for the drivers who can take advantage of new transport developments.
- There will be a shift from manual to automatic services in transport
Over the past 12 months, we’ve seen some great examples of automatic solutions for transport in the UK, with automatic number plate recognition technology playing a part in optimising parking payments. As adoption continues, more drivers will be able to benefit from touch-free solutions.
When travelling into a town or city centre, it’s often the process that motorists would locate a space, and pay for parking via an app. Should the motorist need more time, they can potentially top up their parking session via extending on the app. Collaboration between parking providers and operators means that camera technology can completely automate the process and charges are calculated separate to manual management.
Automatic payment facilitates touch-free entry and exit to parking facilities, and solutions are being trialled in the UK currently. The parking transaction starts and ends completely autonomously, bypassing pay machines. In 2023 we will see an expansion of these high-quality technology solutions for drivers, allowing for new and exciting levels of convenience for urban travellers.
Looking at the horizon
In 2023 I believe we’ll see great strides made toward Mobility-as-a-Service models for motorists, with digital channels enabling better flow in transport. There will be more elements of disposability when moving from A to B, and transport service providers will look at becoming holistic one-stop shops. The popularity of the likes of Uber and Lime attests to the fact that mindsets are already shifting towards service-based transport.
Within the microcosm of parking, providers are linking up mobility services for motorists using apps, and there will be scope to manage a journey in its entirety from one point of contact; mapping, location, payment, and charging services can be housed in one space. We’re also seeing app-based services create actionable data streams for Councils and operators to improve transport management in local areas. These benefits are ticks in the pro column for choosing apps, as they herald an age for more liveable towns and cities.
Electric buses are the World Cup winners? Investment in greener transport could be positive legacy of Qatar 2022
Notwithstanding the controversy surrounding the FIFA World Cup in Qatar, there are many things that make this event unique and unprecedented. One less remarked upon aspect of the tournament is the role of electric buses in getting fans to and from stadiums. Here, Roger Brereton, Head of Sales at bus steering parts manufacturer Pailton Engineering, argues that investment in greener buses could be a positive legacy of the tournament.
The 2022 FIFA World Cup will be a tournament of firsts. The first World Cup to be hosted by an Arab nation and the first World Cup to take place in the Middle East. The first World Cup to be held during the winter months. It is also the first World Cup claiming to be carbon neutral.
That claim, made by the tournament’s organisers, is certainly open to question. Some have questioned the sustainability credentials of the event and others have accused Doha of greenwashing. Regardless of where one stands on this controversial debate, there is no doubt that delivering this major sporting spectacle in a more sustainable way has been a key part of the agenda. There are surely lessons we can all learn from this experience.
A boost for buses
One area worth considering is the investment in public transport and electric buses specifically. An estimated 1.2 million football fans will descend on the small island state to witness the World Cup and they will be escorted to the eight stadiums via a fleet of buses that are integrated with the country’s metro system.
In preparation for this event, Qatar has extended its existing fleet of 1,000 buses to approximately 4,000 in total. As part of this investment, Chinese bus manufacturer Yutong has delivered 741 battery powered electric buses, giving Qatar one of the largest electric bus fleets in the world. Although electric buses were used during the 2008 Beijing Olympics, this will be the first time electric buses have been used to support public transport during a major global event on this scale.
In addition to the buses themselves, there has been a corresponding investment in infrastructure. The new bus depot in Lusail, which has capacity for 478 buses, entered the Guiness World Records as the world’s largest electric bus depot. It is the first of its kind in the region to rely on solar energy and includes 11,000 PV solar panels to generate 4MW of power every day.
This investment is not seen as a temporary indulgence but has been planned as part of a long-term agenda. The buses and the new infrastructure have been designed to be carefully integrated with the country’s metro system, home to one of the world’s fastest driverless trains which became operational in 2019. Yutong will also be investing further in Qatar by building a factory for manufacturing.
There is widespread agreement around the world about the need for greater investment in public transport and electric buses in particular. One of the potential barriers to electrification of bus fleets has always been the high start-up costs and the need for significant infrastructural changes. Major sporting events like the World Cup can potentially provide the impetus for a much needed shift toward greater investment in public transport.
While the World Cup itself may be short lived, it can be hoped that the legacy is more sustainable transport. Those of us interested in buses in other parts of the world will watch the football no doubt, but we will also be watching for what we might learn from this extra investment in e-mobility.
Pailton Engineering designs and manufacturers custom steering parts for heavy vehicles, included the bus and coach sector. Discover more at pailton.com