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After Wild West start, scooter providers chase scale to survive

Source: Reuters

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.

WARY INSURERS

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.

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Preparing for the Surge: Meeting the MCS Requirements of Electric Trucks

John Granby, Director of eTruck & Van, EO Charging and Erik Kanerva, Sales Director at Kempower

Auto electrification is moving at a rapid pace, with electric vehicles (EVs) going from a passion project for early technology adopters to the mainstream – especially when you consider the need to electrify consumer and commercial vehicles ahead of the government’s 2035 Zero Emission Vehicle mandate.

Electrification is also starting to play a vital role in public policy and commercial plans, leading to vehicle availability and a variety of improvements and increasing interest among commercial fleets’ prospective customers. As a result, all of the main car and van manufacturers have a respectable EV offering, and the eBus industry is well on its way to proposing a similarly credible offering for citizens.

Heavy-duty vehicle electrification has progressed slowly, but the pace has picked up over the last year, with several of the major truck manufacturers testing completely electric heavy trucks that are now near-ready to enter the general market.

This is a critical shift in the move towards net zero, given that heavy commercial vehicles account for around 25% of CO2 emissions from road transport emissions in the EU and approximately 6% of the region’s overall emissions. It’s a similar situation in the US, where medium and heavy-duty trucks account for around 29% of total road transport emissions or approximately 7% of the country’s total but make up fewer than 5% of all vehicles on the road.

Having clear goals and objectives in place for fleet electrification will be vital to ensuring the transport sector is on track. For example, Scania’s goal is that 50% of all vehicles it sells annually by 2030 will be electric. Despite Scania being the slowest into the market with battery electric vehicles, other vehicle manufacturers are following the same target, with Volvo Trucks setting itself a target for 50% fully electric vehicles by 2030 and the same with Renault, for example.

Meeting this ambitious goal will require the appropriate charging infrastructure in place so customers have the confidence to invest in the large-scale electrification of their fleets. That is one of the reasons why charging system manufacturer Kempower expects the commercial vehicle DC charging market in Europe and North America to have a 37% compound annual growth rate until 2030.

Trucks require substantial battery packs to provide a similar range as traditional engines, and having the right infrastructure in place to keep them regularly charged is certainly a key factor to consider when electrifying truck fleets. According to the European Automobile Manufacturers’ Association (ACEA), trucks will require up to 279,000 charging outlets by 2030, with 84% located in fleet hubs. By 2030, buses will require up to 56,000 charging outlets, with fleet hubs accounting for 92% of the total.

The Charging Interface Initiative (CharIN) is a global organisation that has been working on a standard for the rapid charging of trucks for several years. CharIN developed the Megawatt Charging System (MCS) concept, which serves as the foundation for the ISO and IEC standards which govern the design, installation, and operation of truck fast charging infrastructures.

The MCS is intended to standardise the quick delivery of enormous amounts of charging power to vehicles and provide stronger communication, which minimises downtime caused by unsuccessful charging events.

Customers who drive commercial vehicles follow particular driving habits. By taking advantage of the required break time from the hours-of-service restrictions governing their drivers, customers can travel further each day thanks to the increased charge rate that MCS offers. Better electrification of commercial cars is made possible by legislation that mandates that drivers take rest breaks. As a result, shorter charging durations to accommodate these breaks are beneficial.

The MCS will operate at up to 3,000A and 1,25 KV at its final development stage, delivering up to 3,75 MW of power when charging. With the backing of a significant segment of the industry, MCS is founded on an international consensus on technical standards. An internationally recognised standard is essential to promote harmonised solutions that reduce costs and boost interoperability without sacrificing safety and uptime.

Trucks on the highway are a key focus of the MCS, not only depot pricing. Large truck units operating long-haul routes and some smaller rigid trucks operating cross-border short-haul deliveries—such as logistics organisations operating deliveries between the United Kingdom and continental Europe—pay particular attention to this issue.

Most MCS charging occurs while drivers take breaks from their routes, but some depots may have a single MCS charger on site to do a flash charge if a truck needs to be turned around quickly. In order to balance this unit’s demand against other chargers on site, load management is crucial because it will require a power supply of at least 1 MW+.

Fleet operators should look to consider incorporating MCS into their whole charging ecosystem and solutions, regardless of whether they are thinking about how electrification will affect their fleet of vehicles on the road or how their depots will operate.

Adopting cutting-edge energy management technology solutions will enable effective fleet electrification, particularly at depots. Investing in effective load management technologies will be critical to maximising existing grid infrastructure capacity while decreasing the need for additional investments in generation or distribution capacity.

Investing in and deploying effective energy management technologies is the key to a smoother, more efficient shift for commercial fleet operators. They are critical in lowering energy expenses, both economically and environmentally.

Energy management solutions for charging electric fleets will also help maximise existing grid capacity, reducing the need to invest in new generation or distribution capacity. This will be an essential factor for fleet managers to consider as eTruck fleets expand and other commercial vehicle fleets, such as buses, increase demands on infrastructure.

With unprecedented energy and investment going into electrification, 2024 looks to be a pivotal year for picking up the momentum of progress around MCS in the logistics sector. If done right, it will create a shift of optimism in the market to accelerate the electrification of commercial fleets and promises to positively impact other sectors, such as marine and aviation, contributing significantly to reducing carbon emissions.

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The role and responsibility of ID verification in the automotive industry

Author: Terry Slattery, CEO at IDScan

Like many, the automotive industry is currently navigating through the complexities of digitalization and the escalating challenge of identity fraud. As the industry shifts towards online sales, remote vehicle rentals, and the launch of ride-sharing platforms, they must ask a crucial question: How can the authenticity of customer identities be correctly verified? 

This is a real issue that needs to be tackled, with an estimated 10% of digital inquiries for car transactions flagged for potential fraud risks. Such threats expose dealerships and rental services to significant financial losses and safety risks, underscoring the urgent need for effective identity verification measures. 

With traditional methods of identity checks proving to be increasingly outdated, propelling the industry towards innovative measures could be the solution to greater levels of security and efficiency in the industry. 

Why AI matters – The crucial role of digital ID verification

The threat of fake IDs and fraudulent activities within the automotive industry isn’t just about financial repercussions, it extends to the safety of employees and customers, where a failure in identity verification can lead to severe consequences. For example, just last year, a woman used a fake ID and a modified driver’s licence to scam a dealership into letting her acquire a new car worth over $42,000. This was not the first of her many fraudulent activities record, but it served as a wake-up call for the dealership to start taking more severe safety measures.

Implementing advanced digital ID verification systems could be the way to mitigate these risks, shifting from traditional, often manual, verification methods towards newer technologies. These systems harness AI to compare identification documents against vast databases of authenticated templates, analyzing every detail from the document’s physical characteristics to hidden security features. Infrared and ultraviolet light scanning can detect the latter, such as holograms and watermarks, and a comprehensive library of ID templates to ensure each document adheres to state or jurisdictional standards.

Furthermore, digital enhancements like 2D barcode checks and face match technology with anti-spoofing measures can validate identities more accurately. By incorporating DMV data verification, dealerships can cross-reference customer details with official records, providing a robust, multi-layered approach to mitigate identity fraud and streamline the customer verification process. This level of security ensures that only legitimate users can access services, from taking a test drive at a dealership to renting a vehicle remotely through an app. 

The benefits of digital ID verification

Perhaps the biggest advantage of adopting digital ID verification is that it drastically reduces the incidence of identity fraud, providing a robust mechanism to catch fake IDs with up to 95% accuracy. This capability is crucial in an industry where the stakes involve high-value assets like vehicles. By ensuring that only verified customers can access services such as test drives and loan applications, dealerships significantly minimize their exposure to financial and reputational risks. 

These measures also automate the customer onboarding process. What once took minutes or hours can now be completed in a matter of seconds. The integration of these solutions allows for the quick and accurate transfer of verified data, facilitating smoother loan applications and dealership operations. 

By adopting digital ID verification, the automotive industry not only strengthens its defence against fraud but also enjoys more efficient and reliable customer verification processes, leading to increased customer satisfaction and improved operational workflow. The mere presence of digital verification technology also serves as a deterrent to potential fraudsters, promoting a more secure dealership environment and ensuring compliance with Red Flags Rule laws, which in turn guarantees that businesses have a solid system in place to detect and act on warning signs of identity theft effectively. 

How to implement digital ID verification

A successful implementation of digital ID verification relies on the solution’s ability to blend with the dealership’s operational framework without disrupting the workflow, connecting smoothly with dealership management systems (DMS) and customer relationship management (CRM) systems. This ensures data flows effectively between systems, enhancing efficiency.

It’s also crucial to educate the staff within the automotive industry, by offering training on the new system’s technical aspects and its significance in fraud prevention and regulatory compliance. This understanding reinforces digital ID verification as essential for dealership security and customer trust, aligning with federal KYC and privacy standards.

Viewing the integration of digital ID verification as an ongoing process rather than a one-time setup allows for continuous improvement and adaptation. Regular system evaluations, soliciting user feedback, and staying updated with technological advancements are critical for refining the verification process and ensuring that every interaction—be it a car purchase, a rental, or a ride-share—begins with the assurance of verified identity.

As the challenges of fake IDs and identity theft continue to rise, so should the security measures within the automotive industry. This is why the adoption of digital ID verification technologies will play a huge role towards safer, and more efficient transactions. By embracing these advanced technologies and making the effort to implement them accordingly, the automotive industry can navigate the complexities of identity verification with increased confidence. 

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Car cannibalism: What it is and 3 tips to avoid it

Mark Barclay, My Motor World

Car cannibalism has been on the rise now for several years — but what exactly is it, and what are the risks? More importantly, how can you ensure that your vehicles are protected? The good news is that there are ways to protect your car from thieves, and here My Motor World share a few of the best.

What is car cannibalism?

Car cannibalism refers to the crime of stripping a car for its parts without stealing the whole vehicle (though it may also be stolen in some cases). A lot of the time, the parts that are stolen are those most commonly needed to repair a car after a minor crash, such as bumpers, grills, lights, and fenders, or any other high-demand parts that thieves can sell to make a profit. Other times, thieves may steal to order, meaning they target vehicles with specific desirable parts or expensive add-ons with resale value. Because of this, every kind of car from pricey vehicles to those popular with young drivers are at risk.

How to avoid car cannibalism

The best way to protect your car from thieves is to keep it out of sight. But even if you have been targeted, there are still ways you can deter a theft in progress or potentially recover your stolen parts afterwards.

Park in a safe area

Always park your car in a safe area, even when parking for short durations. For long stays, private car parks and garages are the safest as they are usually locked and have CCTV or other security measures in place.  However, if you don’t have access to one of these, then a well-lit area with lots of footfall may be enough of a deterrent. Since many of the parts being stolen are from the front of the vehicle, it could be useful to park facing a wall where possible to make the theft more difficult. Always ensure that your vehicle is locked and take your keys with you — not only is this safer, but many car insurance premiums won’t pay out if you haven’t properly secured your car.

Mark your parts

It’s unlikely you’ll ever recover your parts if they are stolen but marking them can make it easier for the police to identify, which means you potentially could get your stolen parts back. In some cases, marked parts can be a deterrent if the thief notices the marking, as they’ll be more reluctant to steal a part that can be traced. People buying the parts may also realise they have been stolen if they’re marked, and if so, they may be more likely to contact the police. 

Use technology

It’s worth putting a camera in your vehicle such as a dashcam if you haven’t already, and a tracker can help you locate your car in the event that it is stolen. If you park in a driveway or just outside your home, a video camera on your property may catch the thieves in the act and prove useful to the police investigation. A security light that goes on when it senses movement can even be enough of a deterrent, and both of these options may be cheaper than replacing the stolen parts.

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