A Rocky Road Ahead?
2.5 minute read
Those darn s@*&t$*?S!
There’s a topic of debate that is currently dominating the dinner tables and sparking passionate opposing positions. You’ve probably noticed their invasion of the streets in your city. Or seen their “nests” on the sidewalks. Yep, we’re talking about electric scooters. Some people see them as a solution for urban mobility. Others view them as "urban litter." With such a rocky market and public opinion what does the future hold for these Silicon Valley brainchildren that seemed to have appeared overnight and multiplied within the past year?
In considering the future, we were curious behind the motivations of Bird and Lime, the main players in the electronic scooter (e-scooter) game. According to Bird’s website, they “share a mission with cities to reduce traffic congestion and carbon emissions by providing people with a safe, affordable, and environmentally friendly alternative to cars.” Lime has similar sentiments on their website: “…all communities deserve access to smart, affordable mobility. We aim to reduce dependence on personal automobiles for short distance transportation and leave future generations with a cleaner, healthier planet.” In short, their goals are to be the answer to the “first and last mile” – the short distance between commuters’ homes and workplaces and larger transportation hubs, such as bus terminals or subway stations.
Those are their public goals. But what about behind the curtain—profitability. So far, neither Bird nor Lime have been able to get out of the red. The scooters aren’t cheap; each one costs $375-$550 to produce. At the current fare rates, they’d require about 115 days in operation just to break even. The problem is that the lifespan of each scooter is limited—less than 3 months—due to low durability, vandalism, and theft.
Nevertheless company valuations are still high, with Bird at $2 billion and Lime valued at $1.1 billion. Investors continue to hand out the dough, betting on future profits. Much like the faith they put in Twitter, a company valued at $25 billion that after 13 years in business just figured out how to turn a profit.
There’s also the safety hurdle that e-scooter companies must overcome, along with the corresponding policies enacted by their target cities. The barrier for rider qualification is low and so is the policing of rider behavior, which combined, leads to a high rate of accidents. Lime has made attempts to address safety issues head-on, with their “Respect The Ride Pledge” and a distribution of 250,000 free helmets. Will it be enough?
The reaction of cities has been mixed. Nashville and NYC have outright banned the scooters, while others, like Atlanta, have passed policies that restrict riders from riding on sidewalks and dictate where they should be parked.
It will be interesting in the coming years to see how the electric scooter companies pivot to move towards profitability. What will also be interesting is how municipalities will react to these micro-mobility vehicles. How will their policies look? Will they adapt with new infrastructure?
What do you think? Are scooters in the fast lane to profit-town or will they take a wrong turn to the fads of yesteryear?