The e-scooter paradox

In this article: As people persuaded to leave their car at home and use alternative transport methods, the e-scooter is blossoming technology, but is it just a fad destined to disappear as quickly as it’s appeared

There’s a quiet revolution taking place in our city centres, but depending on who you ask, it’s either an annoying fad industry or the future of urban transportation.

Cheaper than the bus, less sweaty than cycling and more convenient than walking, the electric scooter has become a useful addition to a widening range of transport options that is helping cities from Paris to Portland move its millions of residents.

Not only do these cities know they are woefully behind their air quality and global emissions targets, they also accept the role of the private car in dense urban areas is on borrowed time. A recent Science and Technology Select Committee report concluded that, “in the long term, widespread personal vehicle ownership does not appear to be compatible with significant decarbonisation.”

Scooting to freedom

For now, some cities are finding the smartphone-based scooter service a usefully cheap and user-friendly solution for its residents in the so-called ‘last mile’ conundrum. Simply download the app, point your phone at the scooter’s QR code to unlock and off you scoot with rent-by-the-minute freedom, often limited to 15mph. It’s this combination of seamless technology, renewed environmental consciousness and a willingness for customers to access a shared product without the burden of private ownership that has helped create an adoption curve that’s making investors salivate.

Electric scooters may be a giggle to ride, but they are no laughing matter. In 2018, emerging LA e-scooter rental business Bird was given a billion dollar valuation faster than Uber, AirBnB or Facebook and is today valued at $2.5bn. In September 2019, Silicon Valley-based rival Lime became the first e-scooter company to complete 100m rides since its launch two years ago and even carmakers are now circling the space. Ford has paid £100m for San Francisco start-up Spin in a bid to not become relegated to a future, solitary role of hardware provider.

“Most carmakers are still thinking about product but micromobility is about urban freedom,” explains Horace Dediu, business analyst and industry expert on this emerging landscape that includes the e-scooter. He describes micromobility as being intelligent, electric, lightweight and utility based, but also concedes that the industry is still evolving between shared and owned services, between products that feature handlebars, seats, covers and autonomy. There also remains some fundamentally different visions of how people should access the growing number of transport modes available to navigate cities, be that Uber’s ‘Amazon of the mobility experience’, to third-party aggregator platforms such as Citymapper.

A bumpy journey

It’s clear, however, that people are embracing this new urban freedom, picking up e-scooters and leaving them wherever. The problem for cities is that people are picking up e-scooters and leaving them wherever. A nascent industry, too much capital and a desire for first mover advantage has created some painful conversations between the scooter companies and the cities they inhabit.   

Beyond the uncomfortable images of over-supply witnessed in San Diego and Paris, there have been other issues with accidents, theft and products not robust enough for public life. All of which has encouraged tougher governmental regulation, which challenges unit cost and those hefty unicorn valuations.

With little in the way of competitive differentiation, the global expansion of Bird and Lime is also being thwarted by new European challengers including Dutch-based Dott, Barcelona-based Wind and Berlin-based Tier. Tier Mobility is a start-up working alongside Germany’s transport authorities and has grown to 10 million rides, adding 8 million in the last four months. “If you want to change for good, you have to partner with the cities,” concedes Tier’s CEO Lawrence Leuschner.

It’s clear that cities will not be able to support all of these players, so as the e-scooter market matures, we can expect to see some consolidation and renewed valuations.