Director, Smart Mobility Initiatives
Calendar year 2019 raised a lot of questions about the profitability, and therefore sustainability, of many shared-use and micromobility business models. Uber and Lyft both saw their stock prices drop from their initial public offering price by more than 27 and 38 percent, respectively, at the time this posting was written. The pathway to profitability for privately held electric scooter-sharing businesses was put to question numerous times as well, and European electric scooter-sharing business Coup, owned by Bosch, announced it was shuttering its operations due to an extremely competitive market and other economic reasons.
Is now the time for shared mobility users to panic? I don’t believe so. However, I do believe the landscape will see some significant changes in 2020. Here are a few of my predictions:
1. Ride-sharing services like Uber and Lyft will diversify their business models while leveraging their current assets.
However, these businesses don’t appear to be poised to profit from their core ride-sharing operations until the dawn of autonomous vehicles. Since autonomous vehicles are still a long way out, these companies are being forced to identify new ways to increase the utilization of existing assets (e.g., their drivers and software platform) and identify potentially smaller but more profitable market segments. I expect these types of services to grow in 2020 as ride-sharing services look to identify those more profitable markets and services.
2. More cities and communities will enact policies to control the use of e-scooters.
In June 2019, the mayor of Nashville, Tennessee, announced an e-scooter ban. He stated, “We have seen the public safety and accessibility costs that these devices inflict, and it is not fair to our residents for this to continue.” In September 2019, France announced a sidewalk ban for e-scooters. In November 2019, Singapore announced a sidewalk ban for e-scooters that could become an all-out ban in 2020. In fact, not even 24 hours before this blog was written, the San Diego City Council voted to ban electric scooters from boardwalks in their city. I believe more cities will follow suit in 2020 and enact policies to control where e-scooters can be utilized in their communities.
3. Charging hubs and docking stations for micromobility will see significant growth.
I’m not sure any urban resident or beach visitor hates anything more than trying to navigate a litter of fallen e-scooters. Why can’t those e-scooters be neat and tidy like the plethora of docked bike-sharing models we see in cities? The only real argument would be the convenience of riding right up to the front door of your destination instead of being limited to the location of docking stations. However, I believe that convenience for one person is outweighed by the inconvenience for everyone else when sidewalks are cluttered and potentially unsafe. Docking stations have already been shown to work well and cities understand how to deploy them. Furthermore, the inclusion of charging infrastructure could go a long way to lowering the operating cost for businesses like Bird and Lime and maybe even make them profitable.
4. Shared-use and micromobility businesses will become more consolidated.
The highly competitive market has already led to the shuttering of one respected e-moped business in 2019. I believe this is just the beginning and that 2020 will see several more businesses either become acquired by other companies or go out of business altogether. High operating costs associated with creating, updating, and maintaining the software platforms and vehicles (e.g., recharging the e-scooters) that enable these shared-use options make profitability more challenging. Therefore, increasing market share, or volume, is one way to leverage those costs and create a potential pathway to profitability. However, I believe there is one exception to “bigger is better” for profitability, which leads to my fifth prediction . . .
5. 2020 will see the growth of small-scale independent shared-use owner/operators.
I already mentioned that established platform operators (e.g., Uber, Lyft, Bird, Lime, etc.) will need to increase volume in order to create a more viable pathway to profitability. I also believe companies like Toro will enable aspiring entrepreneurs to launch their own car rental businesses. Those independents will be able to purchase a small fleet of vehicles and team with organizations like Greenspot EV Charging, which signs land contracts with local municipalities to install charging infrastructure and make it available for carsharing and the public. Where larger corporations like ReachNow, which is now shut down, have failed, there will be opportunity for small independent operators to not only fill the gap but profit from lower overhead costs.