Micromobility: Unlocking a $300 Billion Industry

The Potential and Challenges of E-Scooters in Urban Transport

In comparison to traditional automobiles, e-scooters represent a more environmentally friendly, quieter, and cost-effective transportation option. They possess the capacity to positively influence both urban mobility and environmental sustainability.

Despite this promising potential, a significant portion of the urban populace views these devices as either recreational toys or potential safety risks.

Limited Investment in Micromobility

Venture capital investment in the micromobility sector remains relatively low. Since 2010, shared micromobility ventures have received a total of $9 billion in funding globally.

This figure sharply contrasts with the $72.3 billion secured by U.S. startups during the third quarter of the current year alone.

To facilitate a genuine shift towards sustainable urban environments, where low-carbon micromobility options are favored over private vehicles, establishing profitable business models is crucial.

The Shift Towards Securing Licenses

Initially, e-scooter companies focused on attracting riders by maximizing the number of scooters deployed. A strong physical presence was considered a key to success.

As cities began implementing regulations and issuing licenses, the emphasis of these operators transitioned to obtaining approvals from municipal authorities.

These licenses guarantee access to consumers and provide the stability necessary for long-term strategic planning.

Licenses and Investment Growth

Securing licenses also simplifies fundraising efforts for startups. Companies that successfully obtain licenses often experience a substantial increase in funding.

For example, in 2021, firms such as Tier, Voi, and Dott collectively raised $490 million.

Europe as a Testbed for Micromobility

This trend clearly indicates to other e-scooter operators that securing a foothold in cities is paramount for attracting investment and achieving growth.

Currently, this is particularly relevant in Europe, which boasts a more developed infrastructure and serves as a proving ground for micromobility transport and associated business models.

As the efficiency of micromobility for urban communities becomes increasingly evident, these practices are likely to extend to other regions, including the U.S., where cities are actively expanding their network of bicycle lanes.

Given projections that the global micromobility market will reach a value of $300 billion to $500 billion by 2030, the effort to establish a strong presence is certainly justified.

Beyond Licensing: The Need for Profitability

However, simply winning a tender is insufficient. Licensed operators must navigate a continuous cycle of competition.

They are required to satisfy the expectations of both end-users and investors, meaning they must achieve profitability while simultaneously delivering a superior product and user experience.

Challenges to Profitability

To date, the e-scooter sharing business has yet to demonstrate consistent profitability. Existing business models have significant potential for refinement.

A major concern is the high cost of charging and operational expenses, which can represent up to 60% of total costs. Even modest improvements in these areas would yield substantial benefits.

Addressing the Challenges of Micromobility Charging

The methods employed for charging micromobility vehicles are relatively limited across different companies. Currently, most operators rely on either manually collecting scooters for charging at a central location or physically exchanging depleted batteries for fully charged ones.

Both of these approaches necessitate significant manual labor. Consequently, several companies are now developing solutions designed to reduce these operational costs.

Gogoro, a Taiwanese e-scooter manufacturer, has pioneered battery swapping stations, effectively transferring the charging responsibility to the riders themselves. Currently, this system is compatible with only two e-scooter brands.

Similarly, Tier, a German operator, recently introduced the Tier Energy Network. This allows Tier riders to independently swap batteries using PowerBoxes installed at partner businesses. However, implementing a swapping system requires operators to maintain a stock of at least two batteries for each scooter in their fleet, and batteries represent the most substantial hardware expense.

Furthermore, requiring riders to alter their routes specifically to swap batteries at designated locations could negatively impact user experience and potentially restrict an operator’s customer base, a critical factor in a competitive market.

As micromobility demand grows, charging stations must accommodate a large volume of vehicles simultaneously. This will drive the need for a universal charging infrastructure. Kuhmute and PBSC Urban Solutions have begun to address this with universal chargers compatible with diverse e-mobility vehicles and brands.

However, many of these solutions utilize electric contact-based charging, limiting the number of vehicles that can be accommodated at any given time. Additionally, these stations are susceptible to contact oxidation within a few months and alter the urban environment.

A logical progression would be the development of a standardized charger capable of supporting a significantly larger parking capacity. However, this introduces the involvement of cities as crucial stakeholders.

Urban areas are already facing the challenge of converting land intended for residential development into parking spaces for cars. They will also need to allocate space for e-scooter charging, whether it be swapping stations or charging docks, both of which require above-ground infrastructure.

Solutions to this issue are emerging, as demonstrated in the electric car sector. WiTricity, a U.S.-based company, has created a wireless charging pad that charges vehicles over-the-air when parked above it.

This charger lacks any visible above-ground components, allowing it to function as a standard road or sidewalk. The absence of exposed parts also provides a degree of protection against vandalism.

Applying this technology to the e-scooter market could improve financial viability by reducing the need for extra batteries and the labor costs associated with swapping or plugging them in. Such standardization would benefit both consumers and micromobility companies.