The on-demand scooter industry entered a new phase this year as investors and companies bet that the two-wheelers, at one time reserved for kids, may relieve traffic congestion and improve life in large cities.
Bird Rides earlier this month bought rival Scoot, not long after the other big player, Lime, raised $310 million from investors. Bird shows no sign of slowing — it’s reportedly raising a similar mount on its own. Ride-hailing giants Uber and Lyft got into scooters last year through acquisitions, signaling a frenzy in an industry that barely existed two years ago.
“It’s a serious industry,” Dillon Fitch, co-director of BicyclingPlus Research Collaborative at the University of California Davis Institute of Transportation Studies, told Karma. “This is a clear pathway to solving a major transportation problem in cities.”
This growth comes as cities try to cut the time commuters are stuck in traffic and make up for lost economic output. American drivers lost an average 97 hours in traffic last year, at a cost of $87 billion, transportation analytics firm INRIX said in its annual Global Traffic Scorecard of major cities.
That survey highlighted the appeal of scooters for cities: in New York, the last mile commute took an average seven minutes by car, far slower than human-powered transport.
Congestion “will continue to have serious consequences for national and local economies, businesses and citizens in the years to come,” Trevor Reed, transportation analyst at INRIX, said in comments accompanying the study. “We must invest in intelligent transportation systems to tackle our mobility challenges.”
Besides being cheap and energy-efficient alternatives, electric scooters and e-bikes are fun and, for some, nostalgic, Fitch said.
To others, they are a sidewalk hazard and efforts to ban them are cropping up. New York Governor Andrew M. Cuomo said yesterday he was concerned about them operating on crowded sidewalks, although they are expected to be legalized in the city. Many U.S. cities are establishing scooter policies and regulations. They may restrict who can operate them and under what circumstances, including how fast they go and where.
Actions in Paris, where about a dozen scooter companies operate, may foreshadow what’s to come. Scooters are banned from sidewalks, and officials are weighing a 12 mph speed limit. Bird and Lime models top out at about 15 mph.
UC’s Fitch said that the industry’s growth also likely will depend on cities’ efforts to connect micro-mobility programs to their public transportation infrastructure. Scooters have proven especially useful for last-mile commuting that connects homes and workplaces to train and bus stops. This may involve the creation of an app that enables consumers to pay for micro mobility and public transportation options in one swoop, like a transfer pass.
About 10 companies now offer on-demand scooter programs in the U.S., with Santa Monica-based Bird and San Francisco-based Lime vying to be the biggest. Combined, they cover more than 100 U.S. metropolitan areas and university towns, sometimes overlapping. Bird has received $415 million in funding, while Lime’s latest infusion — led by Andreessen Horowitz, Fidelity Investments and Bain Capital Ventures — increased its total to $765 million.
Fitch said he believes those two companies are likely to control the most market share, although he’s also watching Uber and Lyft. Last April, Uber acquired Jump Bikes, a New York-based shared-biking provider, for a reported $200 million. Lyft joined the fray with its own $200-plus million purchase of Motivate, which runs New York’s Citi Bike services, and a scooter program. “Those four companies are going to drive the space,” Fitch said.
Bird’s deal for Scoot for a reported $25 million gave the company a small but important win against the other three companies, particularly against Lime. Last August, Scoot and Skip, a smaller competitor, beat out Bird, Lime and a half-dozen other scooter providers for permits to operate in San Francisco.
Scoot, which has raised about $47 million, has 625 dock-less scooters in San Francisco. That is in addition to its fleet of mopeds that have racked up almost seven million miles over the company’s eight-year history.
The Bird-Scoot deal marked an advance in the industry because it involved one “micro-mobility company doing the purchasing rather than being purchased by a larger company that made its money doing something else,” said Kevin Fang, a Sonoma State University assistant professor who tracks micro-mobility trends.”
Bird and Lime earlier tried to enter San Francisco market with the same guerrilla tactics they successfully employed in Atlanta, Chicago, Seattle, Los Angeles and other cities, unloading scooters in different neighborhoods with little or any warning. But when residents filed more than 600 complaints that discarded devices were cluttering the sidewalks and careless driving had created a safety issue, the San Francisco Transportation Authority (SFTA) banned the scooters’ usage.
In an analysis of the permit applications, the SFTA graded Scoot higher than Bird or Lime in four categories related to safety and parking etiquette. The agency cited Scoot’s “commitment to safety,” which included mandatory instructional videos, helmets with rentals and free personal training. Bird and Lime scored “poor” or “fair” in these areas but Scoot “strong.”
In a statement shared with Karma, SFTA spokesperson Paul Rose said that it had “approved the continued use of the permit based on a review of the request and on their assurances to meet the goals of (a) Scooter Share Pilot.”
Bird referred Karma to a press release announcing the Scoot acquisition. Lime sent an automated response to queries.
The Importance of Safety
Regina Clewlow, the co-founder of transportation software provider Populus, wrote in an email to Karma that she believes scooter providers that make design improvements ensuring their products are safer, easier to operate and adaptable will have the best prospects. “Companies that demonstrate they are good citizens will be favored in a market where cities hold so many of the cards,” she said.
Fitch foresees companies introducing hybrid devices that combine the small-size portability of scooters and lower-center of gravity of e-Bikes. A recent model he saw offered riders both options. “There is going to be a movement to the sit-down style, even though standup is all the rage,” Fitch said.