Automakers Keep Mobility Eye on eScooter Revolution

The streets of Los Angeles and many other cities are literally littered with micromobility options including electric scooters, e-bicycles and more.

Now a city start-up has joined the pack and is betting that people would rather take a spin on their Wheels as opposed to the other options. Wheels, the newest electric entrant to sidewalk travel, is a hybrid between the electric scooters and bicycles. The company was founded by the entrepreneurs behind dog-walking service Wag and faces challenges in its bid to be the solution in a crowded field for easing last-mile congestion. The company declined the opportunity to comment for this article.

The City of Los Angeles classifies the Wheels vehicle as an e-bike; it features a seat and Bluetooth speaker to offer a different riding experience than its e-rivals. Still the mobility firm faces many of the same problems plaguing the nascent industry. LA city officials say they operate the largest micromobility program in the US: eight companies have received permits for some 36,000 e-scooters and e-bikes to operate on the city’s 7,500 miles of streets. An LA Department of Transit spokesperson tells TU-Automotive that it handles about 12 complaints daily; “the vast majority for improper parking”. That includes blocking wheelchair ramps and being left laying on its side on the street or on a neighborhood lawn.

It was this invasion of Birds and other companies that led some cities to pass a moratorium on the conveyances until regulations could catch up. Some city officials have expressed a feeling of being ambushed when the e-scooters and e-bikes just show up on their streets. Other complaints in LA and elsewhere include safety concerns for riders as helmets are rarely worn in many US cities and there have been numerous serious injuries including fatalities. Brakes and other maintenance issues have been reported as the vehicles are not weather-proof and then there is vandalism – scooters have famously ended up in the Pacific Ocean and hanging from street signs.

Horace Dediu, an analyst with Asymco, found vandalism rates are much higher for micromobility vehicles, and scooters in particular, than for bicycles. He said: “Non-users are more contemptuous of them than bicycles or mopeds. They’re not easy on the eye and there’s something that irritates them and causes people to behave badly.”

Another major challenge is the amount of competition competing for a rider’s last mile in the micro mobility business. “I don’t’ know how 45, or even six companies will make it,” Dediu says, adding, “Is there enough demand for all these companies in this space? Do consumers need to have accounts with all of them?” That certainly seems unwieldy, although Dediu offers that riders could potentially use a single tap card that works across platforms with local city transit, ride share, and micro mobility vehicles.

Still, he recognizes that the vast number of firms trying to establish an early position in the industry is a hurdle: “It makes it hard for cities. That many more contracts and one bad actor can make it harder for companies doing well to make sure they’re keeping their scooters standing up.” He added, “We can’t put our heads in the sand, how do we proactively react to people being annoyed by (e-scooters and e-bikes) on the sidewalk? How do we get more space in the roadway?”

According to a report Dediu’s firm co-authored with Barclays Investment Sciences team, micro mobility vehicles including e-scooters, e-bikes, e-velomobiles and e-mopeds are going to demand a lot more right of way on city streets. Their research found that e-scooter upstarts Bird and Lime left ride-hailing giants Uber and Lyft in their dust when comparing uptake in their respective first years of operating.

Money changes everything

The Barclays report found the micromobility market may reach 1.1 trillion global passenger miles by the middle of 2020. That would create an $800Bn market. Interestingly, easy access to funds may be a paradoxical hurdle for micromobility firms. Venture capital firms are flooding the market trying to capture first mover advantages but this has also caused some backlash as marketing and servicing, not to mention regulation, of the vehicles have not kept pace with deployment.

“These companies are bound by capital that’s so impatient,” asserts Dediu. “The good is you get an enormous growth rate, 10 billion rides per year and 10 ‘X’ car-sharing. Bird and Lime have gone much faster accumulating rides more than the car guys. That’s a fantastic, huge growth rate and trajectory but, at the same time, you may run into a wall if you don’t do it sustainably.”

In other words, dropping off scores of scooters without first talking with city officials has proven problematic, leading some municipalities to ban the vehicles while sorting out regulations. This approach has left the companies without a voice, so the analyst recommends the firms talk first with city officials then deploy scooters or ebikes.

It also remains to be seen if local governments will tax micromobility vehicles which are using public rights of way, to create special lanes or expand current bicycle pathways and keep roads smooth and sidewalks repaired (the vehicles are easily spotted on the sidewalks even though they are generally designed and designated for street use only).

As the uptake and revenue potential grow, start-ups are being joined in the race by transportation incumbents including automakers and Tier 1 manufacturers. Dediu points to Ford’s acquisition of Spin and General Motors’ ebike in Europe, saying: “The automotive guys are paying close attention… rather than fighting micromobility they want to join it. It’s validation to see the automakers involved.”

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