E-Scooter Sharing in Germany–not yet a sustainable business
- economical, environmental and social outcome of e-scooter expansion pending
Hi, I am Philipp, Investment Manager in the Industrial Tech team at IBB Bet. Besides new industry topics, energy, IoT, logistics, robotics, we have been active in the mobility for quite a while. This article is for you, if you are interested in future urban mobility concepts, want to learn about the latest developments in Germany and think that there could be other sharing concepts besides E-Scooter Sharing (e.g. E-Moped Sharing) out there with huge development potentials.
Shared Mobility — Why should I care about this? Is it only a temporary hype made by some mobility hipsters? Perhaps — but there are good reasons you should have a look into this topic:
- Massive market interest from strategic players and high volume of investments
- Wide distribution in cities all over the world
- According to various surveys (e.g. UN), in 2050 approx. 70% of the worldwide population will live in megacities and individual mobility in these areas will be a challenge
- Cities worldwide are faced with the massive challenges of climate change and the task to e.g. reduce CO2 emissions and dust pollution
If you attempted to travel from Hamburg to Berlin in the middle of the 19th century, the 300 km journey would have taken approx. 6.5 hours. Now you could say that’s a good thing, because my Netflix account will finally be worth the subscription fee. But over the years travel times have decreased — in 1914 people travelled that same distance in close to half the time. Today the ICE (highspeed train) needs 102 minutes (if it’s actually in service ;) and a flight takes 54 min. Maybe, in a few years Elon Musk will “shoot“ us through hyperloop tunnels in 20 min flat. Long story short: Mobility has sped up — as well as our desire to go from A to B as quickly and conveniently as possible.
Now the next trend seems to be micro mobility. I will use the following definition: Electrically powered or human powered sub 50 kg vehicles for urban transport mostly to drive distances between 0–4 km in a free-floating sharing use case.
For a couple of months now there have been various new mobility offerings in European and German cities, most notably: E-Scooters. But is this kind of vehicle really new? — I don’t think so. Even 100 years ago everybody from the upper class in the US and Europe was talking about motorised (kick) scooters. The 30 km/h fast, rattling scooters were used by postmen, gangsters, new money and suffragettes as symbol of individual freedom. One of the most popular scooter models was suitably powered by a single-cylinder engine developed by an inventor Joseph F. of German origin. Merkel, a man with the same last name like our current chancellor Angela Merkel, who approved the agreement for the introduction of e-scooter sharing all over the country earlier this year — history can be funny sometimes.
There are other mobility sharing concepts that have already been established or tested over the years. These can be categorised as micro mobility (e-scooters, bikes/e-bikes), urban mobility (e-mopeds, ride hailing, van pooling, car sharing), short-haul travel (e.g. air taxis, buses, hyperloop) and long-haul travel (e.g. e-planes). A more detailed overview of the different mobility concepts and examples for leading start-ups in that space can be found below.
Focusing on micro mobility, the market environment has been developing rapidly and in an agile fashion over the last years and months. 6 major e-scooter providers (Lime, Bird, Jump, Voi, Circ and Tier) are currently active in Germany. Besides the usual sharing city suspects, like Berlin, Munich, Hamburg, smaller cities with populations under 200k inhabitants are also being approached. In the US alone there are more than 20 e-scooter sharing companies in the market, some of them already expanded or plan to expand to Europe/Germany.
I think most people ask themselves how sustainable micro mobility sharing approaches can be?
Some positive aspects come to mind:
- Affordable mobility alternative
- Electrified micro mobility vehicles can help decrease the dependence on combustion engines if they indeed replace them and, e.g., reduce CO2 emissions and/or reduce traffic jams and noise pollution
- Driving pleasure for stressed city dwellers
On the other side, there are different experts from the industry that draw a negative picture after the first practical experiences in Germany. Of course, when it comes to e-scooters it’s too early to make a real judgement, because the available data for Germany is not yet robust, because of their short usage period here.
The pricing models of all players are very similar with a 1 euro booking fee and per minute prices between 15 and 25 cents. First results from empirical studies show that the average route length is between 1.8 and 2.8 km. For a typical ride you have to pay between 4 and 5 euros — expensive in my opinion. If you use other sharing options like e-moped sharing or car sharing, prices are cheaper, sometimes close to half the price. And now dynamic pricing is increasingly seen in various cities. The following statistics show a price comparison for e-scooter, bike/e-bike, e-moped and car sharing.
First KPIs for the movements of the e-scooter per day show values of 4–6, whereby it is not clear if that’s all paid rides or these amounts also include movements for battery swap and/or maintenance reasons.
Other voices see the e-scooter revolution even more critical regarding the environmental impact: The WiWo (German Business Publication) wrote that e-scooters will not cause energy savings and will not impact the climate footprint positively, but rather the opposite and will not lead to significantly lower usage of combustion engines at all. Especially the energy consumption and CO2 emissions for the production of e-scooter batteries in combination with the short usage period (3–4 months) is problematic. The authors see a trend in that people who walk or use a normal bike will be inclined to use e-scooters…bad news for the climate. E-scooters are seen as a ”silly toy“ in contrast to bigger two wheelers (like e-mopeds) where you have the option to drive larger distances at higher speed. Andreas Knie, a traffic researcher from InnoZ, sees the e-moped as the ideal vehicle for sharing use cases closing the gap between bicycles and cars.
A study published by iop science (link to the full text) states: “This study clearly demonstrates that there is the potential for e-scooters to increase life-cycle emissions relative to the transportation modes that they displace.“ Even more interesting are the results from the comparison with other already established sharing/mobility options, where the negative global warming impact by e-scooters, considering the whole life-cycle impact, exceeds significantly the impact of bikes/e-bikes, buses and e-mopeds.
An aspect often discussed in this regard is road safety. Pot holes and cobblestones are the natural enemy of any e-scooter driver and the lack of mandatory helmets is causing beads of sweat to form on the foreheads of some road safety researchers. There is a wide spread mindset that e-scooters are seen as a fun lifestyle product and not as actual motorised vehicles. In general, there is a massive need to build appropriate infrastructure by the local authorities and provide incentives that monster-truck-like vehicles (e.g. SUVs) are not the right choice for future urban mobility.
The approaches regarding battery swapping differ from company to company. Lime, for example, tries to outsource the battery exchange activities to a network of freelance “juicers” who collect the e-scooters, charge the batteries in their apartments and deliver them back to a defined business area. There is a risk of extending the group of precariously employed people if extrapolate this to a bigger scale.
Light at the end of the tunnel
But there is light on the horizon. The municipalities and sharing companies agreed on a framework to make the sharing service more compatible.
The example in the US shows a trend to limit the number of free-floating e-scooter providers within the cities. In San Francisco only a handful of 11 providers received a licence to operate in the city.
And there is other news from California that is worth our attention. The so-called bill AB5 will require businesses to hire workers as employees, not as independent contractors, with some exceptions. This will give hundreds of thousands of Californian workers basic labour rights for the first time. This could affect players like Lyft, Uber and DoorDash but might help make the sharing businesses more sustainable socially.
Regarding financial sustainability, it’s hard to make long-lasting predictions. Of course, the number of financing rounds are high and valuations have fantastical dimensions, but all providers have to prove that they can be sustainable financially in the long term.
The big challenge for all shared mobility operators is not only to provide mobility alternatives in a certain asset class, but also to provide as many mobility options as possible as a service to their customer group and to cover a broader range of distances and use cases.
From meals to wheels
Uber for example is testing a subscription service that combines rides, eats, e-scooters, bikes/e-bikes. The subscription costs $24.99 per month in San Francisco and Chicago, in other cities they are experimenting with other price models, like discounts on every Uber ride, free eats delivery and free e-scooters, bikes/e-bikes rides. The goal is to establish Uber as the go-to option for your everyday needs. Another big player, Lyft, followed with a similar product called All-Access.
Because there is no real customer USP within the micro mobility sector and a lot of competitors in the market, brand loyalty and also relevant product differentiation is the key to win the billion-dollar funding race as the number one mobility app. Additionally the development of own hardware assets could also be a promising option.
The big OEMs are also jumping on the e-scooter trend and have announced their own hardware models. Mercedes Benz announced its e-scooter for 2020. BMW is going live with its X2City, while Volkswagen looks to the Cityskater and Streetmate as their answer for last mile mobility. AUDI presented the Audi e-tron scooter, a foldable combination of an e-scooter and a skateboard. The scooter is controlled by body weight transfer and gives the driver the Tony- Hawk-pro-skater feeling some of us know from childhood. The Audi project manager responsible for the product is promising “flow-feeling“ and “asphalt carving“ — Trendy!
Segway-Ninebot the leading producer of e-scooters is one step ahead and filed patents on self-driving models. Surprisingly the first use case is not to bring drunk beer tent guests safely back home. But it will offer an alternative to the barely sustainable approach of juicers or service trips with combustion engine trucks to charge the e-scooter fleet. So, don’t be surprised if a „ghost e-scooter“ overtakes you at highspeed in the future!
But if we can trust an FAZ article, e-scooters are already an old hat. The future belongs to a new generation of textile shorts with an integrated battery to support the person wearing them while walking and running. Maybe in the next years pedestrians, oppressed by cars, bicycles and e-bikes will get their autonomy back by sprinting the last mile in their motorised underwear to get to their next appointment. ;)
E-scooters seems to have arrived in Germany — they still have to prove if they really are an useful and sustainable mobility alternative. Other asset classes in the slipstream, like e-mopeds seem to be more attractive when it comes to really closing the gap in mobility needs (between bikes and cars). And then regarding sustainability aspects, e.g. less global warming impact, already established and thoughtful partnerships with cities and cheaper customer prices, e-mopeds are seen to be the more reasonable option at the moment. But also in this asset class, operational excellence is key and only those players with competitive cost structures and business models will be successful in the long term. In my opinion in the next months we will see more collaborations and consolidations like those already announced:
- Between Uber (ridesharing) and Cityscoot (e-moped sharing)
- Free Now (taxi app, car sharing) initiative to integrate e-scooter offerings (Hive and others)
- Whim (public transport, bike- and car sharing, taxi) collaboration with Mitsubishi and BP
- First speculations about mergers from e-scooter players
- News from Coup to end their sharing offerings cause of cost reasons and changed strategical focus from 100% shareholder Bosch
Let’s see, the next months and years will give us more clarity — but one thing is sure, the race to become the most relevant mobility as a service provider in Europe and several other regions worldwide is on and running at full speed!
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