3 November, 2020
I am collaborating with fluctuo for a set of articles to analyze and explain mobility phenomenons. Episode #6: trying to explain some share mobility failures. For once, we will go beyond MICROmobility.
There is a pressing need to tackle issues like congestion, air, and noise pollution, and smarter use of public space in all the major cities worldwide. Shared-mobility services are part of the solution, especially in these times of pandemics, when city-dwellers are reluctant to use public transports and are deterred from using private cars.
So, in theory, all lights should be green for the shared mobility industry. But the reality is more complex as launching and operating a mobility service poses many challenges. Let’s review some recent failures to understand why things don’t always go as planned.
On the rise
Whatever the mode you consider, shared mobility services are on the rise.
The car-sharing boom happened in the 2010’ with exponential growth in most western countries. The market more than doubled between 2016 and 2019, from 1,500 cities across 33 countries to 3,128 cities across 59 countries! But the success of free-floating options is moderate with around 5% of the total figures. Moscow, the car-sharing capital of the world, has 6 active operators offering access to more than 30,000 vehicles (10,000 for Yandex alone).
If the moped-sharing industry figures are less impressive due to its more recent development, its evolution is nonetheless impressive: +164% in 2019 and +44% in 2020, to reach a total of 95,000 vehicles worldwide. In 2019, services were available in 88 cities across 21 countries, with a stronger presence in Southern Europe (France, Italy, and Spain) and Asia (India, Taiwan) where mopeds are already an integral part of the transportation ecosystem. Bounce (India) is the world champion with more than 20,000 mopeds, while Acciona leads in Europe with around 10,000 vehicles.
Finding the global figures for bike and e-bike sharing is a real challenge, due to the ups & downs of Chinese operators. During the free-floating craze of 2018, there were 18 M. bikes available worldwide across 1,600 programs. After the Chinese companies (ofo, Mobike) scale back and exited most cities to refocus on the Chinese market, the numbers went down, but bikes are still by far the most used shared vehicle. 1,997 services are currently in operation with close to 9.5M bikes according to the Meddin Bike-sharing World Map.
E-scooters, the most recent addition to the micromobility landscape, are following the same trend. Launched in late 2017 by Bird in Santa Monica, e-scooter sharing services saw the fastest growth of all shared mobility services. Taking the example of the USA, the number of trips with shared e-scooter grew from a few thousand in 2017 to 85 M. in 2018 and almost 112 M. in 2019!
So, is all for the best, in the best of all possible worlds? Wait a minute, things are not that simple. In fact, shared-mobility operators are still looking for the silver bullet.
How do you operate?
Let’s have a look at Bolloré BlueCar division, who launched its first service Autolib’ in Paris in 2012. To operate its Blue cars, Bolloré bet on the same model as its bike-share cousin Vélib’, with dedicated parking spaces and charging infrastructure. After a swift international expansion until 2017, the descent into hell started in 2018 when Paris DoT chose to terminate the expensive Autolib’ contract, soon followed by BlueIndy (Indianapolis) in 2019, and BlueCity (City of London), BlueCub (Bordeaux), and BlueLy (Lyon) in 2020 while BlueLA was acquired by Blink the same year. The operator struggled to reach profitability in every market, partly due to its operational model. First, “an infrastructure set up that is ridiculously expensive and overkill (registration kiosks)”, according to shared mobility expert Sandra Philips. Second, as with docked bike-share, a big challenge lies in the ability to maintain vehicles and docks availability. But with a charging time of 8 hours for the Bluecar, and the complexity to re-balance cars across stations, Bolloré had been unable to achieve it and eventually decided to pull the plug.
To allow smooth operations, you first need a good vehicle: for shared-usage, that means sturdy, weather, and vandal-proof. When Gobee.bike launched in Paris in 2017, it used the cheapest bikes ever, not checking a single requirement: apparent cables, breakable wheels, hackable lock… Facing major vandalism issues in France, Italy, or Belgium, and therefore, struggling to maintain its fleet, the company closed all of its European services… after only 4 months of operations.
It is just business
Sometimes companies are just a pawn on the business chessboard. As an immature industry, e-scooter sharing is the place of multiple acquisitions. US operator Bird acquired 2 competitors in 2019: California based scooter & moped operator Scoot then German scooter operator Circ.
If most Circ services have been incorporated under Bird’s operation (with branding specificities in cities where Circ won permits such as Marseille), the story ended more abruptly for Scoot. Bird has been the first operator to announce massive lay-offs in March 2020 due to the COVID crisis, and the sad news was soon followed by another: the closure of Scoot’s services in Barcelona (mopeds and e-bikes) and Santiago de Chile (e-scooters and e-bikes). Bird chose to maintain Scoot’s activity in San Francisco only, a smart move to remain in one of the most strategic markets in the US.
Cities’ market analysis is another key point to the success for shared mobility services. Following successful launches in Paris, Nice and Milan, the e-moped operator Cityscoot chose to launch in Rome (Italy) in June 2019. In a quite competitive market with the presence of the European leaders eCooltra and Acciona, the French company did not manage to reach high enough ridership after the COVID lockdown to ensure profitability. It simply chose to exit the city and move its fleet to expand the service in Milan.
It is not the first shared mobility service closure in Rome: Eni in 2017 (moped-sharing), O’Bike in 2018 (bike-sharing), and Share’n Go in 2020 (car-sharing). The latest is a good example of a bad business deal: created in 2015, the company quickly expanded across the country, but accumulated debts. In need of investments, the company was sold in 2019 to a Dutch businessman. But behind the news of a pause of the services in Milan and Rome was hidden an increasingly bad economical situation, leading to unpaid salaries and an eviction from the Rome HQ. The Dutch businessman is now charged for money laundering…
A new relationship with cities
Since 2017 and the arrival of free-floating bike-share, then scooter-share, in Western cities, the possibility for authorities to get “free” shared mobility services totally changed the dynamic of the relationship with operators. Cities are now pulling the strings and finding ways of supervising and regulating the private mobility cities under their jurisdiction.
Some chose to create ultra-competition by launching RFPs that select way too many operators: Barcelona initially selected 21 moped-sharing and 10 bike-sharing operators, Madrid 18 scooter-sharing, and 6 bike-sharing ones, and Copenhagen 11 scooter-share ones. Due to the high level of competition, many companies are eventually not willing to take a chance while others try their best to survive with small fleets that do not allow to reach break-even nor to provide an efficient service.
The fees for public space occupation imposed by local authorities can also be part of the problem. Amounts vary between cities (US$75 per scooter in San Francisco / €20 per bike, €50€ per scooter, €60 per mopeds in Paris / NZ$86 for e-scooters in Christchurch) These fees have led some operators to give up on cities where the fees were too high. When Coup, the German moped operator, chose to stop its service in Berlin, Madrid and Paris after a business decision of its parent company Bosch — highlighting deeper management issues — the GM France Maureen Houel mentioned that “the public space occupation fee was definitely not good for their business model: 60 to 72€ per moped & per year depending on the fleet size. The amount was substantial […] It is quite contradictory to encourage the development of shared electric mobility on the one hand while being afraid of free-floating on the other”.
From the choice of vehicles that need to meet vandal-proof or easy battery charging requirements, to the way of charging and dispatching vehicles, the free-floating model is currently evolving at high speed to reach profitability.
Acquisitions, mergers or bankruptcies are another sign of an industry that is still in its early ages and requires consolidation to reach maturity. Free-floating changes the way cities and operators are partnering. Again, selection processes (tenders, RFPs) are evolving fast, along with regulations on parking rules, fleet caps or fees.