Shared mobility services: “Battle Royale” in Barcelona
17 March, 2020
I am glad to collaborate with fluctuo for a set of articles to analyse and explain mobility phenomenons highlighted by their products. Episode #3: the situation of shared micromobility services in Barcelona.
The dense, touristic and sunny capital of Catalonia has a huge potential for shared mobility. In 2007, it launched Bicing, one of the most successful dock-based bike-sharing services in Europe.
From 2016 onwards, as in most major European cities, multiple free-floating services have been launched by local companies (like eCooltra and Yego) or international operators (like Donkey Republic and Scoot, among others).
For the last 3 years, the city council of Barcelona has been trying to regulate these services to make sure their development was not compromising the Urban Mobility Plan (PMU) it has adopted.
In August 2019, it launched a call for applications for shared micromobility services. But now, as it is about to grant up to 30 operating licenses, operators are doing the math and the prospects are bleak.
An inventory of operators and vehicles available in Barcelona
In February 2020, the shared micromobility offer is substantial. Seven companies are operating a total of 2,300 bikes and 5,700 mopeds, according to fluctuo’s data.
Wait, no scooters? Indeed, e-scooter sharing services are banned from the public space and the City Council is prompt to confiscate the vehicles from Wind and Reby, the only 2 companies which are still trying to operate in Barcelona through partnerships with underground car park operators or convenience stores. The local regulation also obliges shared scooter users to wear a helmet.
Donkey Republic, Scoot and Movi (by Mobike) are operating dockless bike-sharing services in Barcelona and in L’Hospitalet de Llobregat (in the south of Barcelona).
But the shared mopeds business is by far the most active and competitive. In February 2020, 5 companies are operating in the Catalan capital: eCooltra (2,200 mopeds) ; Acciona (1,400 mopeds) ; Yego (1,000 mopeds) ; Movo (650 mopeds) and Scoot (500 mopeds).
According to fluctuo’s data, 15,000 to 20,000 rides are taken daily in February 2020(depending on weather conditions and day of the week) with a ride per vehicle ratio between 2,7 and 3,5.
A “divide and rule” approach
Following suit to many major European cities, Barcelona’s City Council voted for the introduction of a licensing regime in order to prevent traffic accidents and problems that arise from sharing public spaces (and, some might say, to protect the Bicing business). It includes a 71€ yearly fee per vehicle and fleet caps at 3,975 bikes and 6,958 mopeds.
What was more unusual was the choice of Barcelona to grant licences to up to 21 moped operators (with 331 vehicles each) and 10 bikes operators (with 419 vehicles each)! The final number of licensed operators should decrease throughout the City Council process, but with the caps per operator from the license documents, one was expecting 3 or 4 operators maximum to be selected in each category.
This selective approach is indeed supported by most experts of the shared mobility industry as the most virtuous for end-users and authorities. Uncertainty takes its toll on riders trust in the services’ reliability, and on local authorities that are not able to work over the long term.
From the industry point of view, this permissive approach is also condemned: eCooltra, the main e-scooter operator in Barcelona that will have to remove 80% of its current fleet and to fire a large part of its staff, did not wait long before disapproving of the results. And one can understand this anger…
What Barcelona should have learnt from Madrid?
In fact, Barcelona is not the first Spanish city to take such a controversial approach: Madrid did the same in February 2019 with shared e-scooters, allowing 18 companies to operate a total of 8,600 vehicles. One year later, it’s worth taking a look back and reflecting on the lessons we could learn from Madrid.
1- Local start-ups cannot survive in such a competitive environment. If the low CAPEX can appeal to local entrepreneurs, they usually underestimate the complexity and the cost to operate hundreds of vehicles, especially with so many competitors around. In Madrid, 6 local companies either stopped operating after a couple of months (UFO, Conga, Eskay, Buny) or simply never launched their service (Alma, Motit4U).
2- Major operators who have not been granted enough licenses will eventually exit the market. Tier (484 licenses) left Madrid in July 2019 and Voi (162 licenses) in December 2019. Either for scooters or mopeds, operating a small fleet of vehicles in a competitive landscape is hardly profitable, as fixed operation charges — battery charging, maintenance, fleet balancing, warehouse rental, staff — are carrying even more weight as the fleet is small. For many micromobility experts, operational profitability cannot be reached with less than 500 vehicles, and for that reason, Tier already withdrew its application in Barcelona.
3- Buy-outs and transfers of licenses undermine the credibility of both operators and city officials. SJV Consulting, a local company with zero experience in shared mobility services, was the biggest winner of the allocation process in Madrid with 1,315 licenses. But as SJV was unable to deploy its service in time (as anticipated by many experts and journalists) and was at risk to lose its licenses, it “transferred” its licenses to Movo. Then, in June 2019, Bird acquired Scoot and Circ (aka Flash) acquired Koko. In January 2020, Bird acquired Circ and Wheels acquired Mygo. These buyouts and transfers create an unstable situation that really makes shared micromobility services unreliable.
4- Only the most experienced and the most-funded eventually survive. Just look at the list of companies still operating in Madrid: Lime, Bird, Jump, Movo, Bolt and Wind. We have the two scooter-sharing world leaders (Lime and Bird) and three operators backed by powerful ride-hailing companies (Uber/Jump, Cabify/Movo and Taxify/Bolt).
What to expect in Barcelona?
We can expect to see the same kind of turbulences in Barcelona: buy-outs, transfers of licenses, exits and bankrupts. The number of vehicles available should, therefore, remain far from the 11,000 allowed by the City of Barcelona. In Madrid, less than a third of the scooters allowed are really available.
Fragmenting the market into so many operators has a negative impact on all stakeholders (end-users, operators and authorities). Furthermore, if the most likely outcome is to see the best-funded operators eventually surviving this “battle royal”, wouldn’t it be wiser to set-up a RFP and select rationally 2 or 3 operators, with confidence and long-term relationships on top?