On the surface, electric scooter pioneer Bird’s bankruptcy filing seems like a nail in the coffin for shared micromobility — that vague term often used to describe rentable electric bikes and scooters in cities. After a number of mergers and poor financial management, the scooter company OG goes bankrupt. That doesn’t bode well for the future of scooters in general, does it?
But actually shared electric mobility is doing fine. Sure, margins are tight and profitability is still rare, but scooter and bike sharing companies are becoming increasingly important to urban life in ways we never thought possible.
The only thing that’s dead is the zero interest rate-influenced era of runaway investment and wildly skewed valuations that we saw at the end of the last decade. Hopefully now, with Bird’s Chapter 11 filing, we will see a new era of more responsible management and better pricing to ensure these systems remain viable for years to come.
Despite Bird’s murky future, cities are increasingly using shared scooters and bicycles. But don’t take my word for it – here’s what the National Association of City Transportation Officials (NACTO) annual report on the state of affairs in 2022 says:
Micromobility trips in the US and Canada increased by five million compared to 2021 and are up 40% since 2018. In the US, shared micromobility continued its pandemic-era recovery, with 113 million trips in 2022, while passenger numbers declined in Canada. past pre-pandemic highs, with 17 million trips.
It’s not just 9-to-5 commuters or even just tourists making all these trips. According to NACTO, 34 percent of cyclists and scooters use “to access work,” while 39 percent go shopping, 16 percent go to school and 50 percent for “other social or recreational outings.”
E-bikes in particular are becoming increasingly popular, with three-quarters of all station-based systems (docked, as opposed to dockless systems like Bird) in the US and Canada increasing the number of e-bikes in their fleets.
In the US, shared e-bike rides increased from 14.5 million rides in 2021 to 20 million rides in 2022. And while docked e-bikes made up just 9 percent of the micromobility fleet in the US and Canada in 2022, they were good for 18 percent of the total journeys. People love their e-bikes!
But NACTO’s assessment of the state of scooter touring isn’t all roses and moonshine. There are worrying trends on the horizon, “including volatility among private sector operators and climbing costs for cyclists.”
This week we saw one of those predictions come true in real time.
When Bird first dropped its scooters onto the streets of Santa Monica in 2017, the future seemed bright for this new concept of micromobility. Before Bird, we had many so-called docked bikeshare programs, such as CitiBike in New York and Divvy Bikes in Chicago.
But these scooters were dockless. They could go anywhere and be left anywhere. And the scooters – off-the-shelf Chinese models from brands like Xiaomi and Segway-Ninebot – were cheap to buy, so Bird could theoretically launch in any city it wanted and start distributing scooters. The only obstacle was cities that had learned a thing or two during the rise of Uber and Lyft and were naturally skeptical of venture capital-backed startups claiming to solve the problem with mobility.
But almost immediately, the financial health of shared micromobility came under scrutiny. An early indication that the mission of cheap, abundant electric mobility was in jeopardy was the unitary economics of the scooter industry.
But these scooters had no dock
As cheap as they were, the scooters didn’t last long enough on the streets to recoup their initial costs. They went bankrupt, largely because the companies didn’t take into account the huge hits these things were taking on a daily basis. People drove them into the ground and destroyed them too. Many ended up in lakes or in trees. A few were set on fire.
So after the initial novelty wore off, the next phase was about customizing the industry through purpose-built scooters designed for a longer lifespan. Bigger, heavier and tougher scooters were the name of the game. The Scofflaw city launches gave way to consent seeking and public-private partnerships. Scooters were relegated to a system of begging cities to pick them for a limited number of pilot licenses. The companies that were chosen basked in the glow of their new purpose; the losers usually fold.
But after all that money spent and research, renting a scooter hasn’t really gotten any easier. Bird thought an IPO would give the company the boost it needed, so it merged with one of those special purpose acquisition companies, or SPACs, back when that was still cool to do. But the company continued to make unforced errors, losing money, overestimating its revenues and eventually slowly sliding into layoffs and irrelevance.
Other scooter companies have also struggled. Many have merged with other companies or simply disappeared. New technology that seemed poised to solve many of the problems with dockless scooters never really caught on. The micromobility industry continues to change, with some players abandoning two wheels altogether in favor of four.
If there’s one company that can benefit from Bird’s fall, it’s Lime. The San Francisco-based company can now claim to be the largest micromobility operator in the US. Earlier this year, Lime published a limited set of financial figures (it’s still a private company and not obligated to share most of these figures) that would show its financial future is heading in the right direction.
Lime reported gross bookings of $250 million in the first half of the year, up 45 percent from the same period last year. It also touts adjusted EBITDA profitability of $27 million – the first time the company has achieved this in the first half of the year and a 45 percent increase in margins from last year – and unadjusted profitability of $20.6 million. Yet there is much we do not know, such as the revenues and costs.
Lime wasn’t the first to offer electric shared scooters for rent, but it may be the last scooter company standing, especially as others merge and the industry continues to consolidate and evolve.
NACTO wants more taxpayer-funded subsidies, or even full municipal ownership of fleets, to prevent more bankruptcies. Roads need to be redesigned to give priority to less polluting modes of transport. That means more protected bike lanes and other solutions to encourage people inclined to two-wheeled forms of transportation.
A recent positive step is the update of the Manual on Uniform Traffic Control Devices, the Federal Highway Administration’s 88-year-old rulebook for U.S. highway construction. It is said that the long-awaited eleventh part of the book will finally address emerging vehicles, such as electric bicycles and scooters, and will include necessary design changes, such as cycling infrastructure and bike lane design.
But while we wait for those changes, the micromobility industry will continue to survive, one way or another. Bird said it plans to continue operations while it goes through the restructuring process. However, it is unclear where this will leave the company’s system of outsourcing city operations to independent fleet operators. Will the Bankruptcy Court Approve Payments to Unsalaried Employees? It is unclear.
Small electric vehicles are just getting started. Sales of e-bikes continue to break records. State subsidies reduce costs for interested buyers. Shared fleets are an excellent starting point for personal ownership. In certain cities in the southeast, electric go-karts are even becoming popular.
The bird’s goose may be done, but the need for alternatives to polluting cars remains paramount. The federal government hopes Tesla and other electric car companies can save us from a future marred by climate change. But we will need every weapon in our arsenal if we are to defeat this existential threat.
And that also includes micromobility. Even the smallest, dumbest electric scooters matter in this battle.