At the dawn of 2018 they came. Out of nowhere they appeared and quickly multiplied. Now, they are everywhere: on the roads, on your sidewalk, in the news.
Was 2018 the year of the electric scooter?
The data certainly indicates it was:
Fastest ever companies to reach $1B valuations - doing so in less than a year from founding.
It wasn’t just Lime and Bird!
E-scooter companies all over the world raised large amounts of funding. Five European e-scooter companies have emerged and raised over $150 million of capital since the start of 2018.
E-Scooter Valuations & Investors ($ in millions of USD)
Source: Public announcements, Crunchbase, Tracxn, Base10 research.
2019 shows no signs of slowing down!
Just this week, the largest e-scooter companies in Latin America announced a merger to form the leading micro-mobility company in the region¹.
1 | Base10 is a Seed investor in Grin and Yellow.
Despite the hot fundraising and M&A environment, negative headlines are talking about a “scootergeddon!
Do cities need electric scooters?
Cities need to reduce traffic congestion and emissions, which means less cars on the street and e-scooters are a good way to start.
42%of car traffic in the US is caused by cars on trips less than three miles, and the average US commuter spends 42 hours in traffic congestion.
Sources: Lime, INRIX.
Micro-mobility solutions, especially e-scooters that are tailored for short distances, could alleviate almost half of car traffic in the US.
How much does it really cost US citizens to sit in traffic
Annual delay per commuter (hours)
Annual fuel wasted (gallons)
Annual cost per commuter ($)
Nationwide cost of congestion ($ in billions)
But do cities actually want e-scooters?
It depends which city you ask.
Why do cities want them?
Helps alleviate traffic congestion, especially at rush hour.
Held reduce car emissions.
Why are cities hesitant?
How do we keep the e-scooters from being parked where we don’t want them?
How do we modify our bike lanes to help e-scooter riders and pedestrians feel safe?
How do we keep underrage riders off them?
Base10 has spoken with more than 15 MTA officials across the country. These are some of their quotes.
These concerns have viable solutions achievable through better tech and more data.
Bird and Lime are already working with cities to address these concerns, including testing electronic geo-zones to prevent riders from going where they shouldn’t, like the sidewalk!
Companies like Remix and Swiftly, public transportation data companies, are developing software for authorities to track all e-scooters across platforms in real-time.
Through better technology, data and good safety track records, it is likely that cities will come around to the view that e-scooters are a good thing.
Do people actually like these e-scooters?
Love more than like. Go to Santa Monica or San Diego on a sunny day and you’ll see hundreds of locals and visitors racing to find available e-scooters to take them from point A to B.
Data from Lime shows how popular e-scooters are relative to Lyft rides in both companies’ first year of operations.
Number of rides achieved in the early days of mobility companies
Sources: Lime blog, Lyft blog.
Importantly, many riders are using e-scooters to replace car rides and / or get to public transport, helping alleviate congestion or increasing transportation convenience.
Why are riders using e-scooters
Source: Lime public data.
And this is far from a US phenomenon. There are at least 14 e-scooter companies backed by venture capital operating across three continents.
Where do the e-scooter companies operate
Sources: company announcements and websites, Base10 research.
But are they safe?
There are reports of rising ER visits with e-scooters as the culprit, but these reports also cite rider neglect as the primary cause. Therefore, all riders must adhere to the safety guidelines.
When were the primary modes of personal transport invented?
Accident rates should decline significantly as riders become more familiar with e-scooters. After all, cars and bikes weren’t considered safe when they first reached the masses more than 100 years ago. Shared e-scooters are barely a year old!
I have seen the pictures: Don’t they get stolen and thrown into rivers... or explode?
Like any good early-stage company would, the e-scooter companies are quickly coming up with fixes and are already seeing a decline of theft and vandalism.
So can these companies be profitable?
Early e-scooter unit economics have been inconsistent and subject to seasonality but are on an upward trajectory. Nonetheless, it is too early to give an emphatic yes.
Importantly, unit economics will soon increase driven by tech improvements that will significantly improve the lifespan and reduce daily overhead.
Better battery life and / or swappable batteries, which will significantly reduce the cost of juicers.
Better parts and construction, which will increase e-scooter useful life by a factor of 2x or more.
Base10 Estimate of E-Scooter Unit Economics On a Per Day Basis
Source: Base10 estimates.
Note: These estimates reflect operating costs in developed countries. Operating costs will decrease and profit per scooter will increase in developing economies like LatAm and India.
The catalyst for improved e-scooter tech is the entrance of new manufacturers into the market and sparking product innovation. Since early 2018, Segway has manufactured almost all the shared e-scooters you see on the street, which is now quickly changing.
So why doesn’t Uber just do this?
They’re certainly trying.
Uber hasn’t yet bought Lime or Bird and Lyft’s e-scooter footprint is currently a fraction the size of Bird and Lime, but the question remains can an independent e-scooter company compete alongside a rideshare giant who wants to win the e-scooter market?
Time will tell, but the large e-scooter companies currently have these advantages.
Recognized by users as a dependable mobility option and with operations in many cities across geographies.
Unique experience operating complex e-scooter networks where they are learning how to increase safety and efficiency in real time (something Uber or Lyft could only replicate with the requisite experience).
Pre-existing relationships with other regulatory authorities who can validate their ability to operate successfully and safely in cities across the world.
One more thing...this might actually be all about payments?
For e-scooter companies operating in underbanked populations, it just might be.
Alibaba used its e-commerce platform to launch Alipay, which is the world’s largest payment platform and has 870 million users.
GrabPay will eventually generate 20x the revenue for Grab that rideshare does"
Hooi Ling Tan
Could an e-scooter company with an engaged and frequent user base do the same?
E-SCOOTER CO'S IN UNDERBANKED POPULATIONS
No matter what side of the e-scooter argument you fall on, the data clearly indicates that society needs a viable micro-mobility alternative to the current transportation options that are congesting and polluting the world’s most populous cities, and the product market fit and consumer adoption of e-scooters suggests they are the best micro-mobility solution for these problems.
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