COVID-19 Likely to Accelerate Consolidation in Shared Micromobility Market

The coronavirus outbreak has turned daily life upside down for large portions of the global population. As a result of social distancing strategies, public transportation ridership is taking a huge hit—about 948,000 fewer trips were taken on New York City’s subway system on Wednesday, March 11 compared to an average weekday in January. In the San Francisco Bay Area, Bay Area Rapid Transit ridership is down by up to 85% and the service is expected to lose $37 million a month. Ridership numbers will likely plunge further as COVID-19 continues to spread. While micromobility service usage initially spiked due to decreased public transport ridership, significant levels of e-bike and e-scooter sharing programs are now being suspended and the industry at large is facing an increasing likelihood of bankruptcies, acquisitions, and business consolidation. 

Initially Displacing Public Transport

To avoid crowded buses and subway trains, many commuters initially switched from public transit over to micromobility devices. For example, New York City’s Citi Bike program, which has thousands of e-bikes, reported a 67% increase in ridership in March 2020 compared to March 2019. Several e-scooter and e-bike vendors, such as Unagi and Juiced Bikes, began offering special sales for their business-to-consumer products due to COVID-19. While many shared micromobility services are disinfecting their devices at higher rates and are requiring operators and mechanics to wear protective gloves, owning a personal micromobility device is an even safer way to avoid contracting COVID-19.

Micromobility Not Immune from Crippling Service Suspensions

On March 17, micromobility services began to take a hit from COVID-19. San Francisco-based Lime, which is estimated to be the largest e-scooter sharing company in the world with 120,000 e-scooters deployed across 30 countries, announced that it was suspending its e-scooter sharing programs in California, Washington, Italy, Spain, and France. As of late March, Lime’s service suspensions now cover nearly two dozen countries globally. Bird has also announced a suspension of its services in six US cities and across Europe. Other major micromobility sharing companies such as Spin, Uber (JUMP Bikes), and Lyft (Motivate) have yet to halt significant levels of their service offerings outside geographies with shelter in place orders.

While micromobility is replacing significant levels of public transport usage, more micromobility sharing companies are likely to suspend services if COVID-19 continues to spread. This would have a crippling financial effect on e-scooter sharing companies that are already struggling to find profitability in a crowded marketplace. Lime is likely to make further layoffs to its workforce; the company is reportedly considering the removal of 50 to 70 employees, primarily at its San Francisco headquarters. Lime’s valuation may have already decreased by 80%; the company is reportedly seeking new funding at a valuation of $400 million, compared to $2.4 billion when it last raised money 14 months ago. 

The Bottom Line

With a plethora of companies active across the micromobility sharing competitive landscape, COVID-19 will likely accelerate the market consolidation that was expected to eventually come to the industry. E-scooter sharing companies will have to be flexible and responsive to address falling revenue and emerging challenges related to COVID-19. Businesses that offer online direct-to-consumer e-scooter sales, such as Bird, are likely to gain an advantage in the coming months as more micromobility sharing services get put on hold due to the coronavirus. Shared micromobility service providers will also have to convince investors that e-scooter sharing can be a key part of the recovery effort—as seen in China with bikeshare operators such as Hellobike, Mobike, and Didi Chuxing achieving increased ridership after lockdown restrictions were relaxed. 

Just as micromobility companies were preparing for busy spring and summer seasons, achieving profitability just became much more challenging. This difficult time for shared micromobility companies will likely reveal which companies are viable in the long-term, and which will get swallowed up by their competitors.