This article is part of the special topic "Future Mobility".
Micromobility What micromobility is and how it is shaking up urban transportation worldwide
The micromobility revolution is in full swing. With cities pressed to resolve traffic pain points and congestion problems, micromobility is emerging as a powerful alternative to the current transportation mix.
Startups all over are vying for a piece of the micromobility market. The massive influx of companies rushing to establish their ride-share system has, unsurprisingly, recently resulted in the market experiencing growing pains. Constraints include unclear regulations, citywide bans, and vandalism.
In the past years, large investment sums have been poured into the micromobility space. Now, the million-dollar question is: will micromobility truly change transportation as we know it, or is the buzz surrounding shared micromobility overwhelming its real-world potential?
In this article, we'll go through what micromobility means exactly and look at the industry's current state of play and where it's headed.
What is micromobility?
The term micromobility is often used to describe travel solutions for short distances, usually the first or last mile of a journey. A vehicle's gross weight can't be more than 500 kilos to qualify for inclusion in the category. There's no one exact definition of micromobility. However, additional commonalities among solutions in the category are the provision of a motor and primary utility use.
Another key feature of some micromobility systems is a model of shared usage. Some bike-share services use docking stations for drop-off and pickup, while others use smartphone apps to provide a dockless option.
The term micromobility was coined by business and technology analyst Horace Dediu, in a speech he delivered in 2017 at the Micromobility Summit in the Techfestival event in Copenhagen.
Where is micromobility used?
Cities are changing at breakneck speeds as a result of demographic shifts and overall population growth. Each week, some 1.3 million people move to cities worldwide. By 2030 so-called megacities, urban areas with more than 10 million inhabitants, are expected to increase from today's 31 to about 43. Fast forward ten years and about 65 percent of the population is expected to live in cities.
With urbanization on the rise and many cities already dealing with dangerous levels of pollution and gridlocked streets, micromobility could solve a handful of problems. Among many use-cases, micromobility services reduce the number of cars on the road, lower our environmental footprint, and provide convenient methods of transportation for short trips—all while being cost-effective.
When is micromobility used?
Micromobility is the solution to the last- and the first-mile problem, which is the space between the station and home, or the transfer between buses or any distance that is too close to drive, but too far to walk.
Since 2010, people have taken 207 million trips on shared bikes and e-scooters. In 2018, of the 84 million micromobility trips taken, 38.5 million of those were on scooters. Rides on station-based bikes accounted for 36.5 million trips, an increase of nine percent from 2017. Compared to the year prior, more than twice as many trips were taken on micromobility services.
How big is the micromobility market?
About 60 percent of car trips in the European Union, China, and the U.S. are less than eight kilometers and could benefit from micromobility solutions, according to a study by the McKinsey Center for Future Mobility. Micromobility could theoretically encompass all passenger trips of less than eight kilometers.
However, mobility is unlikely to cannibalize this entire theoretical market. The McKinsey Center for Future Mobility estimates that micromobility will take over between 8 and 15 percent of its theoretical market. Constraints include its suitability for relevant mobility use cases (for example, limited space when going shopping), customer adoption, age fit, weather conditions, and micromobility's lower presence in rural areas.
Although the micromobility market is expected to take over a relatively shy part of its total theoretical market, the McKinsey Center for Future Mobility predicts it to be worth between $200 billion to $300 billion in the United States, $100 billion to $150 billion in Europe, and $30 billion to $50 billion in China by 2030. To put that into perspective, it equals about a quarter of our forecasted global shared autonomous-driving market potential of roughly $1,600 billion in 2030.
Since 2015, stakeholders have invested more than $5.7 billion in micromobility startups, with more than 85 percent targeting China.
What drives the micromobility market's rapid growth?
Two circumstances have driven the micromobility's quick growth. First, most launches of shared micromobility take place in conducive environments. Here, urban consumers have already been using solutions for shared mobility for quite some time. Second, the economics of shared micromobility are largely favorable to industry participants. It's in many ways easier for companies to scale up micromobility assets compared with car-based sharing solutions. While thousands of dollars are often required to purchase a car, the current acquisition cost of an electric scooter is about $400.
Challenges the micromobility world faces
While we've seen exceptional growth in micromobility worldwide lately, there are still many challenges hindering complete adoption. The challenges the micromobility market faces include limited infrastructure, poor weather conditions, unfavorable regulation, citywide bans, hardware health, and vandalism.
Let's take a closer look at some of the most significant roadblocks in the micromobility world.
Limited city infrastructure
If a city lacks the proper infrastructure such as sufficient bike lanes, the adoption of shared bicycles and scooters becomes difficult and even dangerous to both the consumers and the public. This is one of the main reasons micromobility has yet to take off in countries within Africa and India.
Trouble turning profits
Even though many micromobility companies have raked in millions of dollars from investors, many are still struggling to achieve sustainable profitability.
One example is the Chinese bicycle-sharing company Ofo. In 2017, it was valued at up to $2 billion and had over 62.7 million monthly active users. In early 2018 it received a $2.7 billion investment. Just a few months later, it considered declaring bankruptcy over cash flow issues. At that point, the company had withdrawn from several countries, including Germany where the company was present with 3,000 bikes in Berlin for only three months. Today, only a small fraction of the company remains.
There are, to say the least, still plenty of kinks to be worked out as micromobility companies experiment with ways to improve their profit margins.
As dockless bikes and scooters are a very novel concept, most cities do not have proper regulations in place for how these programs are allowed to run. This leaves governments scrambling to figure out how to deal with the sudden appearance of fleets of bikes and scooters popping up around their cities.
In China, the government has been creating new regulations to help control the emerging micromobility market. For example, individuals leaving shared bikes outside of permitted areas can now be fined. In Paris, electric scooters are banned from sidewalks as a cautionary step to prevent scooter collisions with pedestrians. In the UK, the regulations are banned from both sidewalks and public streets. Barcelona has taken the extra step to ban the use of shared electronic scooters completely.
Luckily for e-scooter-sharing companies, these laws may change as companies work with cities to better integrate micromobility systems into city life. Overall, however, the regulations can be beneficial to cities and startups alike, as they prevent companies from growing unsustainably fast.
Vandalism and theft of bikes and scooters have become a major obstacle to many new micromobility companies. Dealing with the expenses associated with replacing stolen hardware and repairing damaged ones usually isn't as damaging for larger companies as it's for smaller. The costs related to micromobility vehicles' short lifespan can, however, hit companies of all sizes hard.
The Paris based bike-share program Velib has reported that about 80 percent of their bikes have been either stolen or damaged. Bird and Lime have stated that their electric scooters tend to last only one to two months before having to be replaced.
Poor hardware health
The short average lifetime of micromobility vehicles isn't only caused by vandalism. Speed without control is doomed to fail. When fierce competition between micromobility startups forces players in the market to cramp out enormous volumes of cheap vehicles fast, the quality of these vehicles suffers.
When bikes break, companies often don't have the manpower in place to fix them in a timely manner, resulting in frustrated users having to test several bikes before finding one that works properly. This can ultimately damage the public's perception of the industry. A problem that's further induced by viral images from massive bicycle "graveyards" all over China.
Challenging weather conditions
Who wants to ride an e-scooter in the pouring rain or on icy roads? Accidents skyrocket in these conditions. For cities with harsher climates, like those in northern Europe, the adoption of shared bikes and scooters is not as viable.
Many shared scooter companies have made efforts to make riding safer and more comfortable in inclement weather. The scooter-sharing company Skip, for example, gave away branded winter gloves and hats to its users in Washington, DS, during the cold winter months. Despite their efforts, it's near impossible for micromobility companies to avoid losing precious profit when the weather conditions are too severe.
Where is the concept of shared micromobility going next?
While it's fair to say that the term micromobility is still very young, the total micromobility market can be said to still be in its infancy.
The industry is unlikely ever to cannibalize its total theoretical market, existing of all trips people make that are too long to walk, yet to short to drive.
We can, however, expect to see more bicycles and scooters on the streets of cities all over the globe moving forward. Furthermore, we can expect to see a slew of new micro vehicle designs in the future.
Two main trends indicate that the micromobility space has a bright future:
- growing cities are pressed to solve their transportation crisis amid rising concern around gas-powered emissions and,
- an increasing number of investors are pouring enormous amounts of capital into the micromobility industry.