What is Micromobility’s Path Towards Profitability?

Micromobility, whether it be e-mopeds, kick scooters, or bikes, are a climate-friendly solution for transportation. These light vehicles have less maintenance needs compared to a car and take up much less road and parking space. But because micromobility is a fairly nascent industry, there are still many lessons to be learned to make these operations successful.

After an insight-packed three days at Micromobility World and hearing from a range of players in the industry, we narrowed down the key areas we see today that pave the path towards profitability:

1. Hardware
2. Battery charging
3. Location
4. City regulations

Before diving into the details, we want to thank our fellow panel participants for sharing their thoughts: Alexander Gmelin (CPO of INVERS), Janelle Wang (CEO of Acton), Felix Petersen (Head of Europe at Spin), Eric Wang (CEO of Wind Mobility), and Giancarlo Oranges (CEO of Vaimoo). You can also watch the session recording here and read the summary below:

Hardware: Vehicle and Telematics

Unsurprisingly, scooter sharing operators on the panel vouched for the importance of a sturdy form factor that can be used and shared over and over again. In the early days of scooter sharing, kick scooters that were built for personal use were put in shared fleets. This resulted in a short life span and unreliability of scooters as a sharing vehicle option. However, a range of solid, purpose-built scooters for sharing are now available and dominate fleets. For operators, this means they can minimize fleet turnover by reducing downtime and maintenance needs, maximize utilization during the scooter’s lifetime, and ultimately reduce overhead costs of purchasing new scooters.

With a longer lasting micromobility fleet as an asset, operators will want to invest more on a reliable telematics for their fleet. Here, vehicle data aggregation and leveraging of telematics sensors and signals has untapped potential. For example, understanding when and where scooters are frequently picked up and dropped off is only possible with highly accurate GPS positioning. Integrated movement and shock detection sensors would also notify your backend when potential theft and vandalism is detected.

Charging Needs and Swappable Batteries

When it comes to electric micromobility vehicles, batteries make up 30% of the asset costs. The cost factor puts extra focus on battery charging and maintenance operations in order to ensure a prolonged battery lifespan.

While swappable batteries are more economical and time-efficient (than having to bring the entire fleet back to a warehouse for charging), there are safety concerns about whether theft and tampering could be higher due to easier access to the battery.

As operators like SPIN have learned, this critical part of day-to-day operations cannot be outsourced to gig workers. Instead, operators need to be accountable for the charging and kept as an in-house responsibility. This may be why user-based battery swapping is not part of the majority of micromobility business models yet, and generally the adoption of this method has been slow.

However, Gogoro’s battery swapping stations in Taiwan work because those are also for personal-use mopeds and not used solely for shared mopeds. This is a key point to make because individuals take better care of and are more responsible for their own vehicles. In a shared model, that level of care is not as strong. While the implementation of standardized batteries across different brands, makes, and models in the future may improve the feasibility of swapping stations in the future (kind of like refuelling stations but for batteries) that is unlikely to happen soon. Meanwhile, it might be worthwhile to have a hybrid model of on-site charging and swappable batteries, to leverage the benefits of both methods.

Location

Dense, urban cities are the go-to launch pad for all forms of shared mobility. But as cities are capping the number of scooters permitted in cities and as equitable access to new mobility is being questioned, the next question becomes: is it possible to achieve profitability in less dense, and smaller cities? On a high level, people in small cities need to get around just like people in large cities. The difference lies in the density and whether shared micromobility can thrive in those environments.

There isn’t just one “best” city for micromobility. Instead, the foundation of economics starts with supply and demand – for shared micromobility, this looks at whether smaller cities have the infrastructure to support micromobility and whether operators can tailor their service to meet the local mobility culture. While there are lots of opportunities in small cities, one way to mitigate the risk is to leverage available data and make data-driven decisions. Just like you would in a large city, it can make sense to run a pilot first and evaluate utilization to determine the chances of success.

City Cooperation

While winning a permit or RFP is key to launching a shared mobility business; maintaining a strong working relationship with the city is arguably even more important – as cities are essentially a customer of micromobility operations. From the city’s point of view, their focus is on safety, sustainability, and reliability. They are looking for micromobility operators to make mobility further accessible and greener for citizens, by complementing the already existing public transportation infrastructure via seamless integration. As the micromobility space is developing, cities are beginning to realize what they want out of these new services and start to shape their tenders to ensure operators can meet their needs. Operators can leverage their telematics’ built-in I/O extenders and sensors to provide additional data like air quality or road conditions to further benefit cities, which can assist towards building healthier communities.

Operators are also responsible for understanding how cities work. If cities are less willing to permit shared micromobility, another approach could be to work with commercial or residential developers or delivery companies to prove the value of this new form of mobility. At the same time, operators need to evaluate their resources and focus on their strengths. While a hybrid model of B2C and B2B is possible, operators should not try to implement different business models if it takes away from the quality of their core service.

Takeaway: Stay Flexible and Constantly Optimize

As the pandemic has shown, the mobility landscape can change rapidly, as can user requirements. Also, cities are constantly evolving. Operators need to ask themselves how they are addressing a changing landscape and what will be the profitable business model at a given time. This will likely mean looking at operations from a customer-centric point of view instead of a vehicle-centric point of view. While it may make sense to diversify the service offered, that results in operational complexity. Even within the panel, there were different opinions on how to stay nimble to change. Micromobility is still in its early days, and this is the time to experiment and learn from trial and error. From multi-modal solutions to leveraging software capabilities to cooperating with cities, operators need to find their strengths and grow in that direction. There is no one big answer that will make or break operators, it is a matter of many small and constant improvements.

INVERS believes that money is in the code; that’s where the biggest differentiation potential lies for operators’ developers to create a unique user-experience and work towards operational streamlining and excellence.