Shared electric bikes and scooters are a sensible idea. Nipping across town for a mile or two by scooter is faster than walking and less polluting than driving a car. Rapid, low-emission transportation is beneficial to both users and cities.
In the late 2010s, so-called “last-mile” micromobility start-ups were awash with venture capital funding. In 2018, electric scooter company Bird jumped from a $300mn valuation to $2bn. The same year, bike and scooter sharing start-up Lime became a billion-dollar company less than two years after it was created. Online taxi company Uber purchased e-bike company Jump, while rival Lyft bought Motivate, the bike-sharing company that operates Citi Bike.
Foreseen risks included city opposition, theft and supply chain issues. Pedestrians moaned about scooters abandoned in the middle of the pavement. Hospitals reported a rise in injuries from riders who crashed while not wearing a helmet. But what has scuppered the market is the high cost of maintenance and the dearth of riders in the pandemic.
Ride demand disappeared in lockdown. At Bird, revenue in 2020 fell 40 per cent on the previous year to $79mn. In a brutal online video call, the company made more than 400 employees redundant. This year it cut a fifth of the remaining workforce. Rival Lime has axed more than a tenth of its employees. While rides remain subsidised it will not be enough.
Bird has raised $900mn since it was founded. This is more than the market value of Switchback II Corporation, the special acquisition company with which it went public via a reverse merger. It is attempting to operate a franchise model — selling scooters to operators who take the burden of maintenance costs. It is also selling scooters and bikes directly to consumers.
But the cost of keeping scooters on the roads remains high and demand is low. Unfortunately for companies like Bird, the US government’s climate change bill has skipped incentives for e-bikes. When it listed, Bird predicted that revenue would reach $815mn by 2023. Given that the forecast for this year is $325mn, this looks unlikely. Bird needs to come back down to earth.