🛴 Scooters in Europe; ‘cause you know Scooters!
You might be excused for thinking that the US scooter market is relatively mature, complete with mega-rounds, acquisitions, secondary transactions, launching of markets and retrenching of markets. Remind yourself that the scooter-conomy™️ has been in existence for less than 18 months. The market is moving at hyper-speed, not only in terms of companies coming to market and scaling but also adjacent products and startups. So far, we’ve seen a number of different hardware form factors, scooters-as-a-service
, physical stores
and charging startups
European counterparts have, in part, looked to the US for validation and replication of business model. In recent weeks, we’ve seen big early stage financings in Europe for Tier Mobility ($25m), Wind Mobility ($22m) and Voi Scooters ($50m). These companies are loading up the coffers as they battle among themselves and international players for continental market share.
By all accounts, early revenue cohorts for EU scooter companies are as impressive as the early days of ridesharing. The two-sided marketplace of ridesharing benefited from capital as a moat to actively subsidise and stimulate both sides of the marketplace. This isn’t true of one sided (scooter) marketplaces - as we’ve seen the best funded startups like Bird and Lime lost out on operating in San Francisco due to lack of municipal support. So on what axis will scooter companies compete?
Let’s try and further understand revenue and cost drivers
Unit economics: Taking a look at the Bird data provided on 170,000 rides in the first week of May:
- A scooter generated $3.65 in revenue per ride
- Bird spent $1.72 per ride on charging costs
- It spent another $0.51 per ride, on average, on repairs
- Credit card fees cost $0.41 per ride
- Fees to city permits are $0.20 per ride
- Customer support adds $0.06 per ride
- Insurance is $0.05 per ride
- That leaves about $0.70 per ride, or a 19% gross profit margin
Single scooters cost between $450 and $600 - thus each scooter must be used for at least 650 to 850 rides before paying itself back - whilst they’re likely being used 5 to 7 times per day. Key takeaway: scooter durability is vital.
The majority of scooter operators have been using Segway-Ninebot models, though we have seen both Bird (BirdZero
) and Lime (Gen 3
) release more durable models. In Europe, Wind Mobility is also developing a proprietary vehicle with larger batteries, vehicle tracking and OTA updates. Quite simply, extending the useful life of these assets will be drive profitability and will be near term differentiators.
Though before making adjustments to capex and gross profit lines - it’s important to be operating within multiple networks. Municipal / government support is key in order to scale into specific European cities. Through the steam rolling that happened in ridesharing (thanks Travis!), governments have become far more cautious in allowing new transportation entrants unfettered access to their populace. European cities such as London, still do not permit the use of scooters on roads or sidewalks. Fully utilised scooter networks will be a net positive to cities; reducing pollution and congestion as well as providing a cheap and rapid alternate mode of transport. If we expect European cities to continue to compete with one another on quality of life, then surely light electric vehicle networks will be a welcome force. It’s worth noting that many of the political issues caused by ridehailing were due to dissatisfaction of local taxi cartels (yeah, I just called them cartels!) - this is less of an issue with scooters.
In the immediate we can expect competition to be fought through Capex, investment in new vehicles, and positive government policy.
What we don’t know:
- We’re still early in the S-curve - how far will scooters go?
- What % of vehicle miles travelled (VMT) will be disintermediated by scooters v public transport, ridesharing, walking? (45% of VMT are journeys under 3 miles)
- What will the political process look like among cities?
- How will scooter companies scale in Europe?
- Will many of the smaller players consolidate?
We’re truly in the first innings of this new transport economy and it will be interesting to see how it pans out.
>> What’s your view on how scooter companies will scale in Europe? HMU