Lime shutting down in 12 markets over profitability concerns

Everything changed when Uber announced that it would be going for its initial public offering (IPO), making it the first company in the on-demand mobility segment to be publicly traded. But even before this was realized, Uber witnessed a bloodbath in its perceived valuation, with skepticism forcing the cab-hailing giant to downscale its IPO valuation from roughly $120 billion to its eventual launching at $82.1 billion. 

This tanking of fortunes reverberated across the mobility market and hit e-scooter startups, as their likeliness to Uber’s growth story — robust expansion with no signs of profitability — was deja vu to investors, and not in a right way.  

And unlike Uber, which chose to be a cab aggregator, e-scooter startups owned all the vehicles they leased to customers, exposing them to a host of issues that rose out of vehicle ownership. The biggest issue was rough usage, leading to thousands of scooters being put out of service and costing e-scooter companies millions of dollars in repair and replacement. 

Some city streets became an ugly sight, as scooters strewn around pedestrian walkways forced municipalities to reconsider the process of providing operating licenses to e-scooter companies. What followed was a crackdown in several cities across the world, as governments quickly pulled the rug from beneath the wheels of companies, restricting the number of vehicles that could operate within city borders and mandating users to pull up scooters only in marked parking lots. 

Cases of vandalism also have resulted in hundreds of vehicles being willfully broken or chucked into ponds. To improve durability, e-scooter companies worked on building better versions of their bikes, which also burnt into their cash reserves. Batteries have also been a problem, catching fire in certain instances and consequently leading to bitter court battles. 

Lime’s recent pullout from a dozen markets is not an isolated story. Rivals like Bird, Scoot and Skip have all laid off significant portions of their employees and/or have made their way out of markets since 2019. Desperation has also led companies to look at raising ride prices. All said and done, eternal expansion without breaking even is seldom sustainable and the current slump in fortunes was a long time coming.