The micromobility segment has gained immense traction over the last few years, with shared e-scooter startups like Bird and Lime among the fastest companies to billion-dollar valuations. Urban spaces with relentless traffic have been major adopters of micromobility, as commuters can opt for rides on-demand. Apart from being an alternative mobility option, micromobility also helps reduce the city’s overall carbon footprint, as transit options are predominantly low or zero-emission vehicles.
FreightWaves spoke with Sam Baker, president and co-founder of micromobility marketplace Wunder Mobility, to discuss the impact the sector will have on urban spaces over the next decade.
“I view the micromobility trend more in the context of light electric vehicles. For example, the average travel speed of vehicles in Manhattan is 12 mph, and they are mostly private vehicles with four empty seats – cars meant for highways and weighing a ton,” said Baker. “When we look at the congestion in cities, we have to ask the question if these vehicles are really optimized for urban living.”
A recent report from the World Economic Forum forecasts that an estimated 66% of the global population will live in urban areas by 2050. This warrants a seismic change in the way commuters transit in cities, including increasing vehicle utilization, and as Baker mentioned, reducing the size of vehicles to a form factor that is sustainable within city roads.
“Conceptually, it makes sense to shift further away from heavy, high-capacity vehicles in cities to light electric vehicles that have smaller form factors, where one or two people can ride to locations,” said Baker. “This would be more efficient for cities to have many more of those vehicles on the road to supplement existing public infrastructure.”
It is also vital for micromobility companies to be profitable in the market. Having observed the tanking of fortunes of on-demand cab-hailing giants Uber and Lyft, micromobility companies are cautious about their strategies to attain long-term sustainability.
In that context, a linear approach to being profitable lies in the utilization levels of the micromobility companies’ vehicles. Essentially, the more utilization a company can draw out of its equipment, the faster it can recoup its investment and break even.
Baker explained that companies are approaching this across two distinct business models. For startups like Bird and Lime, their micromobility operation is about owning the whole value chain, including the hardware and the software platform, as they believe in optimizing across the board to attain profitability.
On the flip side, the business model of legacy operators has not been about owning the mobility value chain in its entirety, but rather about being exceptional across a single niche – a model that has Baker’s backing.
“Within the mobility market, specialized providers are emerging across every step of the value chain. You can outsource specific segments of operations to specialized providers and only work on your narrow band of expertise in the value chain,” said Baker.
It is also important to consider the city’s role in the functioning of the micromobility market. “Cities are central actors in terms of creating the framework that allows citizens to have comfortable and safe environments to live and work in. They play a role not only in legislating but also in providing mobility services,” said Baker. “And in the future, cities might even compete with the private operators themselves.”
Collaborative efforts between micromobility companies and city authorities will help institute a better-designed transit system. Baker contended that micromobility companies must come together and be open to sharing data within the ecosystem. With a greater inflow of data, people’s movement can be studied, and demand across the city could be proactively predicted. Based on such insights, companies can strategically drop their vehicles relative to expected demand, ultimately improving on their equipment utilization levels.