As a child, riding a micro-scooter was painful. They were affectionately called “razor scooters” because they could remove your skin from your shins. They could be pushed by simply kicking the ground and were fun to ride around on, but they are not a valid mode of urban transportation.
Now, scooters are the preferred mode of transportation for many adults. Today’s electric scooters have become a new form of public transportation. They are equipped with electric motors that can reach speeds up to 15 mph (24 kph). Automotive industry observers have wondered if this is a viable solution to future mobility challenges or a temporary fad.
They tick all the boxes at face value – shared, connected, and electric –
Many of the most prominent household names in automotive have adopted the venture capitalist model over the last few years. Large investments in the strange and wonderful, along with traditional vehicle manufacturing, have been made quickly. However, electric scooters seem to be one of the most obscure targets. This trend is raising eyebrows in the industry.
Matt DeLorenzo, Senior Managing Editor at Kelley Blue Book, said, “I put it under category of throwing something against a wall and seeing how it sticks.” He suggested that automakers might be collaborating with e-scooters to “another attempt at making themselves relevant in the mobility revolution.”
It has seen its valuations rise. Sunny Madra, Vice President at Ford X, said that if someone had told you 12 months ago that there would be a US$2bn scooter business, you would have laughed them out of their doors.” Sunny Madra was speaking at the Morgan Stanley Annual Laguna Conference September 2018.
Ford had previously announced that it would no longer make sedans or compact cars in the US. Instead, it will focus on SUVs, pickups and performance models such as the Mustang. In November 2011, Ford announced that it had purchased Spin, one the major players in the scooter market alongside Lime, Bird. While this was a difficult decision for some, such as cutting back on carbs and increasing the use of scooters, the investment is tied back to Bill Ford’s 2011 TED Talk: “My concern changed from ‘how can we sell more trucks and cars’ to ‘what if they only sell more trucks and cars’.”
Beyond four wheels
It is not surprising that an automaker would look beyond cars to find new profit streams. “The future of the automotive industry will very much hinge on OEMs becoming brokers of ‘Mobility-as-a-Service’, delivered through all kinds of modes of transportation: cars, trains, bikes… or scooters,” observed Axel Schmidt, Automotive Global Lead at Accenture.
At the Barclays Global Automotive Conference in November 2018, Joe Hinrichs (President of Global Operations) at Ford responded to criticisms that “precious capital” was being used inconsistently. He supported the Spin deal, calling it an “important” part of Ford’s mobility strategy.
This has made it a highly lucrative industry, with many start-ups achieving so-called unicorn status, which is a valuation of at least a billion dollars. Bird, which was founded in January 2017, was said to be the fastest unicorn start-up. It took just one year. Lime, which was founded in January 2017, was valued at US$1.1bn by an investment round led by Uber and Alphabet in July 2018. Schmidt stated that E-scooters are a good idea. They are inexpensive to build and maintain, which is in line with MaaS’s key idea. It is all about lowering the cost per mile.
As a whole, the user base is increasing rapidly. With e-scooters being used mostly for short distance travel, usage rates are extremely high. Ford’s Madra noted that Uber took three years to reach one million rides. Lime took six months. This is something you can’t overlook if you are interested in mobility.
Ford isn’t the only one looking beyond four-wheeled mobility options for the future. SEAT and Segway have collaborated to develop a motorized scooter. The eXS comes with LED lights at the front and back, a digital display, and cruise control. It is not a publicly shared product, but it can be privately owned. The eXS builds on the existing Cityskater, a three-wheel scooter that was designed for last-mile travel. The Micro e-Kick scooter has been offered by Peugeot as an accessory to the 3008 GT SUV for a few years. Private customers will also be able to purchase the folding BMW X2City e-scooter. Although Hyundai showed off its Ioniq escooter concept at CES 2017, little else has been revealed.