What’s the future for electric scooters?

Nevertheless, regardless of people’s views the market continued to grow. In 2019, buoyed by concerns about the environment and consumer desire to curtail their carbon footprint, the global electric scooters market size was estimated at $18.6bn.

And then came Covid-19 and the debate changed completely. In the UK, authorities which had occasionally cautioned and even charged electric scooter riders, tuned a blind eye to them. They had, after all, more pressing concerns.

At the same time, the discussion about what a post Covid-19 world might look like began in earnest. Pretty much every commentator seemed to accept that in the short term at least scooters provided an excellent alternative for some urban dwellers to public transport.

Limited trails planned for the UK have become much bigger in scope and electric scooters are expected to be legalised in this country by the end of the year. It seems like the public are ready for them too. A Venson Automotive Solutions survey conducted recently showed that two thirds of consumers would welcome the acceleration of plans to accommodate alternative electric vehicles on UK roads.

64% of respondents to a survey commissioned by the fleet management specialist said they would consider using an e-scooter as an alternative to public transport if the trials prove successful and schemes launch nationwide. 

Of the 200 consumers who took part in the survey, the younger age groups were – perhaps not surprisingly – the most likely to give e-scooters a try: 85% of 18-24s while approximately half of over 55s said they would consider an e-scooter. Overall, respondents were positive about the impact of the trial, with the majority saying it was a great way to get people out of their cars, and to reduce carbon emissions.

Two in three people would ride e-scooter to work, claims survey

European scooter success

It isn’t just private hire scooters that have benefited from the pandemic, either. In mainland Europe scooter hire schemes are emerging after the lockdown, with fears about them playing a role in spreading Covid-19 withering away.

So the future for scooters across the continent looks very promising. From an investor’s perspective, however, the electric scooter market is a complex one.

Firstly it is dominated by venture-backed start-ups, some of which haven’t quite perfected their business models. Secondly in prime markets like London and the UK, the scooter companies are still awaiting that green light. 

Paris has largely been a huge success story for electric-scooter companies. US company Lime launched in Paris during June 2018 and within months its app had become the top-ranked travel application on Apple’s App Store in France. Lime might have led the way but a host of other companies were soon offering their systems across the continent. Lime’s key US rival Bird followed soon after and cemented its position recently by acquiring German start-up Circ. It faces a host of smaller, local competitors including Swedish start-up Voi, German company Tier (which leads the European market in terms of rides), Wind from Spain and smaller Dutch outfit Dott.

Pretty much every major city in Europe now has its own scooter-sharing scheme and most are proving very popular. Germany legalised scooter-sharing schemes in June 2019 and is now its biggest market. In particular, Berlin before the lockdown was awash with scooters from a wide variety of companies. From 2017 to 2018 the amount of shared e-scooters in Europe increased by nearly 200 per cent, and the European demand for scooter-sharing systems is expected to grow 26.2 per cent annually through to 2025. The key issue though for city planners is how to regulate the industry, and this is where different cities have taken very different approaches.

How do you regulate scooter use?

The benefits to city authorities of running scooter schemes are clear. They are environmentally friendly, and while the Covid-19 cloud hangs over cities they promise safer alternatives to public transport like trains and buses. The problems with adding electric shared scooters to a city’s authorities are also fairly obvious. First, they tend to be left in random places making cities look unkempt while at the same time creating problems for visually impaired and differently abled citizens. The issue is often compounded by the fact that multiple companies are offering scooters in cities, leading to a glut of the vehicles.

Secondly, there are still ongoing arguments about where scooters should be used. Are they for roads or for use on pavements? In most cities, advocates of the former appear to be winning, but mixing nimble (they can achieve speeds of up to 20 miles per hour) vehicles with buses, lorries and other road users had inevitably brought injuries and fatalities (more than 30 in the US in 2018). Critics have pointed out that as most users don’t wear helmets there has been a significant increase in head injuries.

Organisations such as UK pro-cycling charity Sustrans point out that scooters tend to work best when sharing cycle lanes. However, not every city has a fully developed cycling infrastructure (though admittedly Covid-19 has lead to spate of initiatives) and, as discussions on Reddit and cycling boards illuminate, there is some reticence on behalf of committed urban cyclists to share their lanes with motorised vehicles that can typically ride 5Mph faster than the average speed of a push bike.

Thirdly, with numerous cycle share schemes across the globe, security hasn’t always been foolproof and scooters have been hacked, stolen and dumped. This is all bad news for city authorities and even worse for their operators.

The tales of New York and Paris

So how do authorities regulate their use to make them safe and appealing? It looked at one point as if the authorities in New York weren’t going to bother anyway. A state senate passed a bill making them legal everywhere apart from Manhattan in June 2019. Then in December New York city governor Andrew Cuomo vetoed the bill, citing the lack of a mandatory helmet requirement, although critics suspect that fears of congestion on the city’s crowded streets was the main reason for the ban.

And then in April this year the city did an about turn and legalised them citing their use by delivery services. Since then sales of scooters to individuals have rocketed, though so far none of the scooter ride sharing scheme companies have launched.

In Paris mayor Anne Hidalgo announced a tendering process to choose a trio of operators with companies assessed on safety, operations and environmental responsibility factors. The big US companies have submitted bids alongside several EU start-ups. Many of the companies have been working closely with the cities in particular sharing data about usage which in theory is invaluable to city planners. 

The process mirrors similar tenders in other European cities such as Marseille, which chose to limit the number of both operators and scooters. This contrasts with European cities such as Berlin, Copenhagen and Madrid which have so far relied on the market to resolve the number of operators.

The decisions in London and Paris will inevitably shape whether the market is dominated by local European start-ups or by big US companies. The irony is that once the regulation is sorted the big players might move in. Ford acquired US scooter start-up Spin and is currently hiring across the continent. Both Uber and Google have invested in Lime. All kinds of deals are currently being done, including partnerships with public transport companies (SNCF in France has a deal with Voi) and even car hire companies.

Interestingly both VCs and investors missed out on companies such as Uber and Lyft. It is not a mistake that they will want to repeat with scooter companies. Unlike scooters, whose batteries typically conk out after 15 miles, this one will run and run.