A Survival Plan For Electric Scooter Startups Leave a comment

The Covid-19 pandemic has served up a cruel paradox for the micromobility industry: Even as urban residents need more socially distant ways to get around, the companies offering shared bikes, e-bikes and e-scooters have laid off staff and abruptly pulled out of markets. Since 2020 began, companies like Lime, Bird and JUMP have shed upwards of 1,000 jobs and scrapped several thousand e-bikes and scooters, all at a time when two-wheel transport is being called a critical lifeline. Little wonder that many transport officials and mobility enthusiasts are now questioning if shared micromobility in its current venture-capital-funded form is truly a sustainable solution worth supporting.

Having served as sustainability directors at two of the leading micromobility companies, Bird (Melinda) and Lime (Alison), we’re familiar with the processes and pressures that drive these business decisions. Indeed, both of our roles — along with a variety of public policy and community engagement positions — were eliminated earlier this spring. But we still strongly believe that shared micromobility has the potential to dramatically reduce car trips, shrink carbon emissions and improve transport equity. 

It’s not too late to get this industry on track. To reach its potential and move forward on a more sustainable path, both companies and cities have roles to play. Given our unique view behind the curtain, here’s how we think it could happen.

Diversify leadership

Micromobility companies operate in diverse cities and in the public realm. But executive teams and boards lack diversity across gender, race, physical ability, geography, background, and expertise, leaving micromobility companies ill-equipped to meet the needs of the diverse people and cities they serve. Diverse leadership, according to research, leads to increased innovation and better business outcomes. A variety of perspectives are necessary to ensure companies consider holistic business impacts on city residents, local officials, employees, workers and the environment. 

Diversity can help ensure social and environmental goals are part of the decision-making process up front, and might have helped the industry avoid its more damaging mistakes. A transport policy voice at the table may have stopped the early practice of deploying hundreds of scooters on city streets without permission. A sustainability voice might have discouraged the decision to deploy thousands of consumer-model scooters that broke down after just a few months, a narrative and figure that has been difficult for the companies to shed even with substantial hardware improvements. And a leader well versed in community engagement could have partnered with cities to design equity programs that improve mobility access in historically underserved neighborhoods and meet city needs without overburdening operators. These early missteps soured relationships with cities which, in turn, brought on tougher regulations that ultimately decreased revenue.

Embrace ESG goals

Investor interest in companies that embrace environmental, social, and governance (ESG) factors has skyrocketed in recent years. Companies with clearly defined ESG focus areas — such as pro-social employment practices and sustainable/resilient supply chains — outperform their peers and have retained market value during the downturn. Micromobility companies are quick to highlight social and environmental benefits provided by their service, but their actions demonstrate these are not always a central business priority. 

Micromobility operators should understand that a deeply embedded commitment to environmental and social goals — aligned with city objectives — builds trust and reduces business risk. When cities see that operators are reliable partners who are helping to achieve their mobility goals, officials will be more inclined to grant long-term permits with more business-friendly operating terms. To get there, companies need leadership and incentives to broaden the short-term focus on margins and growth, orient toward company-wide ESG metrics, and embrace transparency. Such incentives and metrics would help ensure environmental and social impacts are considered in business decisions, setting these companies up for long-term success and attract ESG-focused investment. 

Fix the permitting process

Cities require a lot of information from micromobility operators vying to operate on their streets. Operators must respond to a Request for Proposal (RFP), a cumbersome process where submissions commonly exceed 100 pages. The RFP process incentivizes operators to over-promise to win permits, since cities don’t always have the capacity or expertise to verify their claims. Further, most permits are granted for only one year at a time, which discourages the type of long-term investment needed to maximize social and environmental benefits, such as apprentice programs for worker advancement or investment in low-carbon charging facilities.

City governments that want a successful micromobility program should streamline permitting and move toward a performance-based approach that creates a baseline for entry and provides incentives for achieving mutually defined goals. Under such an approach, cities could require a minimum vehicle lifespan (measured in number of lifetime rides or mileage vs. the misleading number of months) to be awarded an operating permit. Cities could increase fleet size allowances for operators deploying in historically underserved neighborhoods, and reduce fees for operators who use less-polluting electric vans and cargo bikes for fleet management and charging operations. This more dynamic approach would help to align incentives between operators and cities and lead to more sustainable programs. 

Focus on fewer, more meaningful metrics

Building on the point above, identifying meaningful metrics with consistent reporting requirements would streamline program management and lead to better sustainability outcomes. Instead of asking for a lifecycle assessment or a description of a company’s recycling practices — which city governments have no capacity to verify — cities should instead define a handful of metrics that get to the root of what they’re trying to measure and enforce. 

For example, to disincentivize premature vehicle scrapping, cities could require that a certain percentage of parts are reused in repairs, retired vehicles get a “second life,” or that companies have an identified partner for facilitating vehicle donations and reuse. Further, they can require a minimum recycling efficiency rate to ensure that scrapped vehicles go to quality recycling facilities. Such metrics would send the right signals to operators and give cities the information they need. 

We’d be remiss if we didn’t point out here that there is a perplexing asymmetry between what’s asked of micromobility providers versus shared car services or drivers more broadly. Cities would do well to do more to incentivize modes that help to meet their broader social goals — like micromobility. Which leads us to our final recommendation.

Invest much more in safe and sustainable transportation 

Shared micromobility can help achieve the sustainability goals most cities have identified as priorities. But they need help, in the form of bike- and scooter-friendly infrastructure. Connected and protected “green lanes,” particularly in historically underserved parts of cities, will entice additional two- and three-wheel trips and improve safety for all road users. Investment should also be made in other types of micromobility infrastructure, like parking corrals in particularly dense areas, or charging facilities that can be used by operators as well as private owners. 

But for cities committed to real modeshift at the pace needed to reach climate goals, it will likely also require operator subsidies, similar to those provided to bikeshare systems. Such subsidies would give the city more leverage to ensure environmental and social goals are achieved, and would be significantly less costly than the subsidies that are handed to other forms of transportation. When you consider all the social benefits from human-scale, zero-emission mobility — including around livability, air quality, and road safety — this investment would be a real bargain. 

A path forward

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