Compared to automobiles, electric scooters are a low-carbon, quiet and inexpensive means of transportation that can have a positive impact on urban mobility and the environment. However, despite its promising potential, the majority of urban dwellers recognize electric scooters as toys or threatening public safety.
Along with that, the amount of venture investment in this industry is also small. Since 2010, shared micromobility has received $ 9 billion in global investment, compared to 723 US startups raising in the third quarter of 2021 alone. It is 100 million dollars (about 8.34 trillion yen). If we are aiming for a truly sustainable urban environment where people all choose low-carbon micromobility over cars, we must find a way to monetize this business.
Initially, electric scooter operators were trying to get the attention of users by bringing as many electric scooters to the market as possible, and their physical presence meant success. As cities introduced regulations and licensed, operators’ interest shifted to obtaining approval from city authorities, because licenses ensure access to end-consumers and make long-term plans. Because it gives a sense of trust.
The license eased the burden on investors, and licensed startups saw a surge in funding. For example, in 2021, companies such as Tier, Voi, and Dot raised a cumulative total of $ 490 million.
This fact sends a clear message to other electric scooter operators looking to compete in the market that if they want to attract investment and grow, they should first establish their position in the city. At present, this mainly applies to Europe, where infrastructure is well-developed and functions as a micromobility transport and business model test site.
However, if micromobility proves to be efficient for the urban community, these methods will extend to other regions, such as the United States, where bicycle lanes are already in place in major cities. Given that the world‘s micromobility is expected to be a $ 300-500 billion industry by 2030, it’s well worth the effort. ..
But simply winning the bid is not enough, because licensed operators move on to the next competition. Businesses must meet the expectations of both end consumers and investors. That is, you must achieve profitability while providing the best products and product experiences.
So far, the electric scooter sharing business has not been profitable, and there is plenty of room for improvement in existing business models. The most prominent problem is the expensive charging and operation, which is said to account for 60% of the cost, and even a small optimization here can be beneficial.
So what can we do?
Operations may vary from company to company, but there are few charging scenarios. Micromobility operators manually retrieve vehicles and bring them to charging warehouses at the end of the day, or manually replace dead batteries with new ones. Both are labor-intensive, and players are emerging to offer solutions aimed at reducing this cost.
Taiwanese electric scooter maker Gogoro has developed a swapping station that takes over charging work to riders. So far, it only supports two electric scooter brands. The German tier chose a similar approach and recently launched the Tier Energy Network. This allows Tier users to replace their batteries themselves using the PowerBox installed at their local partner shop. However, in order to replace the battery, you have to prepare at least two batteries for each electric scooter you own, and the battery cell is the most expensive hardware component.
Also, having to reroute to replace batteries where the brand’s batteries are located can adversely affect the product experience for some consumers and is crucial when competition is fierce. It will limit the number of users of the business.
In addition, as the demand for micromobility increases, stations will be required to accommodate a large number of vehicles at the same time. This creates a demand for universal infrastructure. Companies such as Kuhmute and PBSC Urban Solutions are partially addressing this issue, developing universal chargers for different e-mobility vehicle types and brands. Since many such solutions are electrical contact, the number of vehicles that can be accommodated at one time is limited. What’s more, stations are prone to contact oxidation in a few months, changing the landscape of the city.
Then, the next step is to deploy a one-touch charger that has significantly expanded parking space. But when it comes to parking spaces, cities emerge as important stakeholders. Cities already need to convert a lot of residential land to parking spaces for cars, but they also need to convert it to charging electric scooters. Both the swap station and the charging dock need to be installed on the ground.
Some players are beginning to tackle this problem, and such products already exist in the field of electric vehicles. For example, WiTricity in the United States is developing a ground charging pad that can be charged wirelessly when parked on it. This charger has no ground hardware, so it can be used like a normal road or sidewalk. In addition, since there are no destructible parts, it is also a countermeasure against destructive acts.
Applying this technology to the field of electric scooters can eliminate extra batteries and manual labor for replacement and connection, leading to improved unit economics. Such standardization benefits both end consumers and micromobility companies.
Editor’s Note: The author of this article, Roman Bysko, is co-founder and CEO of Meredot, a mobility infrastructure company that develops next-generation electric charging stations.
Image Credit: Inside Creative House / Getty Images
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(Sentence: Roman Bysko, Translation: Yuta Kaminishi)