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Explosive electric scooters, how to repeat the defeat of ofo

In 2017, when the domestic shared bicycle market was in full swing, electric scooters, electric bicycles and shared bicycles began to appear in major cities across the ocean. Anyone only needs to turn on the phone and scan the two-dimensional code to unlock and start.

This year, Chinese Bao Zhoujia and Sun Weiyao founded LimeBike (later renamed Lime) in Silicon Valley to provide sharing services for dockless bicycles, electric bicycles and electric scooters, and earned more than 300 million US dollars in less than a year Financing, valuation reached 1.1 billion US dollars, and quickly extended business to California, Florida, Washington…

At about the same time, Bird, founded by former Lyft and Uber executive Travis VanderZanden, also moved its own shared electric scooters to the streets of the city, and completed 4 rounds of financing in less than a year, with a total amount of more than 400 million US dollars. The “unicorn”, which was the fastest to reach a valuation of US$1 billion at that time, even reached an astonishing valuation of US$2 billion in June 2018

This is a crazy story in Silicon Valley. In the vision of the future of shared travel, electric scooters, two-wheeled electric vehicles and other means of transportation that can solve the “last mile” problem have become investors’ favorites.

In the past five years, investors have invested more than US$5 billion in European and American “micro-travel” companies-this is the golden age of overseas shared electric vehicles.

Every week, shared electric scooter brands represented by brands such as Lime and Bird will add thousands of electric scooters and promote them on social media frantically.

Lime, Bird, Spin, Link, Lyft… These names and their electric scooters not only occupy prominent positions in the streets, but also occupy the front pages of major investment institutions. But after the sudden outbreak, these former unicorns had to face a brutal market baptism.

Bird, once valued at $2.3 billion, was listed through a SPAC merger. Now its share price is less than 50 cents, and its valuation is only $135 million, showing an upside-down situation in the primary and secondary markets. Lime, known as the world’s largest shared electric scooter operator, The valuation once reached 2.4 billion U.S. dollars, but the valuation continued to shrink in the subsequent financing, falling to 510 million U.S. dollars, a 79% reduction. After the news that it will be listed in 2022, it is now cautiously choosing to continue to wait.

Obviously, the once sexy and attractive shared travel story has become less pleasing. How enthusiastic investors and the media were at the beginning, they are now disgusted.

Behind all this, what happened to the “micro-travel” service represented by electric scooters overseas?
The Sexy Story of the Last Mile
China’s supply chain + shared travel + overseas capital market, this is an important reason why overseas investors were crazy about the shared travel market at first.

In the domestic bicycle-sharing war that was in full swing, overseas capital sensed the business opportunities contained in it and found a suitable target.

In the United States, participants represented by Lime and Bird have found a “three-piece travel set” centered on dockless bicycles, electric bicycles and electric scooters to meet the short-distance travel needs of different users. A perfect solution.

Sun Weiyao, the founder of Lime, mentioned in an interview: “The turnover rate of electric scooters is very high, and people often make an appointment to use them before it ‘touches the ground’. In areas with high population density, the usage rate of scooters is high. ; and when traveling for long distances, people are more inclined to choose electric vehicles; people who like sports in cities are more willing to use shared bicycles.”

“In terms of cost recovery, electric products have more advantages. Because users are more willing to pay more to enjoy a better product experience, but the cost of the product is also higher, such as the need to replace the battery or recharge.”

In the blueprint conceived by the unicorns, the core of the C position is actually the electric scooter, not only because of its small footprint, fast speed, and convenient manipulation, but also because of the added value brought by its technology and environmental protection attributes.

Statistics show that the proportion of post-90s in the United States holding a driver’s license has dropped from 91% in the 1980s to 77% in 2014. The existence of a large number of people without cars, coupled with the low-carbon model advocated by shared electric scooters, also conforms to the background of the rise of environmental protection movements since the new millennium.

The “blessing” from China’s manufacturing industry has become another important reason for “ripening” these overseas platforms.

In fact, the electric scooters originally used by companies such as Bird and Lime mainly came from Chinese companies. These products not only have price advantages, but also faster product customization and a relatively large industrial chain ecology. Product upgrades provide good support.

Taking Lime as an example, it took three years from the first generation of scooter products to the launch of the fourth generation of scooter products, but the first two generations of products were made by domestic companies, and the third generation was independently designed by Lime. Relying on China’s mature supply chain system.

In order to make the “last mile” story more warm, Lime and Bird also used some platform “wisdom”.

In some places, Lime and Bird users can directly take outdoor electric scooters home, charge these scooters at night, and return them to designated areas in the morning, so that the platform will pay users a certain amount, And in order to solve the problem of random parking of electric scooters.

However, similar to the domestic situation, various problems have emerged during the promotion of shared electric scooters in the United States and Europe. For example, many scooters are placed on the sidewalk or at the parking entrance without management, which affects the normal travel of pedestrians. There were complaints from some local people. There are also some people riding scooters on the sidewalk, which threatens the personal safety of pedestrians.

Due to the arrival of the epidemic, the global transportation field has been greatly affected. Even the shared electric scooters that mainly solve the last mile have encountered unprecedented difficulties.

This kind of influence regardless of national boundaries has lasted for three years and has greatly affected the business of these travel platforms.

As a solution for the “last mile” of the travel process, people usually use products from Lime, Bird and other platforms interspersed with subways, buses, etc. After the epidemic, all public transportation areas are facing a sharp drop in passengers.

According to City Lab’s data last spring, the number of public transport passengers in major cities in Europe, America and China showed a sharp drop of 50-90%; the traffic flow of the northern subway commuter system in the New York area alone decreased by 95%; the Bay Area MRT in Northern California System ridership was reduced by 93% within 1 month.

At this time, the rapid decline in the usage rate of the “transportation three-piece set” products launched by Lime and Bird became inevitable.

In addition, whether it is electric scooters, electric bicycles or bicycles, these travel tools that adopt the sharing model, the virus problem in the epidemic has brought people a deeper level of concern, users can not rest assured to touch the car that others have just touched .

According to McKinsey’s survey, whether it is business or personal travel, “fear of contracting viruses on shared facilities” has become the main reason why people refuse to use micro-mobility travel.

This decline in activity has directly affected the revenue of all companies.

In the fall of 2020, after reaching the milestone of 200 million passengers worldwide, Lime told investors that the company would achieve positive cash flow and positive free cash flow for the first time in the third quarter of that year, and that it would be profitable for the full year of 2021.

However, as the impact of the epidemic escalates around the world, the subsequent business situation has not improved.

According to the research report, using each shared electric scooter less than four times a day will make the operator financially unsustainable (ie, user fees cannot cover the operating costs of each bicycle).

According to The Infomation, in 2018, Bird’s electric scooter was used an average of 5 times a day, and the average user paid $3.65. The Bird team told investors that the company is on track to generate $65 million in annual revenue and a gross margin of 19%.

A gross margin of 19% looks good, but it means that after paying for charging, repairs, payments, insurance, etc., Bird still needs to use only $12 million left to pay for office lease and staff operation expenses.

According to the latest figures, Bird’s annual revenue in 2020 was $78 million, with a net loss of more than $200 million.

In addition, there is a further increase in operating costs superimposed on this: on the one hand, the operating platform is not only responsible for charging and maintaining products, but also disinfecting them to ensure their hygiene; on the other hand, these products are not for sharing And design, so it is easy to break down. These problems are not common in the early stage of the platform, but as the product is laid in more and more cities, this situation is more common.

“Usually our consumer-grade electric scooters can last for 3 months to half a year, while the life expectancy of shared electric scooters is about 15 months, which puts forward higher requirements for products.” A person engaged in related manufacturing industries Experts said that although the products of these unicorn companies are gradually transitioning to self-built vehicles in the later stage, the cost is still difficult to reduce quickly, which is one of the reasons why frequent financing is still unprofitable.

Of course, the dilemma of low industry barriers still exists. Platforms such as Lime and Bird are industry leaders. Although they have certain capital and platform advantages, their products do not have an absolute leading experience. The product experience users use on different platforms They are interchangeable, and there is no one who is the best or the worst. In this case, it is easy for users to change services because of the number of cars.

It’s hard to make huge profits in transportation services, and historically, the only companies that have been truly consistently profitable have been automakers.

However, platforms that mainly rent electric scooters, electric bicycles, and shared bicycles can gain a firm foothold and develop soundly only by virtue of stable and large user traffic. In the short term before the epidemic is over, investors and platforms cannot see such hope.

In early April 2018, Meituan fully acquired Mobike for US$2.7 billion, which marked the end of the domestic “bike sharing war”.

The shared bicycle war derived from the “online car-hailing war” can be said to be another iconic battle in the capital frenzy period. Spending money and paying to occupy the market, the industry leader and the second merged to completely monopolize the market were the most mature routines of the domestic Internet back then, and none of them.

In the state at that time, entrepreneurs did not need, and it was impossible to calculate the revenue and input-output ratio. It is said that the Mobike team recovered after the event, and the company suffered a large-scale loss, just after receiving a large investment and starting to launch the “monthly card” service. After that, the exchange of losses for the market became even more out of control.

Regardless of whether it is online car-hailing or shared bicycles, transportation and travel services have always been labor-intensive industries with low profits. Only intensive operations on the platform can be truly profitable. However, with the crazy support of capital, entrepreneurs on the track will inevitably enter the bloody “battle of involution”.

In this sense, electric scooters in Europe and the United States can be said to be similar to shared bicycles, and they belong to the “golden age” of venture capital hot money everywhere. At the moment of capital crunch, prudent investors pay more attention to revenue data and input-output ratio. At this time, the fall of the unicorn sharing electric scooters is an inevitable ending.

Today, when the world is gradually adapting to the epidemic and life is gradually recovering, the demand for the “last mile” in the field of transportation still exists.

McKinsey conducted a survey of more than 7,000 people in seven major regions of the world after the outbreak, and found that as the world returns to normal, people’s tendency to use privately owned micro-transportation vehicles in the next stage will increase by 9% compared with the previous epidemic period. The propensity to use shared versions of micro-transportation vehicles increased by 12%.

Obviously, there are signs of recovery in the field of micro-travel, but it is very difficult to say whether the hope of the future belongs to electric scooters.


Post time: Nov-19-2022