A $4 billion bubble
Micromobility is socially selective, environmentally unfriendly, and it is not even supported by a sustainable model. But it is still well-hyped and it continues to draw large investments. Here is why.
“Mirage” is the polite world I use to characterize the idea that small individual transportation vehicles could be the solution to urban congestion or pollution.
Micromobility is not an innovation. It is a bad remedy to a failure of the public apparatus — at the state or the municipal level — unable to develop adequate infrastructure despite opulent fiscal bases.
I live in Paris, which enjoys one of the best public transportation systems you can think of. The ultra-dense network of subway and bus lines is able to move Parisians in decent conditions. Locals complain, but that is part of the French folklore. The only problem is strikes,
those are more a political issue than a question of infrastructure.
In spite of that, the Paris mayor has opened the streets to multiple scooter operators. It is a disaster: cohabitation with pedestrians, bike riders, and cars is, to say the least, conflictual. The use of scooters led to a noticeable surge in ER admissions. Thrown-away “trottinettes” litter curbs, blind people trip over them and rolling a stroller is infuriating. As a response, some local laws were passed but they are barely enforceable.
With a remarkable adaptive ideology, the Socialist mayor of Paris Anne Hidalgo had no issues creating hundreds of low-paid jobs in the process. They go to young, otherwise unemployed people living on the outskirts of Paris. But these cohorts of “juicers” or “catchers” who recharge scooters and dockless bikes for a few euros, are the ones who keep the system running. Few users see them; proletarians work at night.
Like in every other city where they are deployed, scooters are also an economic disaster. There is simply no sustainable model for shared micromobility at this point, as shown in this table that breaks down the operation of a scooter fleet and shows a $300 to $500 cost per vehicle:
Even the environmental argument doesn’t hold as explains this piece of the MIT Technology Review (emphasis mine):
“Researchers at North Carolina State University decided to conduct a “life-cycle assessment” that tallied up the emissions from making, shipping, charging, collecting, and disposing of scooters after one of them noticed that a Lime receipt stated, “Your ride was carbon free.”
The study concludes that dockless scooters generally produce more greenhouse-gas emissions per passenger mile than a standard diesel bus with high ridership, an electric moped, an electric bicycle, a bicycle — or, of course, a walk.
The paper found that scooters do produce about half the emissions of a standard automobile, at around 200 grams of carbon dioxide per mile compared with nearly 415. But, crucially, the researchers found in a survey of e-scooter riders in Raleigh, North Carolina, that only 34% would have otherwise used a personal car or ride-sharing service. Nearly half would have biked or walked, 11% would have taken the bus, and 7% would have simply skipped the trip.
The bottom line: roughly two-thirds of the time, scooter rides generate more greenhouse-gas emissions than the alternative.”
Despite this terrible assessment, micromobility’s hype seems intact.
Last month Bird raised $275 million in a fourth round of funding, which values the company at $2.5 billion. In total the startup has collected $548 million, less though, that the leader Lime which raised $765m. Altogether the micromobility sector has attracted huge fundings as shown in this chart from Pitchbook:
The three engines of the micromobility hype
1 . The need for an alternative to the individually-owned car.
Below is my favorite video of the Los Angeles 405 freeway:
1970: One more lane will fix it. 1980: One more lane will fix it. 1990: One more lane will fix it. 2000: One more lane will fix it. 2010: One more lane will fix it. 2020: ? https://t.co/NjS1IPORG2 via @avelezig
The current urban-transportation model is unbearable. Especially if we look a few decades ahead. Last week, analyst Horace Dediu delivered a compelling presentation at a micromobility conference in Berlin.
His arguments circle around the idea that, at the current rate of economic development, the world is facing an additional 1.5 billion cars by 2050, more than twice today’s number. Dediu also details the insane space allocation that goes with the car: because an automobile is idle 96 percent of the time, each of them requires three to five parking spaces, says Dediu, and even eight spaces in the United States.
2 . The liar’s poker of the VC
The idea behind this firehose of capital is the pricing power fantasy: the most aggressive player achieves the largest footprint in record time will reap all the benefits. That was the concept of the ride-sharing business and the battle between Uber and Lyft.
Now is reckoning time.
Both ride-sharing companies are now trading 40 percent below their introductory IPO price. They carry the same lineup of blue-chip investors as those in the micromobility sector (which is also a non-negligible part of Uber and Lyft’s activity). No one wants to rock the boat.
A look at who invests in micromobility shows that all the big names are all here: Andreesen Horowitz, Sequoia, Google Venture, Accel, all have a stake in the game. At the same time, they are neck-deep in the autonomous cars sector, which is losing the investors’ trust. In September Morgan Stanley cut its valuation of Waymo by 40percent, to $105 billion. The two sectors are capitalistically intertwined and are heading towards a certain and severe correction in the coming months. But it’s fine. Being wrong together is not a problem.
3 . Local politics
Like in San Francisco, where scooters are now legal, micromobility initiatives are mostly an electoral response aimed at seducing the most affluent segment of the population: young, urban, upwardly mobile people (and largely male). This means of transportation remains socially selective and shows divisions between the users and those who support the system that helps them work. It is a caricature of growing urban inequalities.