We’re Staring Down the Scooter Apocalypse
Today on Speed Lines: The era of the startup with no viable business plan may be over.
Welcome back to Speed Lines, The Drive's morning roundup of what matters in the world of transportation. It's Monday! Almost nothing good is happening. Let's dive right in!
'A Death Knell For Scooter Businesses'
I think at this point, it's fair to say that dockless scooters can be a fun and convenient way of crossing short distances in cities, but they are hardly the world-changing revolution in "urban mobility" that they were supposed to be. Besides the fact that they litter city streets and sidewalks like the toys a spoiled kid refuses to put away, the scooters owned by Bird, Lime and the rest come with huge overhead and maintenance costs and, as has been typical for Silicon Valley in recent years, an unclear path to actual profitability. Scale, yes. Money? Not so much.
And now that the world is being fundamentally changed by the coronavirus outbreak—including in ways that will increasingly feel long-term instead of just temporary—the e-scooter business is in real trouble, reports Bloomberg. People are advised against going outside, tourism is almost nonexistent and fewer people are even commuting to work.
The scooter game was rough before, and now it's tanking. From the story, and emphasis mine:
Now as governments around the world fight to slow the coronavirus pandemic, micromobility companies are facing a deeper existential challenge. The two largest global operators, Lime and Bird, drastically reduced fleets by mid-March. Several other startups, including Wheels and Jump, say they’re looking at how to continue operating as cities issue lockdown orders and demand plummets. The appeal of sharing a high-touch vehicle with an unknown number of strangers has succumbed to the fear of viral transmission.
Lime’s CEO and co-founder Brad Bao wrote in a blog post on March 21 that the startup is “winding down or pausing” service in all markets but South Korea. Prior to the pandemic, the company operated nearly 120,000 scooters in 30 countries across the Americas and Europe. Bird announced it is removing its fleets in six U.S. cities: Miami and Coral Gables, Fla.; Portland, Ore.; and Sacramento, San Francisco, and San Jose. It had already pulled vehicles from 21 European cities.
The sudden disappearance of scooters and e-bikes comes after months of industry turbulence. Lime and Bird have struggled to raise money from investors, and both cut staff starting late last year. The companies, once singularly focused on growth, have realized their problematic business plans need rethinking.
More companies are cutting back service and laying off teams worldwide. They may need to find a lifeline by getting subsidies from cities when this is all over, but who knows if municipalities will be willing or able to pony up.
While I was never a big scooter user, and in fact, I can't stand the sight of them just dumped everywhere across our cities, I do think the bolded line is the larger lesson here. For about a decade, the tech startups were able to skate by just fine with the help of investors who were fine with shaky plans for profitability, as long as they could scale up to be the next Facebook or Uber or whatever. Too big to die, as it were.
Now, with capital markets drying up and a user base that's basically going to be stuck at home for months, all of these tech startups may be forced into more realistic thinking for a change.
This Was Going To Be A Tough Year In Cars Even Before Coronavirus
The pandemic has hammered new car sales figures and brought factories across the world to a screeching halt. But it's worth remembering that the global auto industry has been bracing for some kind of downturn for probably about two years now. There's plateauing demand after the last recession, a huge drop in small car sales everywhere and a precipitous decline in the all-important Chinese market.
And all of that is before you get to the economy-debilitating viral outbreak of 2020. Ouch.
The Wall Street Journal looks at the Japanese automakers in particular, and how they were poised for a slowdown anyway—especially Nissan, which as we all know is just full of problems:
While China was a big factor, since most factories had to close there in February during the worst of the coronavirus’s spread, it wasn’t the only cause. Nissan’s production had been declining due to falling sales around the world. Its production fell 29% in Japan and 24% in the U.S. in February. Honda’s production was down 14% in Japan and 5% in the U.S. in February.
[...] Global auto sales were already expected to decline on slowing economic growth, but the virus has sent them into a free fall. Car sales could drop to 69 million units this year from 90 million in 2019 if the virus continues to spread into the second half of the year, according to a March 27 report from LMC Automotive, a forecasting firm.
The "upside" is that the Chinese factories are expected to be ramping up again in April, and that country—if their data is to be believed—seems to be fighting through the worst of the outbreak. I'm very curious to see if that will translate to a sales uptick in that market and some much-needed cash for every automaker.
Let's Talk About Charging Stations For Electric Flying Taxis
America's EV charging infrastructure isn't anywhere near where it needs to be yet, and flying cars (specifically air taxis) still feel more like science fiction than a viable means of getting around. But at least one company is trying to get way, way, way ahead of the curve by designing charging stations for electric VTOL aircraft, reports Wired:
Burlington-based Beta Technologies, a three-year-old company that’s developing an electric vertical-lift airplane, created the structure to be a key component in the future of aviation: A charging station for electric aircraft, from pilotless drones to futuristic flying taxis. “It can charge the aircraft, providing accommodations to ‘recharge’ the flight crews, as well, or it can serve as a handoff point for cargo or medical supplies,” says Kyle Clark, Beta’s founder.
The station is designed for the coming wave of electric air taxis—and their demand for fast and reliable charging, something few of the industry’s players have yet to fully explore. Topping off the larger and more powerful batteries used by electric aircraft could cause even greater strains on the grid than electric cars, which already face challenges in getting steady power delivery from charging stations.
Sure. I suppose someone has to get in before everyone else does, but color me skeptical. And you'll notice it's still just a few years away, global pandemic be damned:
Clark says the system could be ready to go long before eVTOL aircraft are actually in operation—something targeted for the middle of this decade, assuming progress isn’t hindered by the current economic crisis. In fact, they could be placed in service almost immediately for UAV operations.
On Our Radar
Follow the latest on assembly plant closings (Automotive News)
China's factory activity seen recovering in March, but still in contraction after virus shock (Reuters)
Read These To Seem Smart And Interesting
This is why everyone is hoarding toilet paper (Ars Technica)
What transportation-related businesses do you see failing amid the pandemic? How can they avoid that outcome?