15.04.2020
  • COVID-19 is leading to a slump of the mobility markets worldwide – also micro mobility providers are in crisis mode.
  • Suppliers are reacting by reducing operations or discontinuing them altogether, sending employees on short-time work or massively cutting jobs.
  • After the hype and hope for a breakthrough this summer, the industry of e-scooter providers is facing a struggle for existence – Nunatak highlights three scenarios to illustrate the possible path after the crisis.

 

A mild winter and promising growth numbers of the previous year fomented high expectations for the micro mobility market in 2020. However, a quarter into the year, many firms are at the abyss of financial collapse. What is the current situation? How are the affected companies handling the crisis? And what is the perspective for the future? An Overview.

At present, there are signs of a global collapse of the mobility market.

Worldwide exit restrictions and travel bans lead to massive losses in turnover in the mobility industry. Lufthansa alone is cancelling nine out of ten flights, car sharing companies are recording a drop in revenue of more than 50% compared to the previous year and public transport is also experiencing a drop in traffic of more than 60%.

Micro mobility providers are also massively affected by the crisis

The same can be observed in most metropolises: Residents avoid e-scooters and e-bikes out of fear of a lack of hygiene and tourists have not been coming for a long time anyway. As a consequence, the providers take their e-scooters and e-bikes off the streets and, as in the case of Bird, Lime and Voi, discontinue operations completely. Only a few still maintain a minimal operation. Due to the massive slump in sales and ongoing fixed costs, many providers are forced to apply for short-time work or cut jobs. Tier secures liquidity by sending 60% of its employees on short-time work. Bird, on the other hand, recently laid off 30% of the workforce, costing more than 400 employees their jobs.

A Lack of financing injections dramatize the situation for micro mobility providers

Most micro mobility providers are dependent on venture capitalists who have currently stopped all financing rounds. This is especially critical for Lime which had planned another financing round. Although Lime currently still has 70 million US dollars in reserves, there are already signs of a slump in company valuations of more than 80%.

Some providers send a special sign of solidarity

Nevertheless, some of the micro mobility providers are committed to the social common good in the current crisis. Tier und Dott, for example, have set up a ‘Hero Programme’ which lets people in systemically important professions use the scooters free of charge or at a reduced price. Voi is taking a different approach and, in cooperation with Gigstr, has found “Voi it” – an e-scooter delivery service for pharmacies, restaurants and grocery stores in Stockholm and Gothenburg. Lime has not launched a creative campaign yet. It remains to be seen whether these programs will help to ensure that one or the other supplier is not forgotten by customers during the crisis.

Major players with more diversified portfolios are surprisingly crisis-proof

While most of the companies are currently busy cutting costs, Uber is already thinking one step ahead and is pushing innovative business models onto the market. Uber uses its current network of drivers and quickly converts Uber Eats into an on-demand food delivery service. This new service is to be offered not only via the UberEats App, but also via telephone, in order to provide a relevant offer for less digital client groups. With the recently launched Uber Freight service, Uber manages to maintain strategically relevant supply chains, especially with regards to relief goods. In addition, a new service is currently under development to deliver Corona test kits.

How is the micro mobility market changing after the Corona crisis? Nunatak highlights three scenarios:

Scenario 1: The golden age of new & micro mobility providers 

Social distancing and self-isolation continue to have an effect – even after the restrictions have been loosened. While the public transportation sector is only slowly returning back to normality, we see a strong shift in demand towards the private transportation sector. Roads will soon be hopelessly overcrowded and inhabitants of metropolitan areas will search for alternatives to both public transportation and cars – this heralds the start of the golden age for the new & micro mobility providers. However, they will have to find ways to build up capacity within a short period of time in order to be able to scale, as they are struggling with staff cuts and financial constraints at the moment. For this reason, they will be focusing on markets that have already proven their potential in the past. Only a few providers will fall victim to the crisis, usage figures will increase and the recovering of the market will also encourage investors to kickstart new rounds of financing to stem the growth.

Scenario 2: Financially strong providers will be the winners of the crisis

The ongoing crisis including the restrictions on public life will accompany us for an indefinite period of time. Time that many of the small new & micro mobility providers do not have. As the main focus was put on rapid scaling, even before the crisis the business was only partially profitable and the dependence on risk capital providers was immense. Last financing rounds were more than half a year ago, and new deals are currently not in sight. As a consequence, the providers lack the liquidity to bridge this phase – despite the bitter cost-cutting measures. Even if the demand for private transportation would increase at some point after the crisis, only those who remain after the crisis will benefit – the big ones will be the winners. One of such winners could be Uber with its micro mobility offering ‘Jump’ or also Lyft. On the one hand, they have stronger financial resources, on the other hand they manage to ensure liquidity with the development of creative business models during the crisis. For the micro mobility market this could mean that instead of five or six apps for micro mobility services we would only have one or two apps remaining – the top dogs will make up the market afterall.

Scenario 3: The business will collapse in the long run – creative business models need to be developed

Demand will continue to remain below pre-crisis levels for months, possibly even for years, and the current crisis will become the norm. For those who remain this means: a repositioning, including the development of new and creative business models, needs to happen. Increased partnerships with cities are also conceivable. Micro mobility, for example, could be transformed from a competitor to an integral building block of the public transportation system.

© 2020 The Nunatak Group