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Struggling e-scooter companies hope for a new beginning after the pandemic

June 22, 2020, 3:30 PM UTC

Before the coronavirus outbreak, the future for scooter rental companies was murky at best. They grappled with the high costs of managing thousands of scooters tossed on city sidewalks and government regulations that limited where their services could operate.

But as more cities emerge from pandemic-related lockdowns and people look for safer alternatives to public transit and carpools, many scooter companies expect a smoother ride. It’s a new beginning, sort of.

“Lime will be stronger post this crisis,” said Joe Kraus, president of scooter rental Lime. “People are rethinking their rides, rethinking how they want to get around cities.”

Lime and several of its rivals say they’ve started seeing increases in rides, first-time riders, or the length of trips in recent months. They’re also benefiting from looser regulations and plans by a number of cities to create lanes for electronic bikes and scooters.

But scooter rental businesses still have some fundamental issues to solve—namely, can they stop hemorrhaging money? When the pandemic hit, and many cities implemented shelter-in-place orders, the big losses they were piling on got even bigger after companies paused service in many cities and lost most of their customers.

In January, before the shelter-in-place orders, Lime had laid off about 100 employees and exited 12 cities to reduce its losses. Following the outbreak, the company laid off 80 more workers. In a somewhat similar pattern, Bird cut more than 450 employees since last year. Meanwhile, Lyft pulled its e-scooter operations out of six cities last year, eliminating 20 jobs in the process.

Ryan Citron, an analyst at research and consulting firm Guidehouse Insights, said though the pandemic may change how people get around, it doesn’t appear to have solved the bigger challenge scooter companies face: becoming profitable. They must still pay fees to operate in many cities, spend big money on recharging scooters, and offer deep discounts to lure new riders.

“I’m less rosy than the companies themselves, as far as the future is concerned,” said Citron. “The sticking point is on the economics side. Just because cities are more open to scooters doesn’t mean [companies are] going to be economically successful.”

Euwyn Poon, president of Spin, another scooter company, has a more optimistic view based on the data he’s seeing about ridership. The average duration of trips in a single month increased to nearly 22 minutes in May, up from 15 minutes during the same period last year. And as its business ramps up from the pandemic—Spin has resumed operations in 25 of the 70 cities it previously served—the company expects the trend to continue.

“What that told us was people were using scooters for more functional purposes…to replace longer distance trips they would’ve taken on shared rides,” Poon said. “People were counting on it as a way to get around.”

Bird, which is operating in 50 of the 100 cities it served before the pandemic, is seeing a similar increase in time spent on rides. It also said it’s retaining more new customers than it did before the coronavirus. And since March 1, around the time some of the first domestic lockdowns were being considered, Bird has signed agreements to operate in 11 new cities, including Fort Lauderdale, Roanoke, and Tulsa.

But the biggest change that may help Bird’s business is that cities are relaxing rules to encourage the use of bikes and scooters. For example, London switched a test of scooter services it had planned to start a year earlier, while Milan, Paris, and Berlin all committed to creating temporary or potentially permanent bike lanes that can also be used by people riding scooters.

“[Cities are] realizing the benefits in ways they haven’t before,” said Rebecca Hahn, chief corporate social responsibility officer at Bird. “That accelerates adoption. It broadens our audience.” 

Lime said the money it makes on each scooter per trip is up 30% from this time last year, reflecting the increase in the amount of time people rent its scooters. It’s also seen the number of new riders grow week over week since restarting service beginning in mid-April, doubling in cities including Dallas, Munich, and Paris, and quadrupling in Washington, D.C., but still below pre-pandemic levels.

Lime recently acquired Uber’s scooter and bike business, Jump, after Uber, under pressure to reduce its huge losses, started cutting back on money-losing ventures. Lime expects to become profitable, minus certain expenses, next year.

While scooter companies took a financial hit following the coronavirus outbreak, several say they’re hopeful about the future. “The way change happens is there are decades when nothing happens, and then there are weeks when decades happen,” Kraus of Lime said. “We’re in that moment” for bikes and scooters.