This story originally appeared in Techonomy’s Winter 2020 magazine.
Walking several miles each day through the streets of Paris, Alexandra André figured it was only a matter of time before she was hit by someone riding one of the electric scooters that have flooded the city. But when she was knocked to the ground late at night by one on a sidewalk, it cemented her disgust with the micro-mobility movement. Her nose needed two stitches.
As a partner at venture capital firm Serena Capital, André is typically a cheerleader for innovation. That electronic scooters have managed to exasperate even someone like her is a sign of just how deeply antipathy has spread across the city.
“The problem is not just the scooters,” she says. “It’s the people who use them. They’re not respectful of others. And there are no police around, so nobody gets punished. It’s madness.”
With 12 companies operating dockless electronic scooters in Paris, more than any other city, Paris has become ground zero for the growing global micro-mobility wars. Piles of scooters are scattered on street corners in the mornings, and many pedestrians have a constant fear of getting sideswiped. The swelling public backlash forced the city to crackdown this summer, with rules many worry will still not tame the mess.
While the issues may be more extreme in Paris, the same problem is echoing in cities around the globe. Urban areas have embraced scooters, with leaders hoping they might reduce cars, pollution and noise. Instead, cities find themselves struggling to put in place rules and infrastructure to accommodate them. And ironically, the scooter glut is bad for micro-mobility companies themselves, who have felt forced to respond to fierce competition with unsustainable, unprofitable pricing.
Cities and companies have big stakes in making new forms of mobility work, but the short-term backlash is threatening to squander what feels to many like a real opportunity to transform urban spaces. “It’s very important to get this right,” says Joël Hazan, a Paris-based partner at Boston Consulting Group. “When we introduced cars, we reorganized every city around car transportation. Now we need to adapt our cities to these new transportation modes. And the decisions we make now will be with us for generations.”
THE RISE OF E-SCOOTERS is part of a broader wave of transportation disruption that started with ride-hailing and dockless bikes. Two pioneers of micro-mobility, Bird and Lime, were recently valued by private market investors at a respective $2.3 billion and $2.4 billion, and BCG estimates such companies have raised a total of $2 billion in venture capital globally. Ride-hailing giant Uber scrambled and acquired bike and scooter startup JUMP, and Lyft bought bike-share startup Motivate and rolled out its own scooters earlier this year.
Companies followed each other into city after city in an effort to dominate a market that BCG estimates could be worth $40 billion annually by 2025. The service clearly delighted a wide swath of users, with Bird reporting 10 million rides and Lime surpassing 100 million trips on its bikes and scooters combined. But on their way to becoming among the fastest startups to ever achieve unicorn status, they have been met with growing skepticism from many corners.
Safety concerns were highlighted in a study published earlier this year by the Federal Centers for Disease Control and Prevention and the Austin, Texas Departments of Public Health and Transportation. The authors found 20 injuries for every 100,000 scooter rides. Another study questioned if the trend is “green” after all. Researchers at North Carolina State University estimated that the carbon footprint of an e-scooter over its entire lifecycle was worse than diesel-powered public transportation.
And then there is criticism that the unit economics simply don’t make sense. Given the short lifespan of scooters as well as operational expenses, charging costs, and current low prices charged to riders, BCG estimates a typical scooter needs to operate almost 4 months to break even. But on average they’ve only been lasting 3 months on mean city streets around the world. Companies are rolling out more durable models, with the CEOs of both Bird and Lime saying they’re seeing more rides become profitable. But in the short term, observers say these companies will need more capital to survive. “When the unit economics are negative, whenever someone gets on a scooter, the price is below the costs,” says BCG’s Hazan. “That is not sustainable.”
The mobility revolution hit cities so fast and with such ferocity that many simply lacked regulatory tools or even a framework for thinking about how to adapt.
While cities often respond with bans, that approach poses its own risks, says Maya Ben Dror, project lead for the World Economic Forum’s Autonomous Urban Mobility Project at the Center for the Fourth Industrial Revolution in San Francisco. Dror argues that these cities are turning their backs on sweeping mobility changes that offer the opportunity to rethink the design and function of cities and public spaces. “These services are a powerful combination of social and technical revolutions, manifesting themselves in scooters,” she says. “I think we’re seeing more and more cities recognizing there is an opportunity here to change, and to put people back into the center of our cities.”
The city of Portland, Oregon opted for caution. Having watched other cities grapple with the problem, it launched a 120-scooter pilot program in 2018 to gather data. While results were generally positive, the pilot elicited public complaints about riding on sidewalks and other safety hazards. So for the next phase, the city added geofencing that restricted use to certain areas, combined with incentives for good behavior. Companies start with small fleets, but if they meet certain environmental and safety benchmarks, they are allowed to add more scooters. “We want to make this work,” says John Brady, director of communications and public involvement for the Portland Bureau of Transportation. “The decisions we make now will have a really long half-life.”
One participant in Portland’s program is San Francisco-based Lime. Founded in June 2017, Lime helped pioneer micro-mobility, first with dockless bikes, then with the scooters it announced in 2018. Along the way, it’s raised an eye-popping $752 million in venture capital.
From the start the company envisioned it would need to work closely with cities to roll out the service, says Lime’s Head of Policy David Spielfogel. Even so, navigating city by city has been labor intensive, since rules and politics vary widely. “Anyone at any company who pretends to be surprised governments want to have control over their streets doesn’t understand the reality,” he says.
Lime experienced serious government pushback even in its own home market of San Francisco. The city initially gave scooters free rein before backpedaling, amid widespread citizen complaints. Then the city ordered them off the streets. It is now proceeding with a more measured pilot program with stricter rules. It has granted licenses to just two operators: Skip and Scoot (which was then acquired by Bird). A mid-pilot city evaluation found that complaints and citations had gone down dramatically, and that the scooters seemed to be replacing short trips on ride-hailing services and led to increased use of public transportation. The results were encouraging enough that the city plans to extend the trial and grant more licenses in October.
After initially banning the services, New York State adopted a framework for electric scooters and bikes this summer that would legalize them. State legislators only got the bill through by carving out an exception for Manhattan, where local leaders and most of the public remain adamantly opposed. New York streets and sidewalks are just too crowded. But as of early October, the bill still awaited the signature of Governor Andrew Cuomo, who continues to express safety concerns.
Micro-mobility companies hope more regions follow the example of Germany, where all cities had been waiting for the national government to develop rules for scooters. These were finally adopted in the summer of 2019 and included highly detailed hardware specifications such as the width of scooters, speed limitations, and the type of brakes required. Lime was about to roll out a new scooter which matched some but not all of these requirements. It then had to spend several months ensuring it met the new specs, Spielfogel says. That was a costly delay. But the uniform national rules then allowed Lime to announce an expansion across Germany that will see the company introduce modest fleets in several cities and increase them gradually. In this case, the rules should also help Lime fend off competition. “The hardware requirements are definitely something that limits the field,” Spielfogel says.
PARIS, BY CONTRAST, has emerged as a cautionary tale for both regulators and scooter companies alike.
In June 2018, Lime was the first company to introduce e-scooters there. The city didn’t have many rules in place, and national law made it unclear what authority it even had in this regard. Eleven more companies quickly swarmed into this regulatory void, swelling the number of scooters to 20,000 early in 2019.
Within a few weeks, Parisians were rebelling, as the scooters became particularly popular with tourists. They often showed little regard for the city’s narrow and crowded sidewalks. Smashed scooters were scattered in parks or hurled into the Seine. In the morning, piles of scooters on street corners became a routine eyesore. France’s Transportation Minister Élisabeth Borne described the situation as the “law of the jungle.”
In June, Paris Mayor Anne Hidalgo declared a crackdown, while acknowledging there was only so much the city could do. New rules included speed limits of 12 mph, generally with a stricter 5 mph in more crowded areas, along with tougher enforcement of fines for illegal parking. Hidalgo also said the city will create a process to grant permits for up to three scooter companies, but will wait until a national law later in 2019 clarifies the city’s authority to impose specific regulations of new forms of transport. “We need order and rules to assure road safety and to calm the streets, sidewalks and neighborhoods of our city,” Hidalgo said at a June 2019 press conference.
The ability to issue permits will allow cities in France to better define their relationships with scooters, enabling them to create incentives and penalties like in Portland. Lime executives say they welcome the national framework. But it and other companies will have to negotiate details with each city.
Hazan, of BCG, says limiting the number of scooter companies may also hasten urgently needed industry consolidation. He also says cities and scooter companies should rethink their economic relationship by recasting the vehicles as a form of public transportation that receives a subsidy. Over the longer term, cities need to begin the hard work of clearly defining their transportation future and installing an infrastructure that reduces space for cars to dissuade their use and increases space for new modes like scooters.
But Paris’ scooters will likely remain a source of contention until the city can put permits in place. And with municipal campaigns already heating up for elections in spring 2020, Paris politicians will likely continue feeling squeezed between users who love them and residents fed up with the chaos. “The political debate over scooters is incredibly important,” Hazan says. “Who would have predicted last year that the future of e-scooters would be one of the top 10 discussions in the upcoming election for mayor?”