Micromobility, which includes consumer usage of bikes, e-scooters, electric skateboards and mopeds, is beginning to soar as people need to travel but want to avoid crowded public transportation.
Many people also want to avoid purchasing cars since they depreciate and include expensive monthly insurance bills and parking shortages. The combination of these market trends, accelerating business model innovation and decreasing costs of related technologies will bring many new solutions for consumers around the world in 2021.
Smart investors need to know who the winners are going to be in the near term while understanding what is on the horizon that could disrupt the current dominant players.
Factors driving growth
Changing consumer demographics are a growth driver, as millennials and Gen Z – now the prime working-age population – are adopting micromobility solutions as they are seen as safe, fun and affordable. They are also convenient in crowded cities where cars are expensive and cumbersome to own.
There are also hundreds of miles of new bike lanes being created in anticipation of the growth in the market. Brussels, Seattle, Montreal, New York and San Francisco have each introduced dedicated cycle paths. Milan announced that 35 kilometers of streets previously used by cars will be transitioned to walking and cycling lanes after the lockdown is lifted. Paris will convert 50 kilometers of lanes usually reserved for cars into bike lanes, with plans to invest $325 million to update its biking network.
This all points to a new era of transportation for consumers to use micromobility solutions in addition to autonomous vehicles.
Recovery follows disruption
There’s little doubt that the covid-19 pandemic was at first a disruptor to the multi-billion-dollar micromobility industry. Initial shutdowns meant that fewer people were traveling in general and on public transportation. This impacted the workforce at micromobility companies and helped drive increased industry consolidation. At the same time, however, many companies also shifted to new business models that helped them improve their profit margins.
Investors should know that the sector has already recovered to pre-covid levels, and we expect the trend to continue throughout 2021. E-bike and e-scooter usages are soaring, since the devices meet social distancing norms and are viewed as safe alternatives to shared public transportation. Further, preferences are evolving as consumers begin taking longer trips. According to a 2020 McKinsey & Company report, average trip distances have grown 26 percent since the start of the pandemic, with rides in some cities, such as Detroit, increasing by up to 60 percent.
The micromobility market is expected to grow by 9 percent for private micromobility and by 12 percent for shared micromobility. Longer term, McKinsey reports in its consumer survey that more people say they are willing to use micromobility and they will continue to increase their trip distances. Cities may even de-incentivize and regulate private car ownership, as they are likely to invest more in biking infrastructure.
Innovation led by start-ups
Creative start-ups around the globe like Bird, Lime, dott, skip, TIER and voiare are leading innovations in micromobility.
Bird is working to make cities more livable by reducing car usage, traffic and carbon emissions. Lime’s mobile app helps riders find and use a shared fleet of smart bikes and scooters – an affordable alternative for its users. China has also seen several micromobility start-ups reaching unicorn status, including Ofo, Mobike and Hellobike.
Investors should look out for start-ups that will provide solutions in tandem with the future trends of new city infrastructure as well as those that are incorporating autonomous capabilities. These start-ups will have the best chance to gain enough traction to compete with or be acquired by the largest companies operating in the space today.
Anis Uzzaman is general partner and chief executive of Pegasus Tech Ventures.