McKinsey Mangles Micromobility

Micromobility – characterized by shared bicycles, scooters and other wheeled devices – was all the rage in 2018 and that enthusiasm has carried over into 2019 – if McKinsey is to be believed. McKinsey published a white paper last week touting the glories of micromobility and a potential market of $300B-$500B by 2030. The only problem? McKinsey neglected to recognize obvious sources of woe in the sector.

– Micromobility’s 15,000-mile Checkup – McKinsey

Micromobility leaders around the world are struggling to come to grips with unanticipated levels of theft, vandalism and vehicle abuse. These issues have combined to undermine the confidence of investors and operators.

Simultaneously, the increased awareness of scooter-related injuries is alarming transportation policy makers. A Consumer Reports study found 1,545 electric—scooter implicated injuries since late 2017 in the U.S.

– Investigations Find Scooters a Cause of 1,500+ Accidents – Consumer Reports

Combined with the disinclination of scooter and bike users to wear helmets and the inclination to leave scooters and bikes in inconvenient public spaces, the micromobility explosion is in danger of imploding. These downside insights are coming to the fore as cities weigh the relative merits of shared cars, bikes and scooters as part of an increasingly diverse portfolio of transportation options.

The most obvious failure in the McKinsey report was the estimate that the average scooter lasts four months. Strategy Analytics has found that, on average, scooters last anywhere from 1-3 months, definitely not four. McKinsey further provides estimates for repairs at $0.51/ride – with an average of five rides/day translating to $2.55/day allocated for repairs – or $306 over a four-month life cycle.

Strategy Analytics interviews with operators reveals that most don’t repair their scooters – they cycle the fleet, replacing the old and worn with new scooters. Occasional repairs, yes. Not $306 over a four month period.

There are other flawed assumptions regarding transactions, fees and taxes. Attendees at the recent Micromobility conference in Richmond, Cal., were treated to a healthy dose of enthusiasm leavened by the more sobering concerns of coping with the high cost of keeping scooters on the street in the face of higher than expected levels of theft and abuse.

The most full-throated endorsement came from Horace Dediu, co-founder of Micromobility Industries. Dediu looks at the market from the number and length of trips noting the total addressable market for micromobility consists of all 0-5 mile journeys comprising a total of 4 trillion kilometers/year. (Don’t ask me why Horace combined miles and kilometers.)

– The Reason for Micromobility – Luke Wroblewski blog

Dediu may be correct. That would explain the rapid valuation ramp for companies like Bird and Lime. But attendees at the conference came away recognizing that locks, docking stations and drop off points need to see wider adoption, a solution to the helmet problem must be found, and the scooters themselves need to be made more durable.

Users of scooters need to learn better etiquette as well – a steeper objective for all operators. If the rising tide of reported injuries is not corralled, cities can’t be expected to be unalloyed advocates of micromobility.

Bottom line – there are a lot of bumps along the path to a multi-hundred billion dollar market opportunity. It’s best to approach that opportunity with a helmet, open eyes and ears and better market estimates.