The bike-sharing industry in 2021 and beyond
August 26, 2021
min. read
The bike-sharing industry is on the rise. It is the only mobility industry that statistics indicate didn't experience significant losses during the pandemic. The future is also bright as there are government initiatives around the world to support bike-sharing. However, there are things that newcomers in the business can learn from the previous leaders - success in the industry with high demand is no guarantee that the company will be a success.
A bike is a comfortable means of transportation in regions where motorized vehicles are widely used but create heavy traffic jams and pollute the air. This is a problem in regions like Asia-Pacific, North America, and Europe. And this is where and why bike-sharing has become popular. According to the Statista Mobility Outlook, bike-sharing was the only mobility sector that grew its global revenues during the pandemic by a third in 2020. The single-person set-up and open-air nature of bike riding made it the perfect mode of transportation for the pandemic.
Bike-sharing is a shared transport service in which convectional bikes or electric bikes are made available for shared use to individuals on a short-term basis for a price or free. Development of GPS technologies, mobile payments, and IoT devices, as well as reduced locking and tracking system costs for bikes, have recently led to the popularity of a dockless bike-sharing system that allows users to leave the bike anywhere convenient.
According to Mordor Intelligence, the bike-sharing market was valued at USD 3 billion in 2020, and it is anticipated that it will reach USD 4 billion by 2026. The COVID-19 pandemic affected the bike-sharing sector in several countries. The most negative consequences were the daily decline in bike bookings.
Bike demand is majorly driven by developing countries, such as China and India that especially focus on e-bikes. China has always been the largest exporter of e-bikes. According to China’s Ministry of Industry and Information Technology, the country's output of electric bicycles reached 25.48 million during the first 10 months of 2020, a year-on-year increase of 33.4%. During this period, the revenue of major bicycle manufacturing companies reached about USD 22 billion, an increase of 16.8%. According to the China Bicycle Association, from January to September 2020, the volume of bicycle exports was 12% up on the same period last year, rising to USD 2.43 billion.
However, the bike-sharing market growth in Europe is predicted to be the fastest across the globe, as it is anticipated that a large number of service providers will venture into the region in the coming years. In regional countries, bikes are being rapidly made available near major transit hubs, such as railway stations, thereby offering users convenience and ease of travel. In addition, the European Union (EU) also promotes such services, because they are environment-friendly and help to reduce traffic.
Global bike-sharing service market size between 2020 and 2026 in billion U.S. dollars according to Statista:
Currently, major players in the bike-sharing market are:
- Uber Technologies Inc. - provides opportunities to rent a bike in a partnership with Lime. Jump brand bikes are available after Lime acquired the Jump company.
- Lyft Inc. - in November 2018, Lyft acquired Motivate, a bicycle-sharing system and the operator of Capital Bikeshare and Citi Bike. It thus became the largest bike-share service in the United States.
- Hellobike - a transportation service platform based in Shanghai, China. Founded in 2016, the company merged with Youon Bike the following year. In a series of fundraising rounds dating back to 2016, Hellobike has raised over US$1.8 billion from investors.
- DiDi Bike - Didi Chuxing Technology Co. is a Chinese vehicle for hire company headquartered in Beijing with over 550 million users and tens of millions of drivers. The company provides app-based transportation services, including bike-sharing.
The biggest companies in the market are associated with China as are the biggest deals. Looking at the recent biggest deals in bike-sharing, the first worth mentioning involved Didi Chuxing’s bike-sharing arm Qingju. It raised USD 600 million in a Series B equity fundraising round and will be granted an additional USD 400 million in loans.
What was also interesting that at the end of 2020 the mobile application of Mobike, one of China's earliest and largest bike-sharing providers, went offline after its acquisition by Meituan three years before. Mobike was acquired by Meituan for USD 2.7 billion in April 2018. In January 2019, in an internal letter to employees Wang Huiwen, co-founder and Senior Vice-President of Meituan, informed them that Mobike will be renamed Meituan Bike and that the firm would become a unit of the new parent's location-based service department.
The growing interest in e-bikes
One trend that will definitely influence the industry in the near future is the growing interest in e-bike sharing. Pedelecs or pedal electric cycles or EPAC (Electronically Power Assisted Cycles) are becoming increasingly popular. This is a type of electric bicycle where the rider’s pedaling is assisted by a small electric motor. Such vehicles are capable of higher speeds, compared to manually operated bikes. As the demand for higher speeds for short-distance traveling increases, so does the preference for e-bikes. People are ignoring the fact that sharing services on pedal-assisted bikes are cheaper than e-bikes, as the latter offers effortless driving, more convenience, and variable motor power, as well as higher speeds.
One of the most interesting investment deals in 2020 that underlines the interest in e-bikes involved London-based free-to-use shared electric bike firm London-based HumanForest. It announced in September that it had raised £1.8 million. HumanForest offers 20 minutes free per day and a corporate subscription service. It launched in June 2020. In just four months of the company’s operations, 14,000 riders have taken almost 42,000 rides with the number of rides increasing by over 100% month on month!
Later that year, the company raised £1.27m via crowdfunding with the support of over 520 investors, of whom approximately 30% were trial users. The company says that it ran a successful trial during summer 2020 in London with 200 e-bikes. The new funds will be used to expand the fleet to 1,500 e-bikes.
HumanForest’s business model is based on three sources of revenue - users pay 15p per minute after their free daily 10-minute ride is up, while partner companies pay to advertise their brand on the HumanForest digital platform and companies pay to offer their employees further minutes for the HumanForest fleet.
Bike-sharing - more positive than negative aspects
If we analyze positive, as well as negative aspects that could influence the future of bike-sharing, the positive aspects far exceed the negative ones. The only negative aspects are high initial investment costs, as well as the rise in bike vandalism and theft. Positive aspects that could stimulate the bike-sharing business in the future are growing venture capital investments, an increase in the inclusion of e-bikes in the sharing fleet, as well as technological advances in bike-sharing systems.
There is also increased interest from governments in different initiatives for the development of bike-sharing infrastructure. Furthermore, governments are offering subsidies to service providers for developing stations and expanding their reach to a large number of commuters. For instance, in 2018, Chinese Municipal governments subsidized the Public Bike Sharing Program development to encourage non-motorized transport and offer convenient, flexible, and low-cost mobility options. Meanwhile, in Europe, the new public bike-sharing system was launched in the Italian Municipality of Trieste in February 2020. The system, known as BiTS, is being implemented as part of the city's Integrated Sustainable Urban Development Plan at a cost of EUR 390,000, with the aim of developing sustainable mobility by promoting walking and cycling to reduce urban pollution.
Despite the fact that interest in bike-sharing is rising and will continue to do so, it is equally important to learn and not forget the mistakes of pioneers of the industry. For example, the company Ofo was founded in 2014 as a university project, but soon afterward raised $866 million from investors led by Chinese e-commerce giant Alibaba. Ofo was a station-free bike-sharing platform operated via an online mobile application. In total, over the course of nine investment rounds, the company has raised USD 2.2 billion but has still consistently experienced cash flow problems that were driven largely by intense competition in a market that has yet to be proven to be commercially viable according to analysts interviewed by Forbes.
Fees dropped to 1 yuan ($0.14) for each hour of use and sometimes were even free. Despite this fact, Ofo still managed to reach a valuation of $2 billion in a 2017 funding round and around $3 billion at its highest point, and at one time the company deployed more than 10 million bikes globally and attracted as many as 200 million users. “The company’s cash-burning operations and high valuation have combined to deter potential investors, and when capital became scarce, the startup could no longer cover its once sprawling operations,” wrote Forbes.
In 2018, Ofo announced a massive reduction in operations, and by 2020 it faced a large amount of unpayable debt as a result of which the company was no longer operating bike rentals. “Explanations of what exactly went wrong are still evolving, but it seems likely that the mind-boggling amounts of cash pumped into what wasn't essentially a "bike-sharing" model, but rather a rental business pepped up by a smartphone app, had something to do with it. Yes, the company bought bikes and placed them in the streets without docks for anybody to use, and that was somewhat new. And yes, a smartphone app served as the key. But the company owned the bikes, just like any old-fashioned rental shop, and incurred huge maintenance costs,” explained analysts from Roland Berger Strategy Consultants, who were quoted in its magazine “Own the future”.
So it doesn't matter how big the demand for the service is, you should always apply simple business principles to your business.
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Everything you need to know about micromobility fleet insurance
Discover why fleet insurance is important for shared micromobility operators. Learn how the right coverage provides peace of mind against unexpected challenges.
September 14, 2023
min. read
For shared mobility operators, fleet insurance should be one of the top priorities. No matter the size or composition of your fleet, having the right insurance can offer peace of mind by protecting your business from unforeseen situations
However, the insurance question can sometimes seem daunting – especially if you're new to the industry. In this article, we will explore the key things you need to know about insuring your shared micromobility fleet.
Why you need insurance
Operating a shared mobility fleet isn’t always smooth sailing. Accidents can happen – whether it's a minor fender-bender or something more severe. Insurance serves as your safety net, offering financial coverage for repairs, replacements, and even potential legal obligations after an incident.
Here are the main reasons why insurance should be one of the top priorities for shared mobility fleet operators:
Legal compliance: In many places, insurance for shared mobility fleets is a legal requirement. You probably want to comply with these regulations to avoid any potential fines, penalties – or even the suspension of your operations.
Financial security: Insurance also helps keep your business going financially, no matter what happens. Without insurance, accidents, vehicle damage, or theft can seriously impact your finances. Comprehensive insurance coverage can ensure that you're not left scrambling to cover any unexpected expenses.
Understanding shared micromobility insurance
When it comes to insuring micromobility fleets, part of the challenge stems from the fact that the market is relatively new. Some insurance underwriters avoid dealing directly with micromobility because it's seen as an unfamiliar market.
This is where brokers like Cachet and others specializing in micromobility insurance come in. They partner with various insurance underwriters to provide coverage for operators in this field.
When it comes to shared micromobility, insurance coverage generally has a twofold role: safeguarding assets and handling third-party engagement in the event of accidents.
Liability coverage: Securing third-party public liability insurance for shared mobility fleets is not just a matter of choice – in some places, it's mandated by law. This insurance serves to protect pedestrians and riders in the unfortunate event of accidents, providing financial coverage for injuries and damages that may arise. In other words, it's a safety net that offers peace of mind to operators.
When it comes to mandatory third-party liability insurance, the negotiations with the insurance company usually begin by figuring out what the local authorities require to give them a permit. After that, the insurance policy is adjusted to meet the specific demands outlined by these authorities.
Physical damage coverage: This covers the repair or replacement costs of vehicles if they are damaged due to accidents, collisions, vandalism, or theft. Depending on the policy, physical damage coverage may also extend to equipment like GPS devices, charging stations, and other hardware.
What decides your insurance premium payments?
The amount you'll pay in premiums depends on various factors that are specific to your business This includes your fleet's makeup, where and how you operate, and the level of coverage you're aiming for.
Fleet usage: The more a shared micromobility fleet is used, the more chances there are for things to go wrong. When a fleet is in high demand and used often, there's a greater likelihood that something might happen that requires insurance coverage.
Rider behavior: Insurance companies also consider the fleet's ability to predict and manage undesirable rider behavior. Reckless riding, improper parking, or violating traffic rules can significantly increase the risk of accidents and incidents. Operators that have better measures in place to anticipate and mitigate such behaviors can demonstrate a lower risk profile to insurance providers.
Value of the fleet: How much your vehicles are worth individually and as a fleet will affect how much you pay for insurance. If your vehicles are expensive, your insurance premiums will be higher because it would cost more to replace them if they get damaged or lost.
Size of the fleet: Operators can often negotiate more favorable insurance rates for proportionally larger fleets. As the number of vehicles increases, the overall expected risk is distributed and “diluted” as a result – which translates to lower premiums per vehicle.
However, some brokers like Cachet have embraced a broader approach, ensuring that smaller and medium-sized fleets can also benefit from insurance coverage.
Technology implementation: Shared mobility services that employ technologies like GPS tracking, telematics, and IoT devices can provide insurers with valuable data. This data can then help assess driver behavior and usage patterns, enabling insurers to offer more accurate and tailored premium rates. This also takes into account how simple it is for scooters to be stolen and how well the recovery processes function – which can also play a role in insurance expenses.
Where you operate: The location in which your fleet operates is another important factor. From the insurer’s perspective, different areas pose varied levels of risk. For example, urban mobility – which is associated with a higher risk of accidents – may incur higher premiums compared to vehicles used in rural areas.
Level of coverage: The level of coverage you choose directly affects how much you pay in premiums. Opting for higher coverage limits means you get more comprehensive protection, but obviously, it also means your insurance costs go up.
Choosing the ideal insurance for your fleet
Every shared mobility fleet and business is different, so your insurance needs will depend on things like the type and size of your fleet, where you operate, how much risk you're comfortable with, and of course – how much you are willing to pay.
For example, do you require coverage for specific risks, like vandalism, or perhaps your fleet is composed of premium vehicles that are more expensive? To make it more relatable, let's dive into a practical case of a shared micromobility operator's experience with insurance.
How Hoog found the right insurance with Cachet
The concept behind Hoog Mobility is to revolutionize transportation in smaller Estonian towns. They recognized the need for efficient and eco-friendly local travel and brought a shared mobility solution often seen in big cities but missing in smaller communities: electric scooters.
Cash-strapped mobility startups often worry about potential damage or vandalism happening to their shared vehicles. This concern is shared by traditional insurance companies too. As a result, these insurers might hesitate to provide coverage for shared scooters, and if they do – it's usually at a higher cost.
Faced with this challenge, Hoog initially operated without insurance due to the steep expenses. But that changed when Cachet provided them with a customized insurance solution that perfectly suited the company's needs. Hoog also realized that the initial worry about vandalism wasn't as much of an issue as they thought. But still – having insurance for their fleet turned out to be a sound financial decision that gave them peace of mind.
Concluding remarks
Don't underestimate insurance – it's just as crucial as having a top-notch fleet and solid software. Insurance is best approached proactively – discovering you've cut corners after an unforeseen event will cost you significantly more.
Getting insurance for shared micromobility might be a bit trickier since it's still a new concept, but we've seen that even smaller fleets can make it work – it's just a matter of finding a suitable partner who understands your needs.
At the end of the day, insurance isn't merely about meeting legal requirements – it showcases your dedication to safety, responsible operations, and the well-being of everyone involved in your mobility business.
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Why and how should authorities promote shared mobility
Unlocking the power of shared mobility – how authorities can drive change and improve transportation.
August 31, 2023
min. read
Shared mobility is gaining momentum – offering prospects for reducing traffic, cleaning up city air, and providing users with more flexible transportation options. However, despite its potential, shared mobility often seems to take a backseat to traditional public transportation and private vehicles in the eyes of local authorities and infrastructure planners.
Experts see shared mobility as a game-changing revolution in transportation. It surpasses the earlier revolution of the 20th century when personal cars became widely affordable and accessible. Now, with the rise of shared mobility and environmental concerns, the old notion of "one car per person" is becoming outdated.
In light of this, authorities worldwide should proactively prepare for a future where shared mobility plays an increasingly significant role. In this blog post, we'll explore different ways authorities and legislators can encourage shared mobility – and why it's totally worth it.
The positive impact of shared mobility
Shared mobility has the potential to fix some of the problems we face with transportation today, benefiting users, cities, and the environment. Here are the key benefits of shared mobility:
- Reduced congestion: Shared mobility can alleviate traffic congestion, leading to smoother traffic flow and shorter commute times.
- Environmental sustainability: Shared mobility can reduce the number of vehicles on the road, resulting in lower greenhouse gas emissions and a smaller carbon footprint. This helps combat air pollution and mitigate the environmental impact of transportation.
- Improved transport accessibility and flexibility: Shared mobility services make transportation more accessible, especially for those without private vehicles or limited mobility options. They also offer convenient alternatives to traditional transportation methods.
Considering the urgent need to combat climate change, shared mobility holds a significant promise as a greener transportation option. The European Union's Green Deal aims to achieve a 90% reduction in transportation-related greenhouse gas emissions by 2050. Shared mobility – coupled with increased adoption of electric vehicles and a broader shift in transportation behaviors – will likely play an important role in achieving this goal.
However, for shared mobility to truly flourish and revolutionize transportation, it needs a supportive environment backed by legislative frameworks and infrastructure planning. So, let's take a closer look at how authorities can foster wider adoption of shared mobility.
1. Favorable regulations with an eye on the future
In the past, shared mobility solutions and business models have faced challenges in gaining acceptance from regulators. A prime example is the initial response of local authorities to Uber’s novel services at the time – ordering them to cease their operations immediately.
Shared mobility services can disrupt traditional transportation models – which may not be welcomed by everyone. However, the undeniable popularity of these services, exemplified by the rapid success of Uber, demonstrates the high customer demand.
Instead of battling against it, authorities might want to shift their focus to creating a supportive legislative framework, recognizing the significant benefits shared mobility can bring. It means regulations that prioritize safety, fair competition, consumer protection, and quality standards – creating an environment where shared mobility can thrive and provide reliable services to customers.
Shared mobility is constantly evolving, which means that regulations need to be flexible and adaptable to keep up with emerging technologies and new challenges. For example, as autonomous vehicles become a possibility, authorities will need to establish guidelines for their safe integration into existing transportation networks.
2. A collaborative approach
Collaboration between local authorities and businesses can be a decisive factor in creating a favorable environment for shared mobility. By working together, they can tackle common challenges, share data, and develop integrated transportation solutions.
Public-private partnerships can also involve incentives like tax breaks or subsidies to encourage the adoption of shared mobility. For example, offering tax breaks to companies that implement ride-sharing programs for their employees can encourage the use of shared transportation options instead of individual cars. Similarly, providing subsidies for shared mobility providers can help offset the initial costs of implementing and expanding their services.
Sharing data between shared mobility platforms and transport authorities is another way to benefit from this cooperation. The platforms have valuable information on accidents, trip patterns, and driver availability. Sharing this data with local authorities can help improve the transportation network, enhance travel apps, and identify underserved areas.
3. Building infrastructure to support the future of transportation
To meet evolving transportation needs, authorities should invest in infrastructure that supports innovative modes of transportation like electric vehicles and shared mobility services. By considering the needs of shared mobility users, infrastructure planners can make it a much more attractive transportation option.
Here are the key infrastructure needs for shared mobility:
Integration with existing infrastructure: To offer users smooth and effective transportation choices, shared mobility must seamlessly integrate with current transport systems like public transit. It should enable users to plan multi-modal journeys and switch between different modes of transport without hassle. For example, users should be able to seamlessly transition from a shared bike or scooter to a bus or train.
Charging stations: Keeping shared electric vehicles performing at their best relies on maintaining their charge. This requires establishing a network of strategically positioned charging stations throughout urban areas. If we're aiming for more people to use electric vehicles, we need to make charging them easy and accessible.
Dedicated parking: Shared mobility services need designated parking areas for their vehicles, such as bike racks and car-sharing parking spots. Well-organized parking infrastructure can reduce street clutter and make it easier for others to grab a shared mobility vehicle.
Information infrastructure support: Running shared mobility services smoothly, including handling bookings, payments, and logistics, depends greatly on a reliable information infrastructure foundation. With the advent of advanced networks like 6G, users will increasingly rely on this infrastructure to stay connected and make the most of these services.
The shared mobility landscape in France
Paris's recent ban on free-floating e-scooters has put France in the spotlight. To take a closer look at the shared mobility environment in France, we turned to Manon Lavergne, CEO of Viluso, a shared micromobility operator. We asked for her insights on the state of micromobility in the country.
Since the Mobility Orientation Law in 2019, the French government has been working to make shared transport easier to access everywhere. At COP 26 in 2021, France undertook to cut its CO2 emissions by 55%.
According to Manon, personal vehicle ownership in urban settings is losing favor among many French citizens, and Paris stands out as a shared micromobility epicenter. The city pioneered self-service shared mobility networks like Vélib' (2007), Autolib' (2011), and Cityscoot's shared electric scooters (2016).
However, in April 2023, Paris residents voted to ban free-floating e-scooters in the city. The reasons behind this decision included riders competing for space with pedestrians on sidewalks and complaints about e-scooters cluttering the pavements when parked.
Captur's case study on e-scooter parking habits in Paris revealed that the majority of users encountered no problems when parking scooters in designated bays. However, outside of the designated areas, users had to compete with other vehicles, resulting in poorer parking choices.
This example again emphasizes the need for proper infrastructure to support shared mobility. Lots of cities around the world were mainly designed with private cars in mind – which can create challenges for accommodating shared mobility solutions.
Anne Hidalgo, Paris' Mayor, campaigned with a strong green agenda and has introduced various changes to tackle pollution and traffic jams. Her vision includes a "15-minute city" where people can access work, shopping, healthcare, education, and leisure within a 15-minute walk or bike ride from their homes.
Yet, the chaotic state of free-floating e-scooters in Paris resulted in their ban. This scenario raises a question for other global cities: How can shared mobility be encouraged without disrupting other transportation choices and pedestrian movement?
According to Manon, the upcoming 2024 Olympic Games in Paris, which will draw many visitors, will provide valuable insight into the city's transportation system – including the viability of shared mobility.
Shared mobility is here to stay – so start planning today
By adopting a supportive approach, authorities worldwide can play a crucial role in enabling the full potential of shared mobility. While it may require a shift in mindset, the potential gains of reduced congestion, environmental sustainability, and improved transportation options make it a worthwhile consideration.
We know that shared mobility is here to stay and will only expand in the coming years. By taking a more proactive stance, authorities will be in a better position to integrate and maximize the full benefits of shared mobility.
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