By Chanchal Jetha, Program Manager – Mobility
Fueled by the promise of sustainable urban transportation and convenient last-mile connectivity, the micromobility sharing market is growing rapidly. As services expand across more than 1,500 cities worldwide, cities are increasingly incentivizing and regulating these services to enhance safety and integrate them effectively into existing transportation frameworks. In 2023, over 300 companies, including key players like TIER Mobility, Bird, and Lime, operated fleets exceeding 10,000 vehicles. This dynamic market is projected to grow from 1.5 million vehicles in 2023 to 2.7 million by 2030 in North America and Europe. However, the path to profitability remains complex and elusive for many operators.
To learn more, please access: Micromobility Sharing Profitability and Business Model Analysis, North America and Europe, 2023-2030, Growth Opportunities in Global Traditional Carsharing, 2024-2030, Global Shared Mobility Predictions and Outlook, 2024, European and North American Mobility-as-a-Service Growth Opportunities, or contact sathyanarayanak@frost.com for information on a private briefing.
A Shift Towards Sustainability
The micromobility landscape witnessed explosive growth following the COVID-19 pandemic, yet projections indicate a shift towards sustainable operational practices in the coming years. From 2023 to 2030, eScooter sharing is anticipated to outpace bike-sharing revenues, potentially accounting for 60% of the micromobility market. This trend stems from eScooters’ lower barriers to entry, particularly their reduced initial capital investment compared to eBikes and traditional bike-sharing systems.
Regionally, Europe’s robust regulatory frameworks and developed public transit systems have laid a strong foundation for micromobility, promoting a diverse ecosystem of operators. Conversely, North America is on track for more rapid growth due to its untapped potential. By 2030, North America’s micromobility fleet is expected to represent only 21% of Europe’s, indicating room for significant expansion. As regulations evolve and investments in infrastructure, such as bike lanes, increase, North America may see an acceleration in fleet growth.
The current preference for eScooters over bikes is bolstered by their operational advantages and consumer demand. Although eBikes are projected to grow at a remarkable compound annual growth rate (CAGR) of 22% due to their profitability and user-friendliness, the overall trend leans towards eScooter dominance. Initial growth constraints from strict regulations are giving way to more supportive policies, allowing operators to expand into cities with populations over 100,000. While potential new restrictions on parking and riding could temporarily affect usage, the overall forecast is optimistic. Moreover, partnerships between micromobility operators and public transit systems are set to enhance service offerings, with mobility-as-a-service initiatives broadening the market appeal beyond casual riders.
Challenges to Profitability
Despite the promising outlook, several challenges threaten the profitability of micromobility services. Regulatory hurdles remain a significant obstacle, with inconsistent rules across regions complicating operations and compliance. For instance, in Oslo, a limit of 8,000 eScooters per operator restricts fleet size and growth potential, hindering profitability.
Insurance costs present another challenge, as operators often face high premiums typically designed for larger vehicles. This financial burden can strain operational budgets, impacting overall profitability. Additionally, seasonal demand fluctuations, particularly in regions with harsh winters, create instability and operational challenges.
Fleet management is another critical concern; the costs associated with vehicle maintenance, theft, and vandalism can be considerable. Moreover, competition from other micromobility providers and traditional transport services can lead to price wars, further complicating efforts to achieve profitability.
Our Perspective
Lean and efficient operations will be essential to enhancing profitability in the micromobility sector. Operators should focus on controlling costs by minimizing overheads, optimizing maintenance processes, and leveraging technology for fleet management.
Selecting the right markets will also be also crucial. High-density urban areas with supportive infrastructure and regulations present the best opportunities for profitability. Diversifying revenue streams beyond pay-per-ride models can mitigate risks associated with seasonal fluctuations. Options such as subscriptions, advertising partnerships, and ancillary services will create more resilient business models.
Data-driven decision-making will be vital for optimizing operations. Analyzing user behavior will allow for targeted pricing strategies, improved vehicle deployment, and effective marketing. Collaborations with local governments and stakeholders can unlock new revenue opportunities and reduce costs, boosting overall operational efficiency.
Safety will remain a cornerstone of micromobility operations. By introducing innovative vehicle designs and cutting-edge technology solutions, operators can build trust with both consumers and regulators. Collaborations with companies specializing in geofencing, data analytics, and maintenance services will strengthen safety measures, particularly in the eScooter segment.
Ultimately, integrating micromobility into a multimodal urban transport ecosystem will be essential. This integration will require collaboration with public transit providers, charging infrastructure developers, and data analytics firms. By working together, stakeholders will be able to offer flexible, sustainable, and cost-effective transportation solutions that cater to urban commuters’ needs while ensuring the long-term viability of micromobility services.
With inputs from Amrita Shetty, Senior Manager, Communications & Content – Mobility
