Climate change movements propelling demand for e-scooters

Dubai: An increase in awareness about the urgent need to address climate change and cut carbon emissions is propelling demand for e-scooters, and is only expected to gain traction.

Lime, the operator of electric scooters in various cities across the world, said its users are growing more conscious of the environmental toll from cars, and are looking for more environmentally-friendly transport options, especially for shorter distances.

In the UAE, where Lime launched operations in November, every fourth trip on a Lime e-scooter comes from a car trip, meaning that 25 per cent of users are opting for a scooter to ditch what would have been a car ride — be it on a privately-owned car or on a taxi.

Jakub Olek, regional government relations director for Eastern Europe, the Middle East, and Africa at Lime, said that he expects micro-mobility solutions to definitely expand going forward, especially as more people look for transport options for so-called ‘last mile’ journeys (the trip from or to public transport).

“I think it’s about being eco-friendly, it’s also about being sustainable, and moving around the city in a joyful and seamless way — seeing the city from a completely different side,” Olek said.

Last-mile journeys

He pointed that e-scooters can also be more appealing than bicycles as they don’t require muscle power.

Micro-mobility refers to a mode of transport that is provided by very light vehicles such as bicycles and electric scooters. A note by Deloitte analysts in April 2019 said that the growing adoption of shared e-scooters and shared bicycles shows a real demand for single-occupant vehicles.

Similarly, a report from McKinsey & Company in January 2019 said that stakeholders globally have invested more than $5.7 billion in micro-mobility start-ups since 2015, with more than 85 per cent targeting China.

Currently, Lime, which was founded in January 2017, is valued at $2.4 billion, after its latest round of funding. The US-based company said at the time of the last round that it would use the funding to expand into new markets, grow its team, and enhance its technology.

Since then, Lime has launched operations in Abu Dhabi, which was the company’s first city in the GCC. In late November 2019, it started operating a fleet of scooters in the emirate, mainly around the Corniche area. It has a total of 400 scooters in the city, and said that demand is already there.

The average scooter ride in Abu Dhabi is around 20 minutes, with 60 per cent of trips being under 10 kilometres. Less than a month after it started operations, Lime said that the total distance covered by its users in the city was equivalent to 26 trips between Dubai and Abu Dhabi.

Regulations on e-scooters

Lime’s Olek said that company had been interested in launching operations in the UAE as soon as possible, and found its first opportunity in Abu Dhabi.

“Regulators and stakeholders in Abu Dhabi are very open to innovation. They were very happy to have us. We are in touch with them on a daily basis. It’s very much like we’re building the shared mobility landscape together in the city,” Olek told Gulf News in an interview.

He said he’s hoping Lime will launch its services in Dubai, too, and is in the initial phase of talks with the regulators there to do so, but no date has been specified yet.

Earlier this year, regulators in the UAE banned electric scooters, forcing some companies that were already operational, such as KIWIride, Qwikly, Tier, and Skoot Mobility to halt their services. Authorities said the ban was until laws are in place to govern the new mode of transport.

Months later, Abu Dhabi started allowing operators of e-scooters, while Dubai is yet to do so.

The purchase and the operation of a privately-owned e-scooter is permitted in Dubai, though, with hypermarkets selling the scooters and some residents owning and riding them in the city.

Lime said that regulators do understand that e-scooters are a way to alleviate congestion in the city, and the company thus sees opportunities in the country and is focusing on expanding its services here.

Infrastructure and other challenges

Regulations aside, Lime — and other e-scooter operators — still face key challenges, one of which is infrastructure. Even by the operators’ own admissions, most cities across the globe don’t have the right infrastructure to accommodate e-scooters, which go at speeds of up to of 20 kilometres an hour.

Try to ride an e-scooter in any city and you’ll quickly realise the scooter neither belongs on the road (where it’s too close to other cars and is going much slower than them) nor on the pavement (where it’s moving faster than pedestrians and can easily hit them).

“A bike lane is probably the natural way for a scooter,” Olek said, while admitting that shared mobility continues to face challenges in just about every city. “We think there needs to be an incentive for the city to start thinking about infrastructure in a different way … and we think scooters can do that.”

Profitability

Another key challenge for operators such as Lime is high operating costs. Research on the sector points that costs are still higher than revenues, translating into a tough path to profitability for operators.

But long-term, that is expected to change. A report from McKinsey & Company said that favourable economics ensure that break-even points will drop.

“It’s true. It’s not a cheap business in terms of operations, but it’s also true that you can be better than competitors in managing the business … and it’s doable to be profitable in the business,” Olek said.

While he declined to discuss plans to turn a profit, Olek said the company has a healthy cash balance and “a clear path to profitability,” but did not disclose a timeline.