(TNS) — Just as the threat of COVID-19 has collapsed the market for cruise ships, oil drilling and fitness gyms, it appears to be pushing the once-brash, Silicon Valley-bred electric scooter industry closer to a reckoning.
Lime and Bird, the fledgling industry’s two largest companies and both valued last year at around $2 billion, have each announced that they are suspending operations in numerous U.S. markets and dozens of other countries, mostly in Europe, because the coronavirus pandemic has moored tens of millions of customers at home.
In San Antonio, Texas, downtown sidewalks that pedestrians once deemed dangerous because of discarded machines and speeding, oblivious riders are calm now, even as Texas businesses begin to slowly reopen.
Bird still operates here, but on March 27 it laid off 406 people companywide, or about 30 percent of its staff. Last week, ride-hailing giant Uber, itself struggling to weather the recession, was reported to be in talks to inject emergency funding into Lime, now valued at only $510 million.
Bird and Razor USA were the only scooter companies left standing in San Antonio this year after an often-chaotic duel for customers and city contracts by multiple startups.
In March, Bird and Razor provided slightly more than 50,000 rides on some 1,373 vehicles, according to city records. That month, the pandemic was only beginning to register, and ridership already was in decline. A year earlier, there had been almost 240,000 rides on 4,158 scooters offered by six companies.
After Bird and Razor won contracts last December through a request-for-proposal competition, they each were allowed to deploy up to 1,000 vehicles in San Antonio. Lime also won a contract, but abruptly withdrew in January, citing low ridership and high city fees.
“San Antonio may be in a better situation than most cities because it had already reduced the glut of companies,” observed Joe Deshotel, a former government relations manager for Lime who got laid off in January. “With the exception of San Antonio, most cities did not want to pick winners and losers. Now COVID-19 has done that for them.”
Deshotel said the pandemic repercussions that have claimed retail and service industry stalwarts such as Neiman Marcus, Gold’s Gym and J. Crew accelerated a contraction within the scooter industry that was already in motion last year.
“It could be a good thing,” he said, “and the companies left standing will have a technology that the cities actually want. When we come out of this, people will be leery of just loading into buses, trains and planes, and we will still want something other than cars.”
The pandemic has sharpened the challenge for scooter companies in the meantime — Razor said that in April it had an average of only 173 scooters on San Antonio streets. But Razor government relations manager Brandon Cheung said the company, based in Cerritos, Calif., is “already seeing a rebound in ridership demand in San Antonio (and is) committed to operating in San Antonio for the full term of our contract regardless of where demand is at.”
Bird officials would not discuss their fleet size or performance in San Antonio. In May 2018, it had claimed to be the fastest company in U.S. history to reach a $1 billion valuation, but in March it said it was “pausing” service in San Francisco, San Jose and Sacramento, Calif.; Portland, Ore.; and Miami and Coral Gables, Fla., and had pulled its scooters from 21 European cities, from Antwerp to Vienna.
Cheung said Razor had one of its strongest Aprils and first quarters in its 20-year history because of its “robust retail market” and was headed into 2020 “in an incredibly strong financial position.” He reported that Razor had temporarily pulled out of only one city: Long Beach, Calif., because of its suspension of scooters during the COVID-19 crisis.
That’s one of the more promising forecasts in an otherwise battered albeit very young industry.
PitchBook, the authoritative source on private capital markets, reported that investment in micromobility had dropped 63 percent in 2019 over the previous year, suggesting that in a post-pandemic world only the strongest scooter companies would survive.
And that was before most of the transportation world was brought to a halt by a heretofore unknown virus.
In San Antonio, airport traffic dropped nearly 95 percent, while VIA Metropolitan Transit lost about half its weekly bus riders.
Regular scooter riders, often restaurant and hotel workers, had no jobs to reach. Also among the nearly 2 million jobless claims in Texas are the legions of contractors known as “chargers” or “juicers” who travel in vans at night snatching up scooters to be recharged and serviced.
The need to sanitize scooter handlebars has become a significant obstacle for riders returning to the market, just as the chargers are being told their services are no longer needed.
Because of the pandemic’s economic fallout, “cities like San Antonio may need to offer more regulation or protection to scooter companies to help them survive,” argued David Zipper, a visiting fellow at the Harvard Kennedy School’s Taubman Center for State and Local Government.
“It sort of goes against the libertarian ethos of Texas,” said Zipper, who often writes about urban policy and new mobility technologies. “But they may need some degree of protection against some competitor swooping into a market and taking advantage of all the marketing and education that (the existing companies) have already done.”
Not so much corporate subsidies, just the type of protection that a city might afford a utility or cable TV company that has invested heavily in hardware before reaping the profit in user fees, he said.
That may amuse some scooter companies that accused San Antonio of charging excessive fees and engineering a regulatory climate that dictates almost everything about the scooter experience — except the use of a helmet and the legal agreements by which riders forfeit their right to sue in case of injury.
Without offering specifics, District 1 City Councilman Roberto Treviño was sympathetic to the plight of scooter companies, saying, “Cities need to reduce red tape and put a moratorium on punitive measures while we allow businesses to get back on their feet. The focus should be on providing support and reducing their expenses.”
Amid the gloom, there are some green shoots of promise for small transportation.
Officials in Portland are offering incentives, announcing a partnership with Spin in which the city will temporarily waive scooter daily fees of up to 20 cents per scooter and 25 cents per trip in exchange for Spin cutting the cost of its rides by half.
Gotcha Mobility, which is based in Charleston, S.C., and has scooters on 35 college campuses, told StreetsBlog that its ridership numbers are actually up for 2020 after it started a pilot program to make its sit-down scooters available to restaurants and groceries for takeout and light deliveries. Gotcha had a 25 percent bump in business in Baton Rouge, La.
“All we want is to help people use a small electric vehicle instead of a traditional car,” Gotcha CEO Sean Flood said. “I think this whole crisis will open up all the ways we can do that. I believe we can cut cars out of as much as 75 to 80 percent of small package delivery — and it will save money.”
But city-funded incentives may be a tough sell in San Antonio, where sales tax revenue is down and budget headaches loom.
“I can’t imagine a set of facts that would result in my supporting incentivizing more scooters in San Antonio,” District 8 Councilman Manny Peláez said. “I think taxpayers would hoist us up by our own petards if we were to render aid to scooter companies before we came to the rescue of local businesses.”
©2020 the San Antonio Express-News. Distributed by Tribune Content Agency, LLC.