How will micromobility change the way we travel from point “A” to “B”? How will micromobility co-exist with the traditional models of transportation? What is the importance of network effects in micro mobility?

Kristin Dolgner, a marketing and communications professional at BCG Digital Ventures based in Berlin had an eventful week recently, when she travelled to the US. It started with testing a Lime kick scooter in Santa Monica, then riding an Uber to her office in Manhattan Beach and after her return to Berlin, she spontaneously signed up for Jump electric bike by Uber.  

Kristin, in her own words, is an excessive user of the ridesharing app Berlkönig offered by Berlin public transport Berliner Verkehrsbetriebe (BVG), German car-sharing apps such as DriveNow and car2go, as well as taxi service FREE NOW( formerly mytaxi). 

If you ask her to quickly review her experience of the week when she tried these different modes of transport, she says, “ I was really excited for the kick scooter but I didn’t feel that it was an exclusive experience. Maybe there was a problem with this specific scooter, but I experienced a bumpy ride with the engine gearing up and down. Apart from this, I was carrying a bag with me, which turned out to be very impractical for the kick scooter ride and left me feeling unsafe next to the heavy cars and scooter traffic in LA. However, looking at my Uber experience in the U.S, it is still  a better experience as compared to Uber in Germany – be it availability, fleet, service oriented drivers, pricing etc. Jump bike was the biggest surprise to me : the shrill pink look is killing me but biking at 35 couldn’t have been any more pleasant. Two rides in and I am already a huge fan.”

It is not just Kristin who is confused, but most people today are, who are spoilt for choices when it comes to using the modes of transport and making the right choices. The question that arises is that how are these different modes of transportation going to co-exist? 

Lawrence Leuschner, CEO and co-founder at TIER mobility explains the existing scenario of mobility when it comes to transportation, “The current transportation system is dominated by cars. It has a negative impact on health, environment, space and safety. At present, Europe is pushing cities towards car free cities. The younger generation does not want to own assets. There are three options to travel at present: Car sharing (DriveNow), Ride Sharing(Uber) and then there is micro mobility (TIER). The cake is big enough for all the players right now, but in the end you want to be the one who wins.” 

Most new mobility models want to solve the existing problems in transportation by reducing carbon footprints and decreasing the time of commute.  Cities such as Berlin and Tokyo, could boast about their extensive and user-friendly public transportation systems, which include subways, trains, buses, and trams. Into this field of transportation within cities, enters Micro mobility. 

Micromobility, a relatively new concept, is defined as any transportation via very light vehicles. These include, but are not limited to, electric scooters, electric skateboards, and bicycles.

One of the names you will hear more than often in this space is US-headquartered Lime which has raised over $600 million in capital. “ There are 45 million cars in Germany alone , which is a country of 80 million people. There are 250 million cars in the US with over 320 million people. You need three things to be a great company- operational excellence, leadership in hardware, true partnership with cities. Eight months ago, we did not have a single market that  could say with a straight face that we are making money . Today, 30 percent of our markets are making money and the nmber is going to increase. There is no micro-mobility unless you are a true partner with cities. A deep focus on safety, people and underground teams in each city has been our strength. Ride sharing and mapping companies have invested in Lime,” says Wayne Ting, Global Head of Operations & Strategy, Lime . 

THE IMPORTANCE OF NETWORK EFFECTS IN MICROMOBILITY

Micromobility is new and there are existing traditional players that still dominate the market.  Hence, we see a greater movement toward traditional corporate mobility and micromobility startup partnerships.  

Gunnar Froh, Founder and CEO, Wunder Mobility, says, “In the present scenario, there is a need to be the middleman. If it requires technology- to upgrade mobility- companies like us do it. Digital solutions will open new choices for customers. For example, ticketing by mobile phone for various modes via mobility platforms helps consumers to search for the best platform.”

Some examples of corporate- startup collaborations are given below: 

  • Ford, is partnering with small electric scooter companies, such as Spin, to diversify their brand as well as maintain influence in the future of the mobility sector. 
  • Volkswagen set up its VW Digital Lab in 2016, an innovative hub to execute transportation experiments.
  • Honda has its Xcelerator program, which funds startups that are coming up with mobility solutions for the future. This movement of traditional, corporate companies partnering with startups, if done effectively, could mean successful metropolitan integration. 

A recent report by Deloitte says: Automakers are experimenting and inventing, and have passionate voices within their ranks, describing much-altered futures. Most have set up offices in Silicon Valley to gain greater proximity to technology development and early-stage funding. Among the noteworthy examples of forward-thinking initiatives are Ford’s 25 mobility projects, BMW iVentures,Daimler’s engineering advances in intelligent driving,and Cadillac’s “super cruise” functionality. In addition, public-private partnerships such as the recently opened Mcity in Ann Arbor, MI, provide a platform to enable more efficient and effective automated vehicle (and feature) testing.

This approach is consistent with historic norms, in which automakers invest in new technologies—e.g., antilock brakes, electronic stability control, backup cameras, and telematics—across higher-end vehicle lines and then move down market as scale economics take hold. In Deloitte’s ongoing conversations with auto-industry leaders, they repeatedly and collectively argue, that outsiders simply do not appreciate the sheer complexity of developing a vehicle today, the challenge of introducing new advanced technologies into a vehicle’s architecture, or the rigor and inertia of the regulatory environment. All of this encourages incumbents to believe that they can be at the center of actively managing the timing and pace of these converging forces.

HOW STARTUPS AND CORPORATES COULD WORK TOGETHER? 

The crucial question is, how far can these partnerships go and why  they are so important right now? “Startups and corporates are like fire and water – work attitude, culture, values etc,” says Holger G. Weiss, CEO of German Autolabs. However, innovation in digital times is very fast and has to be fast. “That is to my knowledge the strongest reasons why startups are outpacing traditional corporations in new technologies and business models. They can be faster as they don’t have to be so risk-averse, they can test without immediately burn a brand etc. On the other hand, if it comes to scale and execution, corporates can show their true potential. So, while at first glance there is no common ground, in fact it’s a question of timing that startups and corporates will benefit from each other,” he says.

Gal bechor,  Product Manager, Volkswagen Digital Lab feels, “In a world that is changing so rapidly, we realize it is important for us to collaborate with startups, they can move faster and do things that our processes and bureaucracy do not allow us to do.However, startups usually lack the resources, experience, and scale that we have. By collaborating we are able to get the best of both worlds and build things together. We are now trying this in a small scale with “Inbound Initiative” where we take challenges from business units, and collaborate with startups that can solve them.”

Marvin Metzke, founder of an e-scooter startup called Simple Mobility, talks about the necessity of partnerships between startups and corporations to create sustainable cities. Simple Mobility is a startup that provides its customers with user-friendly scooters as a method of transportation. As a startup, Simple Mobility is able to move with flexibility, but doesn’t always have access to infrastructure necessary to complete its vision. Corporations are more steadfast in their approach, and  have the resources and the infrastructure to execute its goals. 

For example, Simple Mobility’s partnership with Deutsche Telekom will give the startup the infrastructure and investment it needs to successfully bring its scooters to the streets of Berlin. Unlike other e-scooters, Simple Mobility scooters do not need to be plugged in to charge. They rely on chargeable batteries, which can be removed, recharged independently, and inserted back into the scooter, thus allowing more flexibility in scooter movement and business. Simple Mobility’s goal in a partnership with Deutsche Telekom is to enact battery exchanges and charging programs on a large scale. 

WHAT IS THE FUTURE OF MICROMOBILITY? 

With micromobility, a 35-40 minute bus ride becomes a 9 minute scooter ride. As Marvin rightly puts it,  “A future in which scooters, cars, buses, etc. successfully coexist on the streets has the potential to create a better quality of life for people who live in the city.”  

As per a Deloitte report, young adults, along with urbanites, are gravitating toward a model of personal mobility consumption based on pay-per-use rather than upfront purchase of a capital asset, which fundamentally challenges today’s consumption model centered on personal ownership of cars. The change will happen systematically—a rising tide, not a tsunami. At no point will the world be presented with a Manichean choice and collectively decide to plunge all-in to a system of driverless, pay-per-use travel—or else to change nothing at all. Rather, the new personal mobility ecosystem will likely emerge unevenly across geographic, demographic, and other dimensions, and evolve in phases over time.

With corporate funding and infrastructure, micromobility startups have the potential to change the way we live and move. Getting from point A to point B within a city could be an issue of the past. Nico Wohlgemuth, Managing Partner of Dayone, a service design studio leaves us with a question to think about, “If there are passenger drones in the future, the question won‘t be how you get to Moabit. The question will rather be why you‘re still living in Moabit – and not outside the city listening to birds and going for a swim in the lake nearby. The city will just be a glimpse away.”

Note: The quotes by Lawrence Leuschner, CEO and co-founder of TIER mobility ; Gunnar Froh, Founder and CEO of Wunder Mobility; Wayne Ting, Global Head of Operations & Strategy, Lime – are extracted from their speeches at the Noah Conference Berlin 2019. This is a co-authored piece by Diksha Dutta and Arwa Sutarwala.

Previous post

The Layman's Guide to Banking as a Service

Next post

How will AI Change Healthcare? Robot-Assisted Surgery and Virtual Nurses are Just the Start