What can we glean from 2022, a year that shook up the shared mobility ecosystem? Vulog’s CEO Gregory Ducongé explores some of the past year’s major disruptions and what all operators need to keep in mind heading into 2023.
January 03, 2023. 2022 will go down as a turbulent year for a few high-profile shared mobility operators and there is much we can take away from their experiences as we head into 2023.
We saw the exit of two major carsharing services owned by OEMs. Volkwagen’s WeShare, which was founded in 2019 and operated in Germany, threw in the towel after three years and was bought by the Berlin-based mobility player Miles in November. SHARE NOW, which was formed in 2019 from a merger of Daimler’s Car2Go and BMW’s DriveNow and operated by BMW and Mercedes-Benz, was acquired by Stellantis in July 2022 and is being integrated into their own Free2Move carsharing service.
Electric scooter operators also faced some major challenges in 2022. Perhaps most notoriously Bird, which was founded in 2017 and boasts an enormous fleet across 400 different cities, saw its shares plummet in 2022 by 97% from their peak in November 2021 and is now strapped for cash. After blowing through nearly €1 billion in investments over the past 5 years (yes – that’s ‘billion’ with a ‘b’), they are staying alive only thanks to a planned merger with profitable Bird Canada, however, their future remains uncertain.
So, how exactly did we get here and how can shared mobility companies avoid making the same mistakes going forward? Heading into 2023, there are three major lessons learned that every shared mobility operator needs to bear in mind:
- It pays to be lean
- Scale smart, not fast (and keep it lean)
- Partner up on software. Also, be lean.
Shared mobility lesson 1: It pays to be lean
This first lesson can be perfectly illustrated by the rise and fall of WeShare and SHARE NOW. Unsurprisingly, the biggest issue facing the two mobility services run by OEMs was that they were being run like, well, OEMs. Operators that want to succeed in shared mobility need to adopt a startup mindset, that is starting small and lean with a focus on efficiency and cost, and then growing based on their success.
Both WeShare and SHARE NOW, however, were dealing with sky-high operating costs from day one that did not just eat into their profits, but outright consumed them. For instance, they both had enormous teams which may be par for the course for OEMs but is the antithesis of the startup mindset. We see the consequences of this playing out as new owner Stellantis has announced they will need to cut 36% of the SHARE NOW staff. And the fact that WeShare’s new owner Miles, a mobility startup with only €5.7M in funding, outperformed this OEM-backed venture is certainly a testament to the power of staying lean.
Shared mobility lesson 2: Scale smart, not fast (and keep it lean)
For our next lesson, let’s turn our attention to the scooter operators and more specifically, Bird. Bird is a classic example of how it might be possible to raise too much money. With $883 million of VC funds injected into the company over the past half-decade, Bird focused on scaling as fast as they could in an attempt to corner as many markets as possible. This is not a terrible strategy on its face, however, they did so without any consideration of developing a sustainable business model in parallel.
On the surface it looked like Bird was flying high, operating in 400 cities across the world. However, when you consider that they have actually been losing money per ride, their presence in so many markets is downright catastrophic. With their shares falling fast (trading at less than $1 per share as of May), Bird has finally started taking cost-cutting measures such as laying off 23% of their staff this past June and pulling out of Germany, Sweden, Norway, and several dozen small to mid-sized EMEA markets in October. A lifeline has recently been thrown to them by Bird Canada, an independent and profitable operator that licenses Bird’s software and name, which will merge with Bird, bringing an additional $32 million of funding to the table.
Of course, Bird is not the only scooter operator backpedaling from a “grow at any cost” strategy. Both Swedish operator Voi and German operator Tier have been forced to let go of 95 and 180 people from their respective staffs this past year. Scaling at the right pace according to your company’s success, and keeping it lean along the way, is certainly a lesson Bird and its competition has learned the hard way.
Shared mobility lesson 3: Partner up on software. Also, be lean.
This third and final lesson goes hand-in-hand with our first two since software is a critical component for “smart scaling” and building it in-house is one of the highest costs a company can accrue. It’s hardly a secret that developing and managing software is expensive. It requires a team of highly skilled (and highly paid) developers. It requires extra equipment, extra maintenance, and extra time as it is quite complex to build software from scratch. If it’s not your core business, you should outsource it.
SHARE NOW and Bird chose to develop all of their software in-house, which greatly drove up their spending. From fleet management to billing and payment to analytics, software is key to shared mobility success and so for mobility operators, it makes sense to outsource the core platform to an expert. The money saved in the long run (and we are talking millions, even hundreds of millions) would have been well worth it for SHARE NOW and Bird. Not only does outsourcing software significantly reduce expenses, but by choosing the right partner, shared mobility operators can sustainably scale even faster than by going at it alone.
Looking towards Shared Mobility in 2023
Despite the missteps and lessons to be learned from 2022, there were also many shared mobility success stories over the past 12 months. As the future remains bright for both carsharing and micromobility, I look forward to seeing what the upcoming year has in store for operators around the world. Let’s all lean into 2023!